July 15, 2013
Column | techwatch

Shippers show big interest in big data

Survey shows logistics managers have high hopes that "big data" will help them fine-tune their distribution operations.

By James A. Cooke

As piles of data keep getting higher, logistics managers are suiting up to dive into those bits and bytes in search of insights that could improve their operations. That's a key takeaway from the first go-around of the 18th annual Third Party Logistics (3PL) study. The study, which is sponsored by Penn State, Capgemini Consulting, Korn Ferry International, and Penske Logistics, is conducted annually among contract logistics service providers as well as shippers. Each year, the study identifies a few hot topics for further examination, and for 2013, big data was one of the subjects chosen.

Big data refers to information stored in databases, both structured repositories like warehouse and transportation management systems and unstructured sources, such as chatter on social media sites like Facebook. The thinking is that if software could search through these data piles, it might find connections or hidden patterns that could then be parlayed into logistics operational improvements. (See "Getting insight from 'big data,'" TechWatch, DC Velocity,} August 2012.

At a recent Eyefortransport summit on big data in the supply chain, Penn State University professor C. John Langley provided a preliminary look at the results of the latest study. (The survey was not formally closed at press time, and Langley, who heads the study, was still hoping additional shippers would take part.) To date, about 2,000 respondents from around the globe have participated in the research.

If nothing else, the preliminary results confirmed there's substantial interest among shippers in this powerful data mining tool. Although it's only been about a year since the buzz around big data began, 7 percent of the respondents had already begun initiatives in this area and another 21 percent said they were planning to implement big data analysis. On top of that, 56 percent of shipper respondents and 43 percent of the 3PL respondents said their organizations saw tremendous value in using big data.

What do shippers hope to achieve through big data analysis? As it turned out, the respondents had several objectives in mind. At the top of the list was obtaining clearer visibility into orders, shipments, and inventory, which was cited by 50 percent of the respondents. Another 46 percent said they wanted to use big data analysis to improve transportation management planning, while 42 percent said they were looking to leverage big data to enhance transportation management execution.

The study indicated that most shippers - as well as 3PL managers - realize that when it comes to big data initiatives, they can't do it alone. They'll have to get the folks in the information technology (IT) department on board as well. Seventy-nine percent of shippers and 81 percent of third-party logistics service providers said the effectiveness of any internal big data initiatives would be highly dependent on the alignment and working relationships between the supply chain and IT staffs.

Besides the issue of securing IT's cooperation, another potential stumbling block identified in the research may be organizations themselves. Seventeen percent of shippers said their companies considered data proprietary and would not be willing to share that information with others. On the other side of the fence, 37 percent of the 3PLs also indicated their companies felt possessive about their information. That could be a problem: Using big data analysis to improve supply chain operations will likely require access to more than one company's data.

These potential impediments aside, most respondents believe that leveraging big data will offer their organization a competitive advantage. In fact, 58 percent of shipper respondents predicted the use of big data would become a core competency of their supply chain organizations, while 69 percent of 3PLs said the same. The latter finding came as no surprise to Langley. "To effectively manage your supply chain, you have to have access to meaningful data," he said.

Editor's note: The final results of the 18th annual Third Party Logistics study will be presented at the Council of Supply Chain Management Professionals' Annual Global Conference in Denver, Oct. 20-23.

About the Author

James A. Cooke
James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP’s Supply Chain Quarterly and a staff writer for DC Velocity.

More articles by James A. Cooke

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