Digital Maturity & Operational Performance : A case study in the supply-chain of the Scandinavian FMCG industry

Abstract: Manufacturing companies are currently experiencing a digital transformation pressure as focus on concepts such as Industry 4.0 are growing. Industry 4.0 a concept inheriting, among other technologies, IoT, Cloud manufacturing and advanced analytics. The digital transformation and digitalisation of manufacturing may provide performance improvements. For example, in Supply chain functions, due to increased information sharing and possible performance improvements in forecast accuracy and deliverer accuracy. However, many companies are uncertain regarding how digital transformation best could be approached. An increasingly digital supply chain will increase the complexity of the organisation and the first step of any such transformation is to understand current capabilities. In this study we applied and, propose, the usage of a digital maturity framework, including a questionnaire, which is academically robust, has high level of transparency regarding the questionnaire, and are measuring all corporate functions. The digital maturity model is built on 3 dimensions, Strategy & organisation, Smart business processes and Smart product & services, 3 sub-dimensions and 13 associated fields. The framework thereby assesses all necessary enablers for digital transformation and provide guidelines for companies regarding what dimensions that are lagging and potentially are hindering a digital transformation. The framework was adapted and applied in the Scandinavian FMCG industry. By assessing 3 companies within the same corporate group which enabled triangulation with interviews to ensure validity provided a deeper understanding of the challenges in digitalisation and level of digital maturity in the Scandinavian FMCG industry were obtained. The results indicate that the major factor causing the low level of digital maturity within the Scandinavian FMCG industry were due to insufficient Strategy & Organisation mostly caused by a lack of strategic partners. The study concludes that competence and knowledge regarding how to approach digital transformation are the major challenge. In order to avoid develop all capabilities internally it is therefore important to source strategic partners. In addition, this study explored certain KPI’s that, according to the SCOR-model, are of great importance for operational performance. The SCOR-model were used since it is an established framework. The KPI’s for each of the participating factories were presented in relation to the digital maturity score within the associated field of production, procurement & logistics. Although no claims regarding causal relationships between digital maturity are made, the study proves the importance of connecting digital maturity to KPI’s in order to provide tangible benefits.