The Rise of the Data-Driven Supply Chain
- June 20th, 2012
- By: Loraine Lawson
Supply chain managers and chief procurement officers (CPO) are no strangers to numbers. But there’s a shift happening in the corporate executive suite that could soon significantly change how you manage and operate B2B (business-to-business) supply chains.
Increasingly, businesses are becoming data driven. It’s a philosophical shift that focuses on analyzing data to make strategic decisions, rather than relying on experience or business acumen.
A recent Capgemini survey reveals how pervasive this approach is: Nine out of ten business leaders describe their businesses as “data-driven,” according to a recent survey of global executives. What’s more, nine out of 10 also ranked “data” along side land, labor and capital as a fourth factor of production.
Of course, it’s always been about numbers to some extent for supply chain leaders. But this goes beyond financials, to using new types of data, including mobile devices and “Big Data” sets. For supply chain managers, that may mean collecting supply chain data from RFID tags or other sensors on the plant floor and integrating it with your your B2B portals and payment systems.
The question for supply chain managers — and the CIO who supports you — isn’t whether you’ll be using data, but whether you have the tools to process and analyze supply chain data in real- or near-real time.
“Supply chain management is now 30 years old,” Lora Cecere, founder and CEO of the research firm Supply Chain Insights, writes. “Let’s face it: today’s supply chains are inflexible. They respond, but they are bad at sensing changes in market demand, supplier conditions and other factors. Why? The systems are based on optimizing old data. By the time the analysis is done, the market has moved on. It is stale.”
To support a data-driven supply chain, you’ll need an agile IT infrastructure that includes:
- Real-time or near-real time integration and data analysis
- Data management tools, including master data management
- Tools that support analytics and business intelligence
- Supply chain management and B2B (business-to-business) software that automates orders, payments and other traditionally paper-based processes;
- Integration tools for connecting ERP, supply chain management and other technology systems to your data analysis tools;
- Support for processing Big Data types
- Support for the “Internet of Things,” which will mean collecting data from sensors and other objects you may not typically think of as “Internet-ready.”
Don’t panic: It won’t be something you do overnight. In fact, it will require planning, since many of the systems used over the past 30 years will need to be replaced entirely. It’s not about modernizing these systems, warns Cecere.
“It requires a redesign. It is about improving visibility into business activities, providing better service to customers and improving profitability,” she writes.
Much of the technology, including Big Data and data management tools, are already on the CIO’s radar and will be orchestrated through enterprise IT. That makes the CIO your best ally for a data-driven supply chain.