Benefits of digitalisation in the business value chain

The New Era of the technology and Internet has introduced significant changes in the business industry. Especially for large businesses, there is a “before and after” the introduction of digital and electronic techniques within the value chain and daily processes. The process of digitalising a company of adding technological processes can include enhancements at so many levels, anything from having business databases on the cloud and transferring al paper-based documents to computers, to revamping communications by digitalising them or improving security systems of the business premises by adding highly technological security and smart access control systems to manage who enters or leaves an area of the premises.

In order to understand the benefits that this digitalisation has contributed to the business field, we need to specify the definition of the value chain. The concept of value chain consists of all business activities and the added value and profit margins produced by them. We can set three different parts in this process: 

-Primary activities: refers to the range of activities that represent the core of the productive process: production and distribution, products / services development, marketing, sales and post-sales service.

-Support activities make up the entire business infrastructure; this includes human resources management, provision of goods and services, management of technological development. Other areas of similar importance as finance, accounting, quality management, and Public Relations are included within these support activities.

-Margin is referred to the cost-effective of the whole value chain process. To estimate the margin obtained out of a business process we need to calculate the costs in which incur by carrying out both primary and support business activities and then discount these costs off the entire business process profit.

Once we get an understanding of what value chain stands for and what business activities comprise, we need to distinguish what subarea of this value chain is responsible for satisfying customers needs: supply chain. Basically, when we talk about the supply chain we speak about the logistic process behind sales achievement. This process encompasses the fabrication of a product until it reaches the customer including manufacturers, inventory, distribution and delivery.

Although the supply chain process has existed since the emerging of modern business, it has made a 180º turning over the last 20 years. It is an undeniable fact that the beginning of the Internet and the introduction of digital methods in logistic have revolutionized the business industry and brought several benefits to the operation and management of value & supply chain:

-Effectiveness in business negotiations: Digital tools provide with many good possibilities to ease the communication and information exchange between business-to-business and business-to-customer.

-Control in Supplier management: Improve the access to a larger number of potential suppliers as to a wider range of offers in a faster, simpler and automatic way.

-Cost reduction: The operations costs are considerably reduced 20-30% off their regular costs due to the introducing of a digital supply chain. 

-Improvement in Inventory management: the management of inventories visibly improves. Providing with access to online information enables to anticipate needs in production as optimizing the management of the stock.

– Reduction procurement times: through real-time communication between suppliers, business and customers, the procurement process time gets considerably reduced.

Finally, to conclude this post about the benefits of introducing digital techniques in the value chain process, we need to mention the general improvements that the Internet brings to the table. Some features as facilitating development and corporate design, reductions in time and costs and the opportunity to carry out cooperative work remotely. The Internet has changed the entire landscape, and not only when it comes to value chain, but also to the ways in which companies market and monetise their assets, goods and products: as an example, affiliate email marketing has become a major way in which businesses monetise their information and contact networks. The Internet enables two companies that have nothing to do and that are physically separate by a large distance to partner and collaborate so that one passes on to the other valuable information and prospects.

A few years ago, something as simple as two businesses operating simultaneously from two different continents would have been a significant impediment. However, nowadays it is just a daily practice for organisations thanks to the Internet. 

In general, the Internet along with all the new technologies are not other than tools that facilitate and lead to lower costs in communications and exchange of information to promote and enhance the connection between businesses. So, with regards to the benefits brought of digitalisation in business, we can state that companies that invest in technologies to promote the logistic process will be investing in the future and productivity of their businesses.

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Coral Lasalle