Big Data Analytics and Its Impact on the Supply Chain

Pascal Becotte, MD-Global Supply Chain Practice for the Americas, Russell Reynolds Associates
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Pascal Becotte, MD-Global Supply Chain Practice for the Americas, Russell Reynolds Associates

Supply chain executives have often led the market in the adoption of technology. Today’s expanding proliferation of data, on everything from material flows to customer preferences, is rapidly changing the way companies do business and highlighting a powerful need for enhanced data management and analytics. The benefits of big data analytics, referring to large and complex datasets, are clear: Big data can revolutionize the way organizations work, creating substantial differences in efficiency, costs, visibility and customer satisfaction. Big data comes from a wide range of sources:

-Today’s technologies and social platforms allow businesses to get direct customer feedback in the form of ratings, reviews and blog comments.

-Data from mobile, social platforms and e-commerce are being integrated with data from enterprise systems.

-Manufacturing is changing from event-based planning to real-time sensing with the introduction of the Internet of Things and machine-to-machine communication.

-Evolved sensor technology provides real-time equipment and product conditions data resulting in automated maintenance and process adjustments.

Data have grown—in volume, in variety and in velocity—and can bring tremendous value if exploited in the right way.

Organizations already are driving productivity along the entire length of the enterprise supply chain, but the use of big data analytics in the supply chain function is not widespread or well-coordinated across global companies according to research. The companies that do benefit from big data analytics have three commonalities: They have a strong enterprise-wide analytics strategy, they embed big data analytics in supply chain operations and they have the right talent pool to produce actionable insights from big data.

There is a need to hire, train and enable leaders who can help a business benefit from big data analytics. Majority of companies are not yet well-positioned from a human capital standpoint to embrace digital supply chain transformation. We analyzed the profiles of more than 50 senior supply chain executives across a range of industries to see how well-positioned they are for the digitization of the supply chain. An overwhelming majority of executives in companies across disparate industries are lacking when it comes to their position on what might be termed the “digital preparedness continuum.”

We also interviewed business leaders across industries about the implications of today’s increasingly digital world on the role of the chief supply chain officer and on the interaction of the supply chain leader with other executives in the C-suite. Through these interviews, we found four key characteristics that supply chain leaders should possess in order to be able to capture the benefits from big data analytics:

1. A firm understanding of data and systems technologies. Today’s businesses are able to gain profound insights into customer behavior through data analytics and the collection of data through digital means. While chief supply chain officers are not required to be information technology (IT) experts, they should have enough knowledge about data gathering, technology and analytics to lead the conversation and provide a digital vision for both senior leaders and their supply chain teams. Supply chain leaders should recognize how pertinent platforms and processes are implemented and utilized and where data are coming from and should demonstrate a solid understanding of the scope and scale of data from diverse channels. Importantly, leaders must be prepared to act intelligently on data.

2. An influential and collaborative approach. The chief supply chain officer will not be able to reap the benefits from big data analytics if he/she works in a silo. Internally, supply chain leadership must be able to communicate and collaborate with the chief technology officer to help determine the appropriate technologies and policies for the organization, with the chief data officer to understand how data are best captured and used, with the chief marketing officer to evaluate how the supply chain can be more customer focused and demand driven, and with the CEO to concretely communicate the broader value-creation opportunity. Ultimately, the supply chain executive will need to be able to build bridges with both internal stakeholders and external suppliers.

3. Cross-functional experience. Today’s supply chain officer is someone who has experience across functions and who can understand and communicate with people from multiple business functions. It is important that chief supply chain officers also have some knowledge in sales, finance or technology.

4. The ability to develop new skills and train others. Today’s chief supply chain officer must stay abreast of the latest technologies, ensuring that the organization appropriately incorporates digital skills and analytical talent. One of the biggest mistakes that companies make is to implement a big data analytics project without properly preparing the organization. Establishing internal programs to ensure an adoption of skills across the supply chain is critical.

Capturing all the benefits from big data analytics across the supply chain, or throughout the organization, requires more than just technology and IT. Starting with the CEO and executive committee, the company must be prepared to support a fresh way of thinking, fostering a culture that is open to innovation and technology and willing to challenge convention about the way the supply chain is managed. With billions of connected devices across supply networks contributing real-time information on service  requirements, location and inventory allocation and even enabling anticipatory demand, executive leadership that understands and embraces the power of big data, digital disruption and the human capital aspect of these trends is critical to future-state firm advantage.

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