Impact of Big Data and Analytics in supply chain execution
Written by Srini Vasan CEO of eShipGlobal
The big data revolution is here. Enormous quantities of digital data are produced every day. “The world’s leading commercial information providers deal with more than 200 million business records, refreshing them more than 1.5 million times a day to provide accurate information to a host of businesses and consumers,” writes Cognizant’s Sethuraman M.S. in a 2012 paper, Big Data’s Impact on the Data Supply Chain.“They source data from various organizations in over 250 countries, 100 languages and cover around 200 currencies. Their databases are updated every four to five seconds.”
And the pace of data production is picking up. The International Data Corporation (IDC) predicts that digital data will grow from 2.8 trillion gigabytes in 2012 to 40 trillion gigabytes by 2020. Though this unprecedented volume of information may seem overwhelming, it offers unparalleled opportunities for companies willing to invest the time and money to analyze and utilize the data available.The Benefits of Big Data in Supply Chain Execution
Companies wanting to increase efficiency and profitability in supply chain execution should take note of big data. According to Ramesh Sethuraman and Satya Krishna Kunadharaju, senior solutions principals for HCL Retail and CPG Consulting Practice,the information provided by big data can:
- Build efficiencies into the supply chain.Productivity, collaboration, speed and visibility can be maximized, while time spent manually monitoring events can be minimized.
- Improve relationships with supply chain stakeholders.Better visibility can translate into better relations with vendors, suppliers, carriers, distributers, warehousers, and customers.
- Be agile and proactive.Information can help companies to identify issues early, and proactively respond before problems affect efficiency.
Efficiency and expediency is the lifeblood of FedEx, which handles nine million shipments a day and all the accompanying data. But FedEx isn’t just familiar with big data, it recognizes the potential behind it. The company recently decided to apply that data to physical items by creatinga next generation, first-of-its-kind information service that combines a GPS sensor device and a web-based collaboration platform: SenseAware. Originally used by the healthcare and life sciences industries as a means to track high value and/or extremely time sensitive shipments (and now available to all industries), SenseAware attaches digital information topackages, providing:
- Precise temperature readings
- Information about a shipment’s exact location
- Notification when a shipment is opened or if the contents have been exposed to light.
- Real-time alerts and analytics between trusted parties regarding the above vital signs of a shipment
Since the device is equipped with a radio that constantly broadcasts information back to FedEx, an enormous amount of data is generated—information that must be acted on in real-time. Analysis of the data is critical.Analyzing Big Data
But big data, which is not only big, but unstructured by nature, requires a new, different type of analysis. “New” and “different” often translate to “new and different costs.” In terms of supply chain execution, is the expense worth the result?
Yes, says Sanjay Agarwal, principal of Deloitte Consulting LLP. “Supply chain analysis is an untapped opportunity for many organizations that have data at their disposal but lack either the tools or the knowledge to exploit it,” notes Agarwal. “Our experience shows that manufacturing companies can realize a margin improvement of 2 to 4 percent by applying more analysis to the data they already have.” Big data, properly analyzed, says Agarwal, can help companies to employ parametric pricing, predict commodities volatility, and mediate any issues that arise from merger and acquisition integration.
Advanced analytics can be utilized in every aspect of the supply chain, agrees Agarwal’s Deloitte Consultingcolleague, Jerry O’Dwyer. It can improve forecasts, demand planning, sourcing, production and distribution, though it’s best used when looking at the big picture. “If you’re performing analytics in different areas of the supply chain – for example, spend analytics or demand planning,” says O’Dwyer, “you may be missing opportunities that a comprehensive approach can yield. For example, some companies have adopted the use of advanced analytics to develop a predictive asset maintenance strategy or to improve manufacturing operational performance.”
The impact of business analytics on supply chain performance, a 2010 study by Decision Support Systems, examined analysis efforts in four areas of the Supply Chain Operations Reference (SCOR) Model: plan, source, make and deliver. The study noted several potential uses of Business Analytics (BA) in these areas, including:
Plan:Data may be analyzed to predict market trends.
Source:An agent-based procurement system with a procurement model, search, negotiation and evaluation agents may improve supplier selection, price negotiation and supplier evaluation and the approach for supplier selection/evaluation.
Make:Information may be used to ensure the correct production of each inventory item in terms of time, production belt, and batch.
Deliver:Various applications of BA may aid in delivery efforts, but since many decisions about delivery are usually made at the end of the decision cycle, the impact of BA may not be as great in delivery.
The study’s finding may be of special interest to companies that are not yet able to invest in a comprehensive analysis: The authors found “a preliminary indication that an investment in BA in the Make area may bring the most significant improvement.”Revolutionary Results
The findings from the Decision Support Systems study, which considered a large sample of companies from different industries and countries, “reinforced the importance of a company's use of its databases, explicative and predictive models and fact-based management to drive its decisions and actions. The analytical capabilities can better guide the exclusively human decisions and provide automated decisions in some tasks in organizations.”
Right now, companies have an opportunity to get in on the ground floor of this big data revolution. By proactively using big data and its corresponding business analytics, they can make better decisions, create a more efficient supply chain, and increase profits. Big data is here. Use it.
About the author
Srini Vasan is the CEO of eShipGlobal, an on demand transportation management solution provider, which prides itself on bringing business applications to the market quickly and helping customers manage their transportation effectively. Vasan is currently involved in business development and oversees technology infrastructure and software development.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector