Supply chain operations create an immense amount of data. Information is captured every time a product is worked-on, processed around in a plant, stored, transported or delivered. A lot of these data are now captured in the digital forms which can be easily gathered, mapped and managed to provide profitable information. However, in reality, most of these data lie unused in different organizational, functional or technological silos adding little real values. Adding further to the challenge is the fact that most often data is not generated where it’s needed the most but in some other companies along the supply chain.
Barriers & Opportunities:
Data sharing among supply chain companies have been traditionally low, often due to cultural and technological barriers. Now, with the advancement in digital technologies, it’s far more easies to bring data from diverse sources to one point for meaningful applications. A workable option could be to create a data depository in the network or cloud, which could be accessed anytime by a legitimate user. The generating company can link or copy their operational data, as in the form it’s generated, in a data lake which can be accessed and meaningfully utilized using any of the Data as Service (Daas) platforms. The cost for such hosting could be insignificant compared to the values it can create. As an example, an OEM supplier can host the real-time production data in the cloud with appropriate partition and rights, which can then be accessed by the respective OEMs/ clients after passing through the security walls. Similarly, OEM can share their order status with the suppliers eliminating shocks and surprises from a usual order management process. Imagine the kind of planning or financial values that such an arrangement would create for both the suppliers and the buyers. In fact, it can lead to creating a buzzing hub of data platforms linking companies and its various partners not only eliminating the cost of information asymmetry but also building valuable partnerships across the supply chain.
Value Creation:
There can be many usages of such an integrated approach. Inventory planning comes top of the mind as one of the most obvious beneficiaries. Thus, phenomenon, such as bull-whip, arising due to data opaqueness can be eliminated effectively with ease by such data integration. We can also add a few unconventional opportunities from the logistics industry. Let’s take an example of a big-box warehouse, which generally has a significant level of technology applications generating tons of data at any time. Most often, these data are rarely used beyond the operations and calculating standard matrices. But, let’s consider the GPS or picking data dump from the handheld terminals. From this, one can analyze the path taken by the pickers bringing valuable insights for streamlining the layout, picking and storage processes of the warehouse. Equally importantly, won’t such as exercise create a valuable partnership with the client adding value to both the client and the warehouse operator.
Another example could be invoice generation by a 3PL company for transport services. A typical invoicing cycle could take anywhere from 30 to 45 days. In a normal payment process, freight bills must be backed-up by the proof of deliveries (PODs) for the release of payments. However, the collection and collation of PODs delay the billing and payment cycles. Today, real-time delivery tracking is not unusual. Thus, all delivery data including PODs can easily be made available to the consignee in real-time. With such transparency and the right data quality, it would be possible to start a weekly or even a bi-weekly invoicing cycle. Even simple applications such as this can have a far-reaching impact. Such as, in this case, reducing the invoicing cycle from 45 days to 7 days can have an immense impact on the working capital management of the freight company and thus on its profitability. Similarly, with quality assured real-time delivery-data, the supplier can boost its service quotient tremendously with its clients.
Making an Impact:
Besides efficiency and cost improvements, the data-sharing platform can bring immense relationship values between companies involved improving trust and partnership. This could be a great differentiating opportunity for a logistics or 3PL company, or in fact for any supplier company in a normal supply chain. If you as a reader want to explore any such opportunity in your organization or your larger supply chain situation, then please feel free to contact us using the links provided below.