Innovations in digital technologies are transforming business processes. Businesses are using technology to achieve more efficiency and cost-effectiveness. The advent of digital technology has introduced two important terms – Digitization and Digitalization. It is essential to understand the difference between the two.
In this article, we will try to understand both the terms from a business perspective.
Digitization is the process of converting any data or information from analog to digital format. For example, if you go to a business conference and get business cards from your prospective clients. You usually, either click a picture of the cards or store contact details on your phone, which you can then ultimately transfer into a mailing list. This process would be called the digitization of prospects’ contact details.
For example, if a company “A” manufactures consumer electronics goods, then the process of assigning a unique digital identity to each item would be the digitization of products. Digitization is the first step towards digitalization.
For any business, Digitalization is the process of using digital technology to transform business functions. All the digitized information pertaining to a particular business function participates part in the digitalization of that function. Once the company “A” has digitized each of its product items, the products can now participate in the supply chain digitalization.
Digitization vs. Digitalization
Digitization is the foundation on which digitalization of various processes can be achieved. Digitalization is an incremental process.
Let’s try to understand digitization and digitalization through an enterprise example.
There is an ice cream brand that wants to digitalize its supply chain. The first step towards supply chain digitalization would be to serialize all its product items with the help of a serialization technology to mark a unique alphanumeric code on each product item which can be in the form of a number, QR, NFC or RFID. The serialization of products would be digitization.
Once the products are digitized, various processes in the supply chain can be made digital. For example, with the help of technology, these codes can be read by various nodes in the supply chain, and send this information to a central or distributed server. This simple scanning by even a few legitimate nodes in the supply chain can lead to preventing diversion.
The company may have decided to set lower pricing/offers to introduce its icecream brand in a new market. Some stakeholders may try to divert this product batch in order to gain more profits. Such activity will hurt the goal of market expansion and incur losses to the company. With the help of the anti-diversion solution, the company can spot and stop the product diversion and also find the culprits.
The stakeholders involved in the supply chain would be required to scan/enter the product codes (primary, secondary, or tertiary, depending on where it is in the supply chain). The success of the Anti-diversion solution would depend upon how stringently the stakeholders use the solution.
Similarly, after product serialization, the brand can implement various digital capabilities such as product authentication for Anti-Counterfeiting, Inventory management, Supply-chain visibility, Consumer/Retailer/Distributor loyalty programs and Consumer warranty management.
At NeuroTags, we provide the AI-monitored serialization foundation on which we provide a number of ready-to-use digital capabilities to reduce losses and increase sales.
Please contact us to know how NeuroTags is helping brands in digitization and digitalization.