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  • Writer's pictureRon MacInnis

Amazon’s Digital Transformation - What we can Learn

In an era of one failed digital transformation initiative after another, a single company – Amazon – serves as the model for how to do digital transformation right. The broad streamlining of the company’s ordering and fulfillment processes was nothing short of a success.

Many attribute this to their motto of “lead with culture, enable with technology”. But perhaps what played an even greater role in their progress towards digitization is that, from the start, Amazon recognized that a business process cannot truly be transformed unless both the front-office and back-office tasks are automated and enhanced. The company understood that while a seamless and robust online ordering flow would do wonders for the customer experience, it would only get them so far. The way those orders were fulfilled also needed to be improved, in order to meet the near-instant delivery expectations promised to customers.

Key Takeaways for Other Sectors

Since Amazon is a seller of tangible products, of course many other retailers will follow the company’s lead and model their own digital transformation initiatives in much the same way. But organizations in other sectors – financial services, for example – shouldn’t assume that the factors contributing to Amazon’s success are irrelevant to them. Quite the opposite, in fact, as there are some very valuable lessons to be learned here, regardless of industry.

Lesson 1

There are significant gains to be made by streamlining and automating back-end fulfillment processes. This holds true even if it is a service or intangible product, rather than physical goods, that are being sold and delivered to the customer.

Why? Because delays and issues during fulfillment can have as much of a negative impact on customer experience (and ultimately, loyalty, retention and revenue) as problems before and during a sale.

Lesson 2

Accelerating the flow of order/sales information to a limited group of skilled experts is a good start, but not nearly enough to truly transform a fulfillment process. Improvements must focus on building automation into the process wherever possible, and decentralizing the skills and knowledge required to handle the tasks that can’t be automated. The goal should be to empower all employees to complete those parts of the process, rather than relying only on a small group of specially-trained experts.

Amazon accomplished this by reimagining and redesigning the layout of their fulfillment warehouses to enhance “pick and pack” activities. Products and pickers were placed in such a way as to maximize productivity. They were also given AI-enabled devices that “learned” where items where, to provide guidance each time something needed to be retrieved. Gone are the days where only a handful of experienced pickers know where items are located. Every picker – from the novice to the most seasoned – is now fully equipped with an expert system that helps them efficiently fulfill each and every order.

Applying the Same Approach to Complex Documents

The sale and delivery of intangible products and services are heavily dependent on complex documents. The same principals that Amazon applied to its warehouse would also deliver impressive improvements in terms of efficiency and accuracy if applied to complex document generation and collaboration.

For example, a handful of subject matter experts usually hold the bulk of the knowledge needed to create complex documents. Others who rely on those experts during assembly may at times find that the information they need isn’t readily accessible – causing the same kinds of delays and backlogs that previously occurred at Amazon, when less experienced pickers could not find certain items in the warehouse and had to ask their more experienced counterparts for help.

Advances in technology make it possible to capture that intelligence and make it available to all, creating an expert system (like Amazon’s) so that anyone – expert or not – can rapidly and accurately construct a complex document needed to fulfill an order for an intangible product or service. Guided by software, they’ll be able to generate complex documents that are complete, correct and timely, without having to gather data from a small group of knowledge-holders.

Amazon has thrived where others have faltered, due to their smart, comprehensive approach to digital transformation. Retailer or not, organizations must examine and learn from the company’s success, and apply the same principals to their own digital transformation projects.

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