Episode 36 – Why digitization is a paradoxical phenomenon?

In this Episode of the WUEconomcis Outside the Box Podcast, I talked to Prof. Dr. Richard Pibernik, from the chair for Logistics and Quantitative Methods at the University of Wuerzburg and vice dean of the faculty of economics. We talked about data-driven operations management, the “digital paradoxon”, and applied research projects in the field of data-driven supply chain management.

QUANTITATIVE METHODS – SUPPORTING DECISION-MAKING IN LOGISTICS AND SCM

In a globalized and (continuously) digitized world, supply chain management (SCM) plays a major role for companies and organizations. Quantitative models, mathematical models, algorithms, and software development have become cornerstones in the digital world and big data environment. The optimization of big data – transforming data into information – supports the management in finding better decisions in inventory management, designing global supply chains. Collaborations of firms and researchers on applied projects in the field of quantitative methods and SCM can create promising opportunities for both sides.

DIGITAL PARADOXON – THE GOOD OLD TIMES ARE OVER

Digitization is a paradoxical phenomenon. The emergence and access to large amounts of data, combined with the use of data-driven techniques and operations supports faster and better decisions. This is one side of the medal. On the other side, this data is forcing us to use it. Because the clock speed of companies and markets has changed, and the environment has become highly volatile and dynamic it is affordable to use that data and make strategic decisions. Otherwise, companies and organizations run the risk of losing competitiveness. This means, “the good old days” are over and everybody has to deal with the new circumstances – big data, technologies and methods that transform zeros and ones into information.

One of the biggest challenges on the technological side, still lies in operating with large amounts of data and using suitable software solutions. The bigger challenge in many cases has to be seen in the mindset of the organization. Companies have to be open for change – in a modern-day environment organization in silo structures lead to frictions, loss of speed and information and are highly vulnerable. In contrast to that, they need structures, that are dynamic and collaborative – especially in the context of SCM and logistics, it is affordable that workflow and information of the purchasing department is harmonized with logistics and sales. In the next step, software module and techniques can increase the efficiency, speed and quality of decision-making. But this is not possible, if step one – mindset and structure – is missing.

Modern global supply chain management is closely connected to procurement and has become a highly strategical field that cannot be properly operated in a silo structure and with an “outdated” tool-kit. Therefore, besides the mindset aspects, there is an enormous need for continuous education -especially in the field of supply chain management is a need to educate people understanding and using new sophisticated tools and to impart an understanding for the power of technology. In the future, this understanding and commitment will separate successful from unsuccessful or competitive from the non-competitive organizations.

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