Technology is a big part of business, no matter what industry you’re in, especially in logistics and supply chain management. So, when technology issues occur, it’s hard not to get overwhelmed and think of technology as just another expense ticking away at your profits.
This is where I want to challenge you…
What if you thought of technology not as an expense but as an investment? The goal of this blog series is to provide a roadmap for decision-makers to:
- Correct all the technical problems creeping through their organization
- Move technology from expense to investment – get Return on Investment (ROI).
Free Guide: 7 Technologies That Will Change the Warehouse
Technology & Business: A Strategic Alignment
After many years working in technology I’ve come to realize that when businesses see a low ROI on technology it’s because they haven’t been able to interconnect their business goals with their technology investments.
Before investing in technology, sit down with your team and plan where you want to take your logistics information systems. To do this, write 2 lists: Back to Even and Exceeding Even.
Back to Even is intended to identify technological issues affecting employees’ productivity and interfering with business operations.
Have an honest meeting with your team, during which each person exposes technology problems affecting their work. This list will serve as the elements that should be satisfied for your business to run without problems.
Remember Maslow’s hierarchy of needs? Below is Technology’s Hierarchy of Needs. The “Back to Even” list could be compared to humans’ physiological needs to fulfill to survive.
The next list is Exceeding Even. This list can be compared to the “esteem” level of the hierarchy of needs. To produce this list, think about any innovative logistics technology solutions that could:
- Increase efficiency through process automation
- Add value to customers through services and solutions
For example, if you know your warehouse is the most inefficient part of your business, you might want to investigate where technology can help, and then later, you can search for solutions to solve the problem.
First, you must research the industry’s future regarding technology, customer needs, and competitors’ actions.
Once you have these two lists, you will have a strategic technology roadmap that will connect your business goals to your technology needs.
Technology Needs: From Expense to Investment
Many decision-makers disregard technology; they see it as a necessary evil and not an inherently important business component. On the other hand, tech professionals fail to understand how to align technology with business needs strategically. This view of technology as an expense occurs when seen in a vacuum; the business leaders and the technology professionals need to work together to ensure they get the most out of technology.
Take technology from expense to investment in 4 steps:
- Evaluate a variety of logistics technology solutions
- Map each solution’s potential contribution based on business needs
- Validate each option using a financial analysis that includes at least
ROI (Return on Investment) and TCO (Total Cost of Ownership) - Create an annual technology budget
Step 4 might just be the most important. Technology is evolving and needs to be properly managed if we expect returns. If the business can’t afford to implement the vision in one year, create a multiyear budget to execute it and keep it running without problems.
Technological Evolution and Lifecycle
Technology can sometimes be overwhelming. However, business owners should not worry about the nuts and bolts of how each piece of technology works. Instead, they should be very well aware of Technological Evolution and Technology Adoption Lifecycle.
The Evolution of Technology
This concept is pretty simple. Technology is changing – and it is changing fast. This means new opportunities are always to lead your business to greater heights.
To put it in perspective, just imagine this – your smartphone today is more powerful than all of NASA’s combined computing power in 1969.
Technology Adoption Lifecycle
Like investing in the stock market, technology is about buying the right stuff at the right time – especially if you use technology to give your business a competitive advantage.
The innovation adoption curve is a model for maximizing business opportunities and technological investment by illustrating the lifecycle of product adoption. Similar to wise stock investing, the key is identifying undervalued opportunities and investing in early logistics technology solutions to gain an edge over competitors. Adopting technology early requires capturing the market and customers before others catch on. The goal is to position yourself as an innovator, early adopter, or early majority adopter on the Innovation Adoption Curve.
- Innovators (2.5%) are risk-takers with the resources and willingness to try new things—even if they fail.
- Early Adopters (13.5) are selective about which technologies they are willing to start using. They are eager to try new things and reduce others’ uncertainty about trying/adopting a new technology.
- Early Majority (34%) take their time before adopting a new technology. This group is willing to embrace new solutions as long as they understand how it fits within their business
- Late Majority (34%) adopt technologies due to market, peer pressures, standards, or economic necessity. For this group, most of the uncertainty must be resolved before adoption.
- Laggards (16%) are old-fashioned and make decisions based on experience and solutions that they are familiar with. These are often economically unable to take risks on new ideas.
Technology is critical in defining conflicts, finding cures, and lifting people out of poverty. If properly aligned, adopted, and managed, it can affect your business similarly. Considering these points will give you an advantage over those who ignore them.
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