4 Digital is Now a Core Strategy to Survive the Storms of Change

The Corporate Angle

Mr. Pranav Jain Assistant Manager TrucksDekho.com

Digital is Now a Core Strategy to Survive the Storms of Change

Businesses have always worked on intuition. The multiple others. They form dynamic networks that decision of what will work was traditionally taken interact with and shape brands. Hence by professionals who could constantly narrow identification and nurturing of customer networks down the possibilities of failures either by failing or becomes essential. Firstly, companies need to go by learning. This approach worked for companies’ beyond their existing marketing funnels by creating pre-1991. But with the advent of digital channels to encapsulate customer loyalty and technologies, the whole business ecosystem evangelism. transitioned. Mr. David Rogers in his book “The Digital Transformation Playbook” suggests the Secondly, customer’s path to purchase, i.e., skill required to operate businesses in the digital era customer journey, needs to be conceived to survive has transformed especially when the result this age of hyper-personalization that a buyer concerns a company’s customer, competition, data, demands as their interactions become omniinnovation and value. Let’s explore how strategic channel. And lastly, firms need to build themes now follow a completely new status quo. relationships with customer networks by helping

Evolving B2C Relationship

Companies have historically seen customers as

them engage and collaborate with their brand.

Changing B2B Dynamics

solely the buyer of their goods and have tried to In the past, only similar companies were seen as reach them to buy through ways that appeal to competition. But in the digital age, competition is masses. But as business ecosystem more between dissimilar companies across industries. Companies are actually fighting for a moves towards digital, customers not only make customer’s time and preference making a restaurant their personal purchase decision, but also influence and a theatre rivals. The digital revolution is, hence,

redefining firm to firm relationships, leading to the ideas was limited. Today, innovation is approached rise of platforms and marketplaces. The new through rapid experimentation and continued relationship matrix is more a mix of competition learning. Build-measure-learn feedback loop cycles and cooperation. BMW competes directly with are being viewed as the quickest way to identify Audi and indirectly with Uber, a platform. products customers actually want. Such changes Platforms have always existed; a good example to improve their existing services but also by would be shopping malls, but due to digital corporations looking to build new products through technologies like web, APIs, SDKs, cloud & ways including A/B testing and MVPs. The role of mobile computing, platforms are gaining relevance visualizing failure has drastically changed from by getting added to traditional business’s value actually failing to explore the path to real chains to eventually gain permanent positions. innovation.

Data Transformation

Data, earlier seen as a metric to measure and plan A value proposition is the reason why customers processes, has become the most important strategic turn to one company over other. To improve, firms asset for businesses directly impacting value focus either on translating the present value to creation and innovation. Since data will eventually different set of customers or differentiate the value become a tool to make better-informed decisions, to the existing clientele. But in the digital era, firms businesses will have to adopt multiple have to address both simultaneously. technological solutions to structure, manage and store this big data. This will be instrumental in A good example is when a newspaper company generating insights that can be clubbed basis pivots its mission, distribution channels and similarities; this will help understand patterns that geography at the same time. Multiple platforms can be used to attach a context. Multiple businesses practice value creation as an ongoing process, are putting data as one of their operating pillars to which helps pave the path for next set of relevant increasingly capture this context and create stories products. The idea is to promote customers to the to sell and improve. core of the value proposal enabling businesses

Innovation Paradigm

have been adopted not only by businesses looking

Shift in Value Proposition

ecosystems leverage network effects.

Digital transformation has become pertinent for Traditionally, a company could say that they have companies to stay afloat. A shift to a culture of datainnovated only post a market endorsement. The based decision making will strengthen businesses feedback came late in the process and testing of like never before.

Reference:

https://www.seed2vc.com/

About the author:

The columnist, a consultant, is an author at

http://www.entrepreneur.com , https://yourstory.com/ & http://www.businessworld.in/ LinkedIn: http://www.linkedin.com/in/pranav-jain-04a1527b Twitter: @jainpranav94

Emerging Managers

Mr. Ravi Kiran Pilla PGDBA Indian Institute of Management, Calcutta

Optimization of Operational Costs using Data Driven approaches in Oil and Gas Industry

The oil and gas industry has an enormous impact also paved its way into operational cost-cutting. on all aspects of daily life. Individuals, Research reveals that businesses that depend on corporations, and national governments make data-driven strategies can glean insights faster for financial and policy decisions based on the cost, increasing overall revenue and cutting down on use, and availability of these two natural resources. operational costs. Today, 65% of big brands are Oil and Gas sector generates revenue around $3.3 embracing data to stay ahead of the competition. trillion in 2019 contributing to around 4 percent of Operational costs contribute to around 1/3rd of the the world's GDP and therefore Oil and Gas costs Repair and Maintenance costs, Transportations can have a serious impact on the world’s Economy. costs are some of the key drivers of operational The costs involved in Oil and Gas production are costs in the Oil and Gas industry. Earlier generally categorized as Exploration costs, Maintenance and Repairs were done on a schedule Development costs and Operating Costs. basis called preventive maintenance which resulted in high equipment downtime and replacement Typical cost split of the major oil and gas costs. With huge amounts of operational data being companies is as follows: generated, Oil and Gas companies are willing to invest in data driven approaches. total costs involved in Oil and Gas production and Companies used real time data management tools hence companies aim to reduce operational costs to like OSISoft to get operational data from sensors maximize their profits and gain competitive and connect it to cloud based platforms to run advantage. Data, or rather big data, is being hailed predictive models like Support Vector Machine, as a revenue generator, market developer, and a Artificial Neural Networks to predict Asset prime analyser of consumer behaviour. Now, it has lifetime. This helped in planning the inventory and thereby reducing inventory costs. This also helped

in reducing the down time, enhancing the Asset cases, instead of saving the costs, we incur lifetime and operational efficiencies. additional costs. Therefore Time, cost and safety In the past, the operations team used to schedule selection. Data related distances across various vehicles and select routes manually and in routes is gathered. Based on the history and speed industries like Oil and Gas, the volume of schedules constraints the time related data is gathered. Based is very high and makes it almost impossible to on the geographical conditions, the factory of safety make the optimized schedules. Drivers are allowed for each route is calculated. Now an objective to make their choices of their own, which may not function is developed with distance, time and safety be the best route leading to additional costs. With a as parameters. Hypotheses are formed and tested lot of data being available attempts are being made using data. to use data driven approaches to select the optimal factors should be considered for optimal route route. So, the question arises on what parameters to The optimal route can be found by optimizing the choose for selecting the best route. In most objective function. Sometimes users can have scenarios we either consider a shortest route as priorities on these parameters like urgency of optimal or in some cases we consider the fastest delivery (time is priority). In such cases users are route as optimal. Sometimes we might be enabled with an option of giving their priorities and transporting high-cost equipment, if we choose a based on the priorities, the weights of the objective route with the shortest distance but with high function will be changed. The tool can be integrated terrains, there are chances of accidents. In such to mobile apps on a real time basis. Optimizing the routes helps companies reduce the overall distance travelled, the time taken and the cost of movement. There are other operations activities like piping maintenance, purchasing raw materials and hedging against market fluctuations, accurately estimating demand for your products whose efficiencies can be improved potentially using data driven approaches. With loads of data being generated across different levels of operations, and the increase in potential value of data driven approaches, the day is not too far for that operation being revolutionized by data driven approaches.

Emerging Managers

Mr. Vaibhav Joshi Kirloskar Institute of Advanced Management Studies, Pune

To Get In-hand Demand

COVID-19 has caused rapid shifts in consumer scheduling, production, and capacity, they are also behaviour, which has led to enormous issues for the inputting to financial, personnel, and marketing supply chain. By April 2020, online orders had future plans. already ballooned by a staggering 49% as many brick and mortar retail businesses made digital Operations managers have two tools at their pivots. With this kind of velocity in the changing disposal by which to make decisions: actual data consumer demand, operations managers will have and forecast. The importance of forecasting cannot to continue to hone and develop demand- be underestimated. Take a product forecast and the responsive supply chains. Moreover, volatile functions of human resources, capacity, and supply market fluctuations are more common than ever as chain management. The workforce is based on economies around the world are reeling from the demand. This includes hiring, training, and lay-off impact of the coronavirus. of workers. If a large demand is suddenly thrust upon the organization, training declines and the Operations managers will have to master the art of quality of the product could suffer. When the demand forecasting to ensure that inventory levels capacity cannot keep up to the demand, the result is are consistent with current demand. Nobody knows undependable delivery, loss of customers, and how long-term consumer behaviours will change in maybe loss of market share. Yet, excess capacity the new, post-COVID world. can skyrocket costs. Last minute shipping means high cost. Asking for parts last minute can raise the Demand forecasts deal with the company's cost. Most profit margins are slim, which means products and estimate consumer demand. These are either of those scenarios can wipe out a profit also referred to as sales forecasts, which have margin and have an organization operating at cost multiple purposes. In addition to driving or at a loss. These scenarios are why forecasting is

important to an organization. Good operations managers learn how to forecast, to trust the numbers, and to trust their instincts to make the right decisions for their firm.

Objectives of demand forecasting:

utilised to better align sales and marketing be, allows planners to coordinate their logistics

demand forecasting, as we call it, allows you to pinpoint peak hours and slower periods and to translate demand into required headcount using the correct labour standards which opens up doors to optimised shift creation and shift filling opportunities. An example is slightly under covering demand when costs have to be reduced and over covering demand when high service to customers must be guaranteed. Accurately staffing against demand also takes the pressure off your employees in peak hours and overtime. With labour demand forecasting, costs will decline, service levels will increase and employee happiness will improve.

4. Use of new Technologies: Demand forecasting has been around for a long time, but with the newest technologies demand forecasting are more accurate than ever. It has also been easier Benefits of Demand Forecasting in Operations: to generate these forecasts more frequently and 1. Use in inventory management: Accurate factors. Demand forecasting gives a deeper demand forecasting gives powerful insights on understanding of the available demand data and how much, when and which products should be forms a powerful tool to start optimising stocked in inventory. Forecasting can then be operations across the entire supply chain. efforts and reduce the risk of stock outs, Extreme surges in demand for some products may resulting in lower holding costs and increased put stress on certain supply chains, while demand turnover rates. for other products will disappear entirely. The only 2. Operational alignment in terms of logistics and that they must find a way to be prepared for workforce: Knowing exactly what demand will anything. to calculate the impact of external and internal thing that operations managers can be certain of is and distribution with the right number of Having an agile, highly responsive supply chain vehicles, optimise routes and streamlining their can help ensure that production levels can steadily warehouse activities. This lowers logistic costs meet demand without creating excess inventory. and maximises asset efficiency. Maintaining a healthy balance between inventory and meeting market demands will be a tricky dance 3. Workforce management: Demand forms the that operations managers will have to quickly perfect base to build schedules on. Labour master.