WHY IT MATTERS: Digital Transformation

In french. Very good article to demonstrate how industries blind themselves to digital transformation. In this case the professional board of optometrists prevents the sale of prescription glasses online, stating that certain measurements are very specific and must be done by an optometrist. And the regulation was perfect in the age of physical stores, where competitors were across the street or across town.

With Internet, this rule does not apply anymore. Competitors may be anywhere, in the US, Europe or India. And they are not subject to the same rules. This makes the regulation that was once created to protect the public and level the competitive playing field, is now hurting the local optometrists. And the same is true with other professional boards, pharmacists for example (it is not easy to sell prescription drugs online in Quebec, but very easy to buy prescriptions online from US or elsewhere).

We need the professional boards to adapt their regulations to the new reality or face falling off the digital cliff.

A bit long winded for those that follow the topic, this article nevertheless brings forward essential strategic thinking the C-suite executives should ask themselves today. Most important thinking comes at the end, so stick through it.

Think of banking, which essentially a data-driven business, and ask yourself if their leaders have read papers like this one... Or retailers, which often sit on millions of transaction data from their POS and websites without using it to drive their business decisions. 

Most overused these days, omni-channel is often a concept that is difficult to understand. This paper sheds some lights onto the concept as well as provides very useful concrete examples that describe how companies put omni-channel through its paces. 

Moreover, the paper delivers the concept with a focus on data, which indeed appears to be the glue that ties omni-channel together very well. Even though the focus is on retail, I believe this may also apply to banks and other physical locations where customers interact with businesses.

The BestBuy omni-channel strategy document was made public in Nov 2012 and is available online. Sheds light into the company current state versus competitors and the strategy to regain its position.

Retailers have been doing forecasting for a long time, predicting from previous sales and market conditions (and their best judgement), what to order for each one of their stores. When you have hundreds of stores, this is not a simple tasks, and it often requires years of experience - if you want to do it well. Because forecasting errors are very costly, resulting in lost sales or products that stay on shelves or racks and must be transferred to others stores, or worse, discounted at the end of the season.

I've worked on systems - from simple excel spreadsheets to more complex applications - that automate the predictive aspect and provide tools to facilitate the forecasting process. But never were the tools using invidual client profiles  to make the prediction. They always used global store-level or regional sales numbers. 

So, at least in theory, established retailers can have a leg up.

But Amazon may (again) shock retailers into a digital transformation, bringing their individual client sales data into account when doing the forecast. This will require retailers to include individual customer transactions and possibly their "wish lists" and online search information, to include in your forecasts. Data is there but few reatilers have the systems or the integration to bring this data in a timely manner to the "forecasting team" desk.

Amazon has been doing this with "replesnishment" options where they send you products on a regular schedule, so you don't have to "shop" for them: they come at your door at a predefined interval you control. And they give you rebates for sticking to your schedude (predictability is invaluable in a supply chain!).

If you do, then your forecast will undeniably be better. If you don't companies like amazon, with lower overhead, will send your clients products before they even consider going to store to see what's on the shelves!