Big data analytics in supply chain: Tackling the tidal wave
The amount of supply chain data is growing exponentially, and companies are struggling to make effective use of available information. New research reveals the strategies they're adopting to help them harness the power of big data.
Contributing Editor Toby Gooley is a writer and editor specializing in supply chain, logistics, and material handling, and a lecturer at MIT's Center for Transportation & Logistics. She previously was Senior Editor at DC VELOCITY and Editor of DCV's sister publication, CSCMP's Supply Chain Quarterly. Prior to joining AGiLE Business Media in 2007, she spent 20 years at Logistics Management magazine as Managing Editor and Senior Editor covering international trade and transportation. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.
Editor's note: This is the first installment of a special two-part report on how companies are using big data in the supply chain. This month, we'll look at how satisfied businesses are with their data, the technologies they're using for data analysis, and how far along they are in their efforts to leverage the data they collect. Next month, we'll examine some of the roadblocks companies encounter when implementing big data analytics in their supply chains, the benefits they've realized to date and expect down the road, and their plans for future investment in the technology.
Technology is making it possible for supply chain organizations to gather enormous amounts of information from an expanding variety of sources. Billions of data points are pouring in from supply chain network nodes, multiple retail channels, the industrial Internet of Things ... the list goes on and continues to grow. The aim, of course, is to analyze that information to gain visibility into opportunities for innovation and improvement. But few companies are actually deriving sustainable value from the supply chain data they are accumulating. Instead, they are struggling with how to ensure the quality of their data, how to analyze it, and how to make practical use of what they learn from it.
New research conducted by CSCMP's Supply Chain Quarterly; Arizona State University; Colorado State University; Competitive Insights LLC, a provider of advanced supply chain analytics solutions; and the consulting firm lharrington group LLC investigated the current state of supply chain data analytics and the strategies organizations are adopting to harness the power of big data. Over time, this annual survey will track, in the aggregate, companies' progress in using big data analytics in supply chain management.
In this article and a companion piece to be published next month, we outline the study's principal findings. Among the topics we'll discuss are respondents' satisfaction level with their data; what technologies companies are using for data analysis; the challenges and benefits associated with managing growing volumes of supply chain data; and finally, where respondents stand now as well as their priorities for near-term investment in data analytics.
SATISFACTION WITH DATA PROVING ELUSIVE
The survey was conducted in June 2017 via an e-mail invitation to readers of CSCMP's Supply Chain Quarterly and subscribers to a newsletter produced by Competitive Insights. A total of 126 fully completed, usable responses were compiled to obtain the survey results. (For more information about the research, see the sidebar.)
There's no question that most companies are seeing a significant increase in the amount of data they are collecting. When asked to characterize the increase over the past three years in the volume of supply chain data available to them, 36 percent said it was moderately high, while 38 percent said it was high or very high. But, as is often the case, quantity does not necessarily equate to quality.
How satisfied are supply chain managers with the data they currently have to run their supply chains? A majority of survey respondents report being at least moderately satisfied with their supply chain data in terms of availability, usability, integrity, and consistency. However, the combined "favorable" numbers (moderately high, high, or very high level of satisfaction) were not overwhelmingly higher than those for the correlating unfavorable scores (Exhibit 1).
Interestingly, only a very few respondents report being very satisfied in all four data attribute areas: availability of data (3 percent); usability (2 percent); integrity (6 percent); and consistency (4 percent).
"Data is the foundation the 'house' sits on," observes Richard Sharpe, chief executive officer of Competitive Insights. "The survey results clearly show that there are cracks in that foundation—cracks in companies' ability to bring data together, integrate it, have confidence in it, and believe that it is consistent. To take advantage of big data analytics, we have to do better in all four categories."
If companies are only partially satisfied with the data they're getting, the logical question to ask is, exactly what software solutions are they currently using to gather that data? Overwhelmingly, the tools in heaviest use are not advanced analytics or business intelligence solutions. Nor are they operational point applications like warehouse management systems. Despite the availability of an array of sophisticated analytics software, the most widely used tool for managing supply chain data today is still Excel spreadsheets (Exhibit 2).
Despite their dependency on spreadsheets, users aren't necessarily happy with it as a data management tool. "Our survey shows that Excel is very negatively associated with user satisfaction in terms of usability, integrity, and consistency of data," Dale Rogers, ON Semiconductor Professor of Business at Arizona State University, reports. "The problem with Excel is that everyone builds their own spreadsheets, so there's no consistency, no single version of the truth that's shared across departments. That makes it very difficult to trust the data sufficiently to make big decisions across departments."
The survey also found that, not unexpectedly, large companies rely on their enterprise resource planning (ERP) systems to run the financials of the business. But for supply chain professionals, ERP has shortcomings.
"Supply chain folks don't really like ERP that much," notes Zac Rogers, assistant professor of supply chain management at Colorado State University. "Many do not think the data that comes out of ERP systems is very useable for their purposes. They find it too rigid. They also lose the granular operational data they used to get with older supply chain point solutions. And as with spreadsheets, they don't necessarily trust the ERP data—at least not to manage their supply chains the way they need to."
When talking about big data analytics, supply chain organizations typically rely on five basic kinds of tools:
Descriptive—tells you what is happening
Diagnostic—tells you why it's happening
Predictive—tells you what will happen
Prescriptive—tells you what should/could be done
Cognitive—uses machine learning to tell you what should be done.
By far the most widely used of these five is descriptive analytics, according to the survey results. Sixty-one percent of respondents report using this type of analytics tool. Furthermore, use of the four other types of analytics tools lags descriptive applications by a significant margin. According to the survey, companies that deploy these tools regularly, frequently, or heavily use them as follows: diagnostic, 42 percent; prescriptive, 36 percent; predictive, 31 percent; and cognitive, 18 percent (Exhibit 3).
Supply chain organizations that limit themselves to descriptive analytics are unlikely to make much progress. "Descriptive data tools are absolutely necessary," Sharpe says. "But they are only good for telling you what has already happened. To get greater insight, companies need to move into the other types of applications."
Adoption of these more advanced analytics tools takes time, however. To that point, how far have companies come in their use of big data analytics in their supply chains? How mature are they not just in implementing the technologies, but in realizing benefits?
The answer is "not very far," as the survey numbers indicate:
28 percent of companies are in the "developing" stage, with one or more big data analytics initiatives under way.
24 percent are in the "early" stage, conducting proof-of-concept testing to determine benefits and drawbacks.
20 percent have not adopted big data analytics in their supply chain.
Only 2 percent rank themselves as mature; that is, in the "transformational" stage of adoption and benefits.
One interesting note on the maturity question: Different industry sectors are at varying stages of not just maturity, but also plans for adoption. On a maturity model scale of 1 to 6, no industry was a 6; in fact, none reached the top two tiers—"advanced" or "transformational." The technology sector ranked highest at 3.7, just short of "somewhat advanced," while the lowest was life sciences, at 2.3 solidly in the "early" stage. Machinery manufacturers ranked themselves just slightly ahead of life sciences, and third-party logistics companies (3PLs) and retailers fell about halfway between "early" and "developing." (Other industries were not represented in significant numbers.)
Commenting on these rankings, Sharpe observes that some industries are more cognizant of the value that can be derived from supply chain data analytics, while some show little interest in moving beyond what they traditionally have done. For example, although life sciences (which also includes healthcare and pharmaceuticals) scored lowest in maturity, respondents in that industry put very high or moderately high priority on investing in big data analytics. "They understand they need to advance quickly, because of how fast their industry is changing, so they're making these investments," he says.
To be continued… Look for the second part of our special report on big data analytics in our February issue. In that article, we'll look at the roadblocks companies encounter when implementing big data analytics in their supply chains, the benefits they've realized to date and expect down the road, and plans for future investment in the technology.
About the survey
The research outlined in this article investigated the current state of supply chain data analytics and the strategies organizations are adopting to harness the power of big data. The research team included Dr. Dale Rogers of Arizona State University, Dr. Zac Rogers of Colorado State University, Richard Sharpe and Tami Kitajima of Competitive Insights LLC, Lisa Harrington of lharrington group LLC, and Toby Gooley of CSCMP's Supply Chain Quarterly, a sister publication to **{DC Velocity.
The survey was conducted in June 2017 via an e-mail invitation to readers of CSCMP's Supply Chain Quarterly and subscribers to a newsletter produced by Competitive Insights. A total of 126 usable responses were compiled to obtain the survey results.
The great majority of respondents (84 percent) were located in North America (U.S., Canada, or Mexico), while the rest were split among Europe, Central/South America, South Asia, and Asia-Pacific. They represented a wide range of industries, with the most common including third-party logistics; retail; technology (computers, software, electronics); machinery and industrial equipment; food, beverage, and grocery; and life sciences, healthcare, and pharmaceuticals.
Supply chain management (26 percent) was most often cited as respondents' primary functional responsibility, followed by logistics (19 percent), warehousing and distribution (15 percent), and corporate management (13 percent). Sixty-six percent of respondents said their companies have annual gross revenues of less than US$1 billion, 24 percent reported revenues between $1 billion and $15 billion, and 10 percent said their revenues ran to more than $15 billion.
As for titles, the largest contingents were manager/supervisor, with 41 percent, and senior manager/director, with 31 percent. A small number identified as vice president/senior vice president and corporate officer/president (both 7 percent); the rest included analysts, engineers, and other titles.
Over time, this annual survey will track, in the aggregate, companies' progress in using big data analytics in supply chain management. The research team encourages this year's respondents to continue their participation and is seeking additional participants for the 2018 survey. For more information about how to participate, please contact Dr. Zac Rogers at Zac.Rogers@colostate.edu.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.