Digital transformation is undoubtedly one of the most popular subjects this year, as manufacturers grapple with production and supply chain disruptions due to stringent restrictions and lockdowns amid the COVID-19 pandemic. Businesses worldwide have scrambled to buy laptops, servers and cloud-based software such as Zoom and Microsoft Teams to help employees work from home.
Some companies are trying to turn the global health crisis into business opportunities. They have accelerated the adoption of new digital technologies, such as online payment systems, social media marketing or customer relationship management systems, to reach customers stuck at home and recoup losses. Some have made inroads into new areas of business as industrial boundaries begin to blur.
Taiwanese companies apparently do not share the same sense of urgency to optimize their business processes, or create new services to cope with shifts in the market. They are not yet ready to leave their comfort zone, and Taiwan’s success in controlling COVID-19 is the main reason.
As early prevention measures arrested the spread of the virus, Taiwanese companies have been less affected by the pandemic than their counterparts abroad; there were no lockdowns and working from home never took hold. Local companies focused on safeguarding daily operations by taking employees’ temperatures and regularly checking their health conditions to keep the virus out of the workplace.
Digital transformation is lower on corporate executives’ priority list, unless they are forced to take action should the disease trigger an avalanche of revenue losses. As more than 90 percent of local enterprises are small or medium-sized businesses, they often face the dilemma of investing in long-term survival or short-term revenue boosters. Any business transformation carries a risk of failure, but during trying times, it becomes even more difficult to make the right decisions.
Manufacturers this year became more cautious on investing in smart automation, the first step toward digitizing production. About 680 smart machine boxes were installed on equipment in the first eight months of this year, compared with 1,985 last year, according to the Smart Machinery Promotion Office. About 60 percent of local companies have not introduced digital technologies, it said.
Meanwhile, Microsoft Corp CEO Satya Nadella has said that the company has “seen two years’ worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security, we are working alongside customers every day to help them adapt and stay open for business in a world of remote everything.”
In Taiwan, most companies have returned to normal with only minor adjustments, with the exception of airlines, retailers and restaurants, which suffered the brunt of the pandemic’s effects in the first half of this year. Without digitizing operations, businesses would be unable to cope with COVID-19 resurgence, and it is hard to say whether Taiwan would be able to prevent an outbreak. Companies would not have the ability to satisfy customers’ needs for rapid shipment times, small orders and diverse production.
Digitization is crucial to enhancing competitiveness. Delaying this transformation will spell problems for companies — manufacturers in particular — during the post-COVID-19 era. Taiwanese firms are facing a high risk of losing their competitive edge or even being eliminated, as they lag global rivals in adopting digital technologies to optimize work flows, enhance efficiency, save costs and upgrade corporate structure.
The government should help cost-sensitive, small and medium-sized companies quickly introduce digital technologies. Building a new platform to provide consultations and digitization solutions would be one feasible approach.
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