How is Big Data transforming the supply chain?
Big Data. It’s one of the ho...
With Big Data’s influence on companies growing, Supply Chain Digital explores the effect it is having on the industry.
Big Data. It’s one of the hottest topics in the supply chain industry right now and has pride of place alongside artificial intelligence (AI), machine learning (ML) and automation. It’s the new kid at school, the latest film in the cinema and the state-of-the-art phone everyone’s talking about all rolled into one - and everyone wants to get involved. In a bid to gain a competitive advantage, companies are leveraging Big Data for a host of reasons. Through Big Data, businesses can decrease costs, enhance efficiency and ultimately make smarter decisions. Supply Chain Digital takes a closer look at three of the companies that have implemented Big Data into their operations.
What is Big Data?
Big Data essentially refers to the vast amounts of data, structured and unstructured, that helps businesses to establish trends and patterns in human behaviour and interactions. This allows companies to leverage that information to enable better decision-making, thanks to the knowledge of what their customers require. With technology becoming increasingly influential in companies’ strategies, it is fundamental that new processes such as Big Data, AI and ML are introduced into operations, or they run the risk of falling behind to other competitors in the field.
In 2001, Doug Laney, former vice president and distinguished analyst of Gartner's Chief Data Officer (CDO) research and advisory practice, introduced the 3Vs which are considered the defining properties or dimensions of Big Data. The idea behind the 3Vs; volume, variety and velocity, is that the challenge of Big Data management revolves around accelerating all three of those categories, rather than just volume alone. In the subsequent years that followed, there has also been the introduction of additional V’s, such as variability and value.
The ecommerce giants use Big Data to better meet customer demands. By analysing what a customer has recently bought, items in the shopping cart and what products a customer has searched for, Big Data enables Amazon to offer suggestions to the customer in a bid to generate more revenue. Its personalised recommendation system is thought to account for 35% of the company’s annual sales. Amazon has a drive to deliver its orders to customers faster than its rivals. In 2019, this was taken a step further through the launch of One-Day Delivery. Amazon collaborates with manufacturers to track their inventory before opting for the warehouse closest to the vendor and the customer in order to decrease costs by 10-40%.
With 90mn transactions made weekly across more than 25,000 stores, Starbucks is a renowned brand worldwide. The introduction of rewards apps via mobile devices has allowed the company an insight into its customers spending habits. Starbucks’ mobile app is popular among customers with over 17mn active users, while its rewards app sees around 13mn active users. These apps provide Starbucks with a plethora of information about their customers’ favourite drinks and entices them to use the app through complimentary drinks. Another way that Starbucks reaches customers is through targeted and personalised marketing. This is done by sending an email to a customer who hasn’t visited a store recently and advertising a new product similar to one they’ve previously ordered in a bid to re-engage them with the company.
US-based bank American Express is leveraging Big Data to track customer behaviour. With more than 110mn American Express cards in operation and over 1trn transactions processed, the bank handles around 25% of US credit card activity. As is the case with all other fintech banks, cybersecurity is considered the main priority and, as a result, American Express has positioned data analytics and ML at the heart of the company’s strategy to combat this. The firm has deployed a ML model that combines a variety of different data sources, such as card membership information, spending details and merchant information, to detect suspicious events in order for a decision to be made in milliseconds and prevent fraud. American Express seeks to connect cardholders to products and services. To that end, it can recommend a customer a restaurant that they are likely to enjoy based on previous purchase data.
It’s clear that new technology such as Big Data is transforming how companies operate. Digitalisation is everywhere in the supply chain industry and beyond, and thus it has become vital that the latest technology and processes are implemented into operations — or companies risk being left behind. Big Data is ultimately enabling smarter decisions and tracking the latest consumer trends to ensure firms don’t miss out. As the world continues to evolve, the reliance on Big Data and analytics will grow. It’s a tool that observes customer behaviour 24/7 and is an eye that is never closed. The era of digital transformation is here; the future is digital.
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Upgrading RFID and Automated Track and Trace Solutions
During the COVID-19 pandemic, global supply chains faced the challenge of rapidly adjusting their business priorities to new customer preferences. Local supplier backlogs, winter storms, and the Suez Canal backup in March underscored the need for efficiency and visibility across the supply chain.
According to Christof Backhaus, Digital Lead Product Supply and Smart Label Project Lead at Bayer, companies must now place critical importance on tracking and tracing their products. “All large enterprises in the world dealing with finished goods,” he said, “seek functional and technical solutions to real-time channel inventory.”
Indeed, RFID’s real-time tracking data allows executives to make quick, well-informed decisions in moments of supply chain crisis - and rather than unfolding across days or weeks, it only takes a matter of minutes.
Why does RFID remain relevant despite digital disruption?
Essentially, RFID uses radio frequency waves to transfer data wirelessly between a scanner and a tag. In contrast to barcode technology, which requires a stationary scanner, RFID tags can be pinged from anywhere in the world, allowing companies to track real-time movement through the supply chain. RFID tags can also scan unique SKU numbers and distinguish between varying product sizes, colours, and styles: a critical feature for increasingly personalised end-user products.
Though the first patent for RFID tags appeared in 1973, higher accuracy rates, lower costs, and advances in sensor and data technology have made it newly accessible to a wide range of companies. Today, the technology is used in logistics networks, manufacturing and delivery networks in the pharmaceutical industry, and any business where efficiently tracking and monitoring product location is critical: raw materials, consumer products, cars, electronics, retail, and agriculture.
What are the key benefits?
Overall, automated track and trace solutions keep labour costs low, optimise operating costs, mitigate security risks, use capital effectively, and assist companies in adhering to regulatory requirements.
Below are three in-depth dives into how RFID benefits major industries:
- Pharmaceuticals: RFID tags help manufacturers safeguard sensitive products such as vaccines, tracking where they are and when they will arrive in real-time. Sensors closely monitor temperatures to ensure regulatory compliance. If anyone tampers with a shipment, the sensors alert the company.
- Logistics: RFID identifies process gaps and frequent anomalies by monitoring a product’s lifecycle from shipment to delivery. This data helps decision-makers predict the most efficient routes and therefore optimise their distribution schedules.
- Retail: Sensors help guard shipments against theft and provide critical intelligence when shipments go missing. Before adopting RFID technology in 2203, UK retailer Marks and Spencer relied on barcodes to scan inventory. When they made the switch, their productivity increased from a maximum of 400-600 items scanned per hour to up to 15,000 items scanned per hour. Building on their initial success, the retailer expanded the use of the technology and is still using it today.
Regardless of the industry, RFID promotes accuracy, immediacy, and efficiency. Companies reduce human error by automatically scanning products, keep track of inventory even in geographic locations with poor connectivity, and help streamline warehouse operations by identifying exact product locations.
Which recent innovations have changed the game?
With recent developments in cloud technology and IoT, a multitude of cloud-based alternatives have emerged to challenge traditional RFID technology. One of these cutting-edge solutions is Sony’s Smart Label - an intelligent shipping label that runs on AT&T’s global cellular network.
As with any good innovation, Sony’s proprietary technology started with a customer need ready to be solved: the Bayer Crop Science Division lacked an international IoT solution that could track seed products from start to finish throughout its distribution channel. Millions of dollars of revenue stood at stake, so Bayer turned to Sony to develop a smart label that would set the organisation up to manage its supply chain with end-to-end visibility.
Sony’s printable and disposable adhesive label allows companies to track the condition and location of their products worldwide and act upon the vast amounts of data it collects. The process is simple: the label activates when attached to the package, connects to AT&T’s secure LTE-M network, and sends data to the Smart Label Cloud in real time.
In sharp contrast to other smart label solutions that place trust in a patchwork combination of Wi-Fi, radio-frequency identification, and other limited coverage connections, the Sony Smart Label connects solely through a secure and universally-available cellular network. “Working with Sony,” says Robert Boyanovsky, the vice president of Mobility, IoT and 5G at AT&T, “we provide full visibility of every item shipped.”
Most importantly for companies on the edge, the Smart Label integrates with existing enterprise systems to achieve full visibility, thus adding value without disrupting supply chain process flow.
Why is this important now?
Companies that previously delayed introducing RFID and other automated track-and-trace technologies can capitalise on recent developments that lower costs, improve accuracy, and supercharge traceability.
Clearly the technology has value in today’s uncertain global marketplace, and can help decrease the costs of tracking goods. To quote Christof Backhaus, the Project Lead at Bayer, “the Smart Label indicates how much product is in the market, from the packaging line to the end customer.” Companies no longer have to spend a small fortune to take advantage of recent IoT developments. “Due to the technical composition [of the label],” Backhaus explains, “we don’t require additional infrastructure, manual scanning, or other expensive tools.”
Over the decades since RFID was first introduced, support for introducing it to company supply chains has also improved. AT&T’s IoT Professional Services Organisation, for example, supports companies through the end-to-end design and integration process--from installation to deployment and project management.
Companies that invest in traceable and visible supply chain solutions stand the best chance of survival, adjusting in real-time to natural disasters, shipping backups, and slowed-down supplier turnarounds as a result of the global pandemic. “Smart Label promises to help businesses like Bayer realise the full potential of the IoT,” says AT&T’s Boyanovsky. “[We can] deliver improvements in revenue and cost savings and make supply chains more efficient.”
Certainly, company executives will be hard-pressed to ignore recent innovations. In an age of uncertainty, RFID and its challengers herald a welcome sense of supply chain security. The next step? “Our sales team,” Boyanovsky adds, “is prepared to engage with prospective customers now.”