Digital transformation may mean different things to different people, depending on their requirements and the industry they belong to. However, one thing that everyone can agree on is that it is never just about the technology. In fact, according to Gartner, for successful digital transformation, organisations must look beyond technology and focus on assessing and managing the intricate mix of strategy, leadership, business need and – well, technology.
Sajid Lokhandwala, Chief Information Officer, Al Khayyat Investments (AKI), a family-owned company operating in diverse industry verticals, reiterates this point as he shares AKI’s digital transformation journey.
What we know today as AKI was founded in 1982 as Alphamed General Trading. The company has grown tremendously over the years and now employs over 5,000 members of staff with a turnover of more than USD 1 billion. With a diverse portfolio of business units that includes distribution, healthcare, retail, contracting, and automotive; using a shared infrastructure for warehousing, distribution and logistics, human resources, administration, finance, and IT; Lokhandwala and his team had their work cut out for them to develop a group-wide transformation programme.
Lokhandwala says, “Our digital transformation journey began with the Board realising that they want to transform the business at a group level, leveraging technology. So, we put together a business architecture framework”.
“Unless you have a holistic view of the business and define the priorities and aspirations, how to engage with customers and so on, it is not possible to design the technology framework. Our technology architecture was completely aligned with the current and future needs of the business.”
Lokhandwala and his team developed a detailed plan that spanned over four years. In the first year, the team worked on getting the basics and designing the framework. The second year was all about simplifying and automating the processes with warehouse management software. In the third year, the group brought in transportation management solutions, automated proof of delivery, and demand-sensing technologies.
“Now we are in the fourth year and the whole framework is complete and working perfectly. It wasn’t a technology project that we were deploying, all the decisions we took were based on what made business sense and added value to our operations.”
One of AKI’s key focuses was to enhance capabilities and efficiencies in distribution and achieve the ‘perfect order’.
Lokhandwala explains that the ‘perfect order’, coined internally by AKI, is when a customer’s order that includes multiple lines of items, with each line having additional items or information, is translated into the warehouse and fulfilment of the order takes place exactly as per the customer’s requirement.
“For this to happen, the supply chain process must be seamless and robust. Therefore, the first thing we did in our digital transformation journey was to bring in efficiencies in the supply chain.”
This meant that AKI had to deploy technologies that enabled accurate demand forecasting and demand sensing.
“It is very important to predict customer requirements for the future,” he adds. “We also need to track supplier performance and evaluate their ability to fulfil the order because it is not necessary that every supplier can fulfill an order 100 percent.”
AKI has ensured that the technologies in place, for example, its ERP or core warehouse management system or delivery and transport management system, RPA, IoT, etc., empowers the process and systems within the warehouse across verticals to execute the incoming orders precisely.
The CIO explains, “We have made sure that we have the best-in-class solution for each vertical. We are also joining all the systems using a middleware layer so that data is flowing across the multiple and varied systems seamlessly.”
Besides enhancing the supplier side of operations, AKI has also implemented extreme automation for the customer side of the equation to boost resiliency and productivity.
“From the consumer division alone, we were looking at about 12,000 – 15,000 incoming orders from large regional customers. To streamline this process, we needed an end-to-end API-based system-to-system integration, which would allow us to directly pick up and action orders from the system. This way there would be no manual intervention required from the point of order generation to execution. To enable this, we put together a vision of ‘straight-through-processing’.”
The ‘straight-through-processing’ method helped the company automate all its processes from a 360 degree perspective. The way it works is that the inventory from suppliers is now calculated based on demand planning and demand sensing technologies, the systems in the warehouse make sure of stock availability and stock accuracy and incoming orders from customers can now be fulfilled on demand.
Now when a customer generates an order, it is automatically picked up by the company’s system and goes to the ERP for the necessary credit checks and balances. Once everything checks out, it goes straight to the warehouse, without any human intervention required.
“This way the warehouse gets the visibility of tomorrow’s orders, and we further link it up with our transport management system. The transport management system prioritises the orders, the packing is then done accordingly, and the itinerary is created for the driver. The planning happens from a transportation perspective and that is translated to the shop floor.”
Drivers are also enabled with hand-held devices and their routes are already planned as per order priority, and the proof of delivery is now automated through the system.
“This way the drivers do not have to make any decisions, it is all automated and unless he closes a particular delivery, he will not receive instructions for future deliveries.
“Our aim was to simplify the system to such an extent that it is intuitive for our support staff like packers and drivers, so there is minimal learning required, and yet have strong controls in place so that there is no room for anyone to make any mistakes. We have achieved the fine balance between the two, optimising our operations significantly.”
According to Lokhandwala, implementing the ‘straight-through-processing’ method has enabled the organisation to be KPI-driven.
“It has provided efficiencies, predictable business outcomes, and data-driven KPIs supporting key business decision-making.
“The whole game is about efficiency and that comes when you are tracking KPIs. This helps to keep us evolving and improving. The biggest number for a distribution business is inventory accuracy and we are proud to say that we have achieved 99.4 percent accuracy in this regard. We have about 2.5 million items being packed in the warehouse per month, so that is the volume of orders we deal with. Our order fulfillment accuracy is 99 percent for 24-hour delivery SLA.”
Lokhandwala reiterates that the whole transformation journey was possible because strategic initiatives at AKI are formulated in full alignment with the MD and the CEOs of different business units. The CIO and Chief Supply Chain Officer work in close collaboration to deliver the vision.
“We have married the top-down approach with the bottom-up. This is the secret sauce of our success. The vision and strategies are formulated at the top and the actual implementation is done to make the lives of line workers simpler. We think about a day in the life of a packer or driver and see how we can solve the challenges they face. When you design a transformation plan, thinking about the challenges and opportunities from the grassroot levels, it always works.”
Over the coming quarters, we will see AKI revamping its omnichannel stack for BinSina, AKI’s flagship pharmacy chain, and developing an omnichannel stack across AKI retail, which also includes brands such as Holland & Barrett and fashion stores for many mid and high-end labels.
“We are now working on leveraging the omnichannel capabilities we have for BinSina to our other retail brands. We have all the components required, such as our own delivery management solution, centralised order management, and so on, for developing an omnichannel stack across our entire retail business”.
“We have come a long way but this is just a milestone. There are a lot of opportunities for business enhancements in the digitization and automation journey”, Lokhandwala concludes.
