In-depth: How can enhanced data and analytics optimise your supply chain?
As the digitisation of supply chains becomes ever more the norm, we asked the experts how to manage big data and deliver actionable insights across all sectors
The tsunami of big data created by the Internet of Things (IoT) demands that companies employ intelligent data management techniques to separate the wheat from the chaff, or find the ‘good data’. Adding to the fact that 90% of the world’s data has been created in the last few years alone, it’s vital that businesses grasp meaningful insight from data and analytics – but what key areas should be focusses on for best results, and how could this enhance the backbone of your company, the supply chain?
Embrace machine learning
With IoT set to exponentially increase the amount of available data as billions of devices activate and connect online, companies will need to turn to machine learning. Daniel Newman, founding partner of Futurum Research and CEO of Broadsuite Media Group, warns it will be simply too much for humans to handle alone. Machine learning can eliminate data junk and “keep data lakes clean and consistent”, even when it comes to unstructured historical data, he says.
Newman also notes that the technology’s ability to recognise patterns can help users to better understand customers and their decision-making, ultimately helping you to gain more of their business. He adds: “Machine learning helps take most of the bias out of decision making by presenting information based on factual data trends”, but warns that artificial intelligence is not itself bias free as it was created by humans whose judgement and logic are still important parts of data processing. The overall goal should be to improve decision making with the real-time harvesting of valuable data through machine learning to allowing companies to make instant changes based on harvesting real insight from big data to enable actionable supply chain visibility. Can a business see into its supply chain and predict what’s going to happen tomorrow, next month or next year? Harnessing this vision can help companies predict where goods are going to be, compress cycle times and get smart about their business. Newman concludes: “Companies that fail to adopt a smarter IoT by processing data automatically are likely to get swallowed up by the data monster that is surely to come.”
Recruit and upskill wisely
A recent report by Accenture stresses the importance of having the right people involved in supply chain management in your organisation to deliver the data driven decision-making Newman describes.
“Supply chains can essentially jump the digital evolution curve by adopting a networked supply model of operation enabled with advanced analytics instead of following a more conventional progression based on legacy enterprise resource planning and supply chain management systems. As organisations integrate big data analytics strategies into their operations, they will need to update their talent strategy, including upskilling and hiring, or contracting, talent to leverage the power of analytics,” asserts the report.
Accenture stresses that using analytics to automate more routine supply chain decision-making related tasks will help free up existing resources in house to upskill talent to “focus on higher value-added business tasks”. Additionally, automating the ingestion of massive amounts of data from myriad sources across the supply chain will lead to increased operational efficiency.
Leverage predictive analytics
Extending out from just mining existing data, predictive analytics seeks to extract information from current data sets in order to forecast future probabilities with an acceptable level of reliability, including a few alternative scenarios and risk assessment. “Being in logistics, it’s crucial to help upstream and downstream partners grow,” maintains Danny Halim, Vice President of Global Wholesale-Distribution and 3PL Industry Strategy at JDA. “This could be as simple as providing consumer sentiment, down to the assortment insights in the case of the retail industry, as well as seasonality patterns and consumption forecasts,” he adds.
As a provider of third party logistics (3PL), JDA’s clients include the likes of DHL, Asda, Coca-Cola and General Electric. JDA recently aligned with KPMG to meet the needs of those companies rapidly accelerating their digital supply chain transformations. The alliance provides manufacturers and distributors with high-impact, demand-driven planning and execution solutions to look to the future and solve the quest for competitive advantage.
“In the case of industrial procurement, suppliers need to plan months out – however many retailers and distributors aren’t advanced enough to support this,” reckons Halim. “Big data and predictive analytics can help suppliers plan their businesses beyond the next order horizon, and extend this planning all the way out to 12-18 months. They can do this without taking too many risks by providing insight into the downstream customer demand and buying behaviour. Providing better visibility helps customers run their businesses better and suppliers to grow their businesses.”
Data is only as good as the questions you ask
Dr. Catarina Sismeiro is an associate professor at Imperial College Business School on the Executive MBA programme and both the Business Analytics and Strategic Marketing Masters programmes. She argues that many businesses have adopted a twin-speed approach to analytics. Complex algorithms are used to boost operational efficiency, cut costs and track customer behaviour, but only a select few are using what they learn to drive strategic direction. No matter how advanced your IT infrastructure, your data will not deliver a ready-made solution unless you embrace the technology and ask a specific question.
“The main issues are a lack of data-centric culture, not enough willingness to rely on algorithms or data analytics for strategic insights, and the absence of a strategic plan for data-driven insights, especially at the top level,” she explains. “Although the evolution for a data-centric approach at operational levels started long ago, pushed by the need to improve efficiency due to fierce competition, changes at the top strategic level have been slower.”
To help transform data into business decisions, and apply this to real-life problems like supply chain management, you should start preparing the pain points in your supply chain that you want to gain insights into before you even start the data gathering process. Based on your company’s strategy, budget, goals and target customers prepare a set of questions that will smoothly walk you through the data analysis and help you arrive at relevant insights. Growing businesses should consider sweating existing data before splashing out on new insights. According to Sismeiro, internal data is often surprisingly rich and it’s free. In many cases, companies just need to organise, integrate, and ensure data is stored for easy access.
“In the supply chain many assumptions are made,” says Fab Brasca, Vice President of Solutions Strategy at JDA, offering an answer to the dilemma identified by Sismeiro. “We use averages to determine lead times and try to model transportation issues, factoring in many constraints, but integrating with a predictive analytics solution which not only allows you to understand where things are in your supply chain but where they could be. This intelligence can then be used to not only react, but proactively respond and manage disruption.”
Join the wave of digital disruption
Shawn Lane is Senior Vice President of Sales and Marketing at E2open – an end-to-end supply chain company providing software solution tools around supply chain planning, execution, collaboration and connectivity. He agrees that rather than being an added extra, digitising the supply chain is the only way to keep up with big business. “Activist investors and the rise of Amazon.com are forcing companies to change the way they behave. Companies are terrified, and know they need to perform better. They need to have higher customer performance at lower cost and they’re struggling to figure out where to get those productivity improvements.”
E2open works in partnership with Capgemini – a global leader in consulting, technology and outsourcing – delivering E2net (the largest direct materials network in the world, managing $250bn worth of spend from some of the biggest companies in the world). Focused on software-as-a-service (SaaS) supply chain, E2open aims to deliver the best value at the most reasonable cost. The niche they occupy in the market highlights the need for larger companies like Capgemini to seek out and partner with agile disruptors who can innovate their offering.
For supply chain leaders, Lane warns: “The worst decision you can make is to do nothing. It’s important for companies to act right now because the lifeblood of these companies is at stake. More and more companies are going bankrupt because they are failing to be efficient and productive in their markets. And there’s a lot of trepidation in the market right now – the private equity effect in CPG (consumer packaged goods), the regulatory effect in pharmaceutical, and the market depression in high tech. But if companies can step back, what they realise is that during times of change there are tremendous amounts of opportunities. Investing in change, new techniques and approaches is best done in times of transition. Coming out of these difficult markets, there will be winners and there will be losers.”