Digital Transformation in Supply Chain: Why Your Operating Model Comes First

When companies discuss "digital transformation" in supply chain management, the focus often jumps straight to technology. Terms like AI, IoT, and blockchain dominate the conversation. But is technology the right place to start?

A recent conversation in Calgary highlighted this challenge. During a Scope 3 panel discussion, a company shared their plans to allocate millions of dollars in 2025 for new supply chain technology. Yet, when I asked them a critical question, silence followed:

"What’s your target operating model?"

This pause underscores a common misstep. Digital transformation isn’t about choosing technology first. It’s about defining how your supply chain needs to operate and ensuring every piece—people, processes, and systems—aligns with that vision.

Why Technology Isn’t the First Step

Many companies believe that investing in the latest tools will automatically revolutionize their supply chain. But without a clear strategy, technology often amplifies inefficiencies rather than solving them. Here’s the reality: digital transformation succeeds when it begins with strategy, not tools.

Consider this real-world example from my Big Four consulting days:

• A Fortune 500 manufacturer invested $4 million in a new suite of supply chain tools. The result? They were still operating the same way—only now with expensive software.

In contrast, another client approached the transformation differently:

1. Defined their future-state operating model

2. Mapped critical capabilities required to achieve that model

3. Identified integration points across functions

4. Then evaluated technology to support the strategy

The outcome? A clear roadmap that reduced planned technology spend by half and doubled the impact.

The Four Pillars of a Successful Supply Chain Transformation

Before diving into technology, focus on these four areas:

1. Target Operating Model: Define how your supply chain should function in the future. What does success look like? What changes are needed to meet organizational goals?

2. Integration Points: Identify where key functions—such as procurement, logistics, and inventory management—must work seamlessly together.

3. Critical Capabilities: Determine what skills, processes, and resources your supply chain needs to achieve its goals.

4. Information Flow: Map how data should move across systems and stakeholders to enable decision-making and operational efficiency.

The Cost of Misaligned Priorities

Failing to prioritize your operating model can lead to costly consequences. Without a strategy, technology investments may:

• Fail to address core inefficiencies

• Create silos instead of integration

• Lead to overspending with minimal ROI

Starting with a well-defined operating model ensures every dollar spent on technology delivers measurable value.

Let’s Build Your Roadmap Together

If you’re leading a supply chain digital transformation, start with the foundation: your operating model. This approach could save you millions in misdirected technology spend while delivering far greater impact.

Ready to transform your supply chain? Let’s connect to discuss how a strategic approach can guide your journey.