According to the " DX White Paper 2023 " published by the Information-technology Promotion Agency (IPA) , 55% of Japanese companies are using data to promote DX. On the other hand, 20.5% of companies have no plans to use data, which is by no means a small number. What is needed to further advance data utilization, which is essential for efforts to achieve DX, such as reviewing existing business processes and formulating strategies that do not rely solely on intuition and experience? In this article, we will explain the importance of data utilization, the benefits of using it, and key points to consider when implementing DX.
Why data utilization is important for achieving DX
Why is data utilization important in achieving digital transformation? Here we explain the main reasons.
Enabling objective business decisions
Making decisions based on the results of analyzing data enables you to properly grasp the current situation without relying solely on qualitative information, and makes it possible to make quick and objective management decisions.
It will be easier to develop new products and create new businesses.
Although traditional management strategies that rely on intuition and experience are important, it is not easy to grasp new market trends and customer needs using only that. However, by utilizing real-time and diverse data from IoT and outside the company in addition to internal data, it becomes easier to develop new products and create new businesses.
Improved customer experience is expected
By utilizing a variety of data, such as customer purchase data, behavioral data, and personal data, it is possible to create new business models, such as omni-channel, OMO (Online Merges with Offline), and O2O (Online to Offline). As a result, it is expected that customer convenience will increase and the customer experience will improve.
The benefits of using data to achieve digital transformation
The main benefits of using data to achieve digital transformation are as follows:
Leads to improved business efficiency and productivity
By reviewing existing business processes and avoiding dependency on individuals such as intuition and experience, it is possible to standardize business operations. Standardization of business operations leads to cost reduction, improved business efficiency and productivity, and increases the possibility of achieving high results with fewer personnel. It will also create more time to concentrate on work aimed at developing new products and creating new businesses.
It also helps differentiate from competitors
Advances in AI and IoT have made it possible to collect and analyze data in real time. This will enable you to make decisions ahead of your competitors. It will also enable you to differentiate yourself from your competitors and develop unique services and products.
Key points for data utilization in DX
There are a few points to keep in mind when using data in digital transformation. Specifically, they are as follows:
Selecting the right data
Currently, the types of data that can be used are expanding, including not only internal data, but also IoT data using cameras and sensors, external data such as statistics and social media, etc. However, rather than using all data, it is important to select the appropriate data according to the company's purpose and use.
Collaborate across departments
Managing and utilizing data obtained by each department or team separately is inefficient and difficult to achieve results. By using a data integration tool to combine data obtained by each department, it is possible to eliminate data duplication and gain new insights.
Thoroughly verify the effectiveness
If you just "collect and use data," you won't know if you've achieved results. Always verify the effectiveness of measures that utilize data, and if they don't work, make improvements, and if they do work, try to make them more reproducible, and you'll achieve even better results.
Educate people on how to handle data
Utilizing data in digital transformation brings many benefits, but if it is not managed properly, there is a risk of information leaks and cyber attacks, which could result in significant damage. Therefore, it is essential to raise security awareness among all employees, including those in charge of handling data, and to thoroughly educate them on how to handle data appropriately.
Main examples of data usage in DX
We will introduce some examples of companies that have used data to achieve digital transformation.
- Ebiya Co., Ltd.
Ebiya Co., Ltd., a restaurant in Ise City, Mie Prefecture, is a long-established restaurant that was founded more than 110 years ago. As of 2012, the average customer price was 800 yen, and the menu items offered were mostly common items such as curry and udon. In order to improve profits, the company started to record the weather, temperature, sales of each menu item, and the number of reservations by nearby guests in Excel, and began to replace the business that had previously relied solely on intuition and experience with data-based operations.
After that, they began using AI developed in-house to predict visitors, collecting data through image analysis, and analyzing with BI tools, and many of the back-office tasks were outsourced or cloud-based. The president himself used his free time to increase added value and build new business models, implementing measures to increase the average customer price by branding using Ise ingredients and adding high added value to the menu items offered. As a result, seven years later, the company has achieved a 3.5-fold increase in average customer price, a 5-fold increase in sales, a 50-fold increase in profits, and a reduction in food waste by over 70%.
- Hibara Corporation
This is the case of Hibara Corporation, a company headquartered in Tokai-mura, Ibaraki Prefecture, which provides industrial painting services. Around 1990, the company's gross profit margin was low and capital investment was difficult. In 1992, following the death of the previous president, Odagura became president at the age of 26. He used scanners and printers, which had not yet been widely introduced at the time, and promoted IT by digitizing indirect operations.
The company used IT in the areas of "digitizing technology" and "production management," and achieved the previously difficult succession of technology and the digitalization of all work related to painting. In recent years, the company has also been promoting a consulting business that provides its know-how to the painting departments of manufacturers, and has established a new business model as "Japan's first consulting-type industrial painting."
- Matsumoto Kogyo
Co., Ltd. is a company located in Kitakyushu, Fukuoka Prefecture, that manufactures automotive parts and metal products such as seat frames, head rests, arm rests, door and exhaust system parts. The company is putting data to use in order to visualize the operation status of manufacturing equipment and on-site operations.
Specifically, the development of a production management system using RFID enabled the acquisition of a wide range of information, such as the operation status of the production process, the time required for each process, and the workers. As a result, the company has been able to effectively reduce product defect rates and optimize inventory by identifying the conditions that cause manufacturing defects, the bottlenecks in the work, and the causes of these, and taking measures to improve the situation.
The key to using data to achieve digital transformation is to thoroughly select the data and verify its effectiveness
To realize DX, it is essential to improve efficiency and productivity by reviewing existing business processes. Data utilization makes this possible. It will be difficult to reform existing operations or create new businesses if strategies are formulated based solely on intuition and experience. It is important to collect and analyze market trends and consumer needs in real time and make quick decisions. Traditionally, when it comes to data utilization in companies, most of the data used was customer data, sales data, and web logs in the company's own systems. However, the types of data that can be used are now expanding, including IoT using cameras and sensors, and external data such as statistics and SNS. From these, it is necessary to select data that is appropriate for the purpose and use it appropriately.
In addition, it is not enough to just use data; it is also essential to verify the effectiveness. If you implement a strategy using data utilization and do not verify what results were obtained and what was lacking, you will repeat the same mistakes over and over again.
Because the types of data that can be used are expanding, it is important to thoroughly verify what to use and what the results of using it were, which leads to the realization of DX.
Related articles:
Digital transformation: The wave of digital transformation and the manufacturing industry | Stratus Blog
Why is digital transformation being rushed? Reasons and examples of initiatives | Stratus Blog
What is data utilization in the manufacturing industry? An easy-to-understand explanation of the four issues facing the field and solutions | Stratus Blog
