In Supply Chain

This is a very exciting time. We are about to see a data explosion in supply chain. I write often in this blog about how supply chain data is the eyes and ears that connect logistics to profitability. But now things are coming to a very interesting confluence that will truly transform supply chain. Data is piling up and new analytics are forging transformative insight, but not everyone is heeding the “all aboard” call.

Supply chain managers who have gotten aboard and begun data collection and analytics have seen the benefits of how they can improve and even innovate. Deeper visibility is enabling better understanding of product performance, process efficiency, issue sourcing, innovation and collaboration with trading partners.

Forbes reported in the July 13 Tech section of its online edition, that big data is finally revolutionizing supply chain the way we’ve been saying it would. That story, “Ten Ways Big Data Is Revolutionizing Supply Chain Management,” makes a bold statement, just in its title alone.

They can make that bold statement with confidence because they’re right. The author cites a Harvard Business Review survey from 2012 where executives who identify their business as data-driven also happen to be performing well on objective measures of overall operational and financial results. The results showed companies in the top third of their industry in the use of data-driven decision making were, on average, 5 percent more productive and 6 percent more profitable than their competitors (Harvard Business Review, October 2012, “Big Data: The Management Revolution“). And that was three years ago. Imagine what they are doing now, with three years of development under their belts.

Forward-thinking supply chain executives who are already onboard are accumulating masses of information and applying predictive analytics that enable stronger, more accurate planning and deeper context that enables powerfully reliable foresight for business decisions. The depth, breadth and accuracy of the data being collected is enabling a new “contextual intelligence” that brings even more value.

When Accenture conducted its latest Global Operations Megatrends research study, a disconnect appeared between the values of analytics in supply chain and the move to adopt it. The survey showed that although 97 percent of executives surveyed indicated they have an understanding of how big data analytics can benefit their supply chain, only 17 percent say they have implemented analytics in their supply chain.

So why isn’t everyone crowding onto the big data analytics train? The prospect of investing in large-scale internal IT implementations is one reason. The advent and maturation of cloud-based platforms will go far to alleviate understandable concerns about huge, internal ERP investments. Cloud computing is making software and analytics more accessible and affordable. That could be a game-changing opportunity for many. The study found that big data embedded into supply chain operations accelerate processes a minimum of 1.3 times over simply using big data on a more discreet basis, and a 2.6-times uptick in efficiency improvements of 10 percent or more in supply chain.

Accessibility will be key for companies whose growth or even their continued existence depends upon the analytics-derived advantages of optimization tools, demand forecasting, integrated business planning, collaboration and risk assessment. Development of those tools is accelerating quickly.

As this evolution proceeds, the landscape is beginning to evolve those who have to “cool tech” and those who don’t – the picture is quickly developing to reveal leaders vs followers. In the 2015 Deloitte Supply Chain Leaders Survey, responses about supply chain capabilities currently in place shows an marked difference between leaders and followers:

SC-Capabilities-Currently-in-Place-10-2015

The largest two gaps, a 24 percent difference between leaders and followers in integrated business planning and an almost 20 percent difference in collaboration and risk, touch on critical areas that will develop rapidly in the new big data analytics landscape.

Those gaps are likely to grow as leaders take a firmer grasp of these capabilities. Deloitte points out that they find leaders much more aggressive at adopting new technologies, especially in collaboration and risk, which will increase in importance as supply networks become more complex and dispersed. Among the leaders, 80 percent rate highly their ability to negotiate and collaborate with partners, where less than half of followers rate themselves highly in these areas.

As supply chain becomes more complex in a world of omni-channel commerce, more diverse outsourcing and partnering, and Uber-style resourcing, the bottom line is this: What only yesterday looked like a “wait and see” prospect is quickly becoming a necessary tool for survival. It is quickly going beyond being the cool new technology for massive companies and early adopters to becoming the baseline for competitive business practice in supply chain for companies at almost every level.
If you wait to see what train is coming into the station next, the train in front of you will already be 100 miles up the tracks.

Is your supply chain ready for big data analytics? What barriers do you face in adopting big data analytics to your supply chain? Comment below to join the discussion.

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