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Big data: driving changes in supply chain management by Karsten Horn

Karsten Horn, is director of international sales for the materials management division at supply chain optimisation specialist INFORM.

The importance of an agile supply chain
With the success of the recent Olympic Games captivating millions across the world, UK firms were faced with a mix of new challenges. Given that the UK had not held an event of similar proportion in recent years, many companies struggled to make accurate predictions on stock demand and in turn could not manage their supply chains effectively.

For any business to have a tight hold on their supply chain, the key ingredient is flexibility. Being able to adapt quickly to changing circumstances means the company must have accurate forecasts and a clear understanding of supply chain – resulting in greater precision in the prediction of demand.

However, developing a clear overview is not easy and requires masses of data from a vast array of sources. As a result, concerns are increasingly being raised over the issue of big data and the effect it can have on business, not least in the agility of the supply chain. Considering the impact big data can have on already inflexible supply chains, these concerns seem justified.

A pile up of massive amounts of data can create great difficulties in achieving a single view of data. This in turn means that businesses can find it near impossible to focus on the most important task of the day or make quick decisions. This is especially difficult considering most businesses have supply chains which stretch across the globe and encompass numerous suppliers, distribution channels and environments.

It is therefore vital that businesses keep pace with the change that big data is creating and shift their supply chain management accordingly.

Breaking down big data
Whilst the issue of big data may cause businesses great headaches, I believe there is also a potential positive – big data has the ability to drive real changes in supply chain management.

Many businesses continue to rely on legacy systems or ‘gut feeling’ to identify trends and make supply decisions. However, the build up of big data means that businesses are being forced to focus on their supply chain management and in turn are realising the immediate benefits that technology can bring.

Technology can capture data effectively and efficiently, even in vast quantities. Meaning that it can then be used to plan collectively to provide precise forecasting that assures informed decisions can be made quickly.

For example, areas across the business have their own plans that need to be taken into consideration when planning and forecasting demand; not least the plans of the management board, purchasing management, production management but also those of marketing and sales. Synchronising all plans across the company to create one valid plan provides a solid basis for all subsequent processes and planning activities, such as production planning and procurement.

When dealing with masses of data, it can be difficult to determine what information can be deemed unusable in the given context and equally pinpoint the most relevant data. Effective planning technology will identify what data is business critical so that it can be prioritised and acted upon accordingly. For instance, if a shift in demand was forecasted, an alert will ensure that remedial action is immediately taken to ensure optimal stock levels are available. Managing by exception in this way can provide business with a clear competitive advantage.

Utilising the benefits of technology for demand planning and flexible forecasting becomes even more imperative when working within environments that can change at speed or are completely unprecedented. For example, in recent years, the eruption of an Icelandic volcano and the subsequent ash cloud which left businesses struggling to ensure their supply chain remained uninterrupted. Many businesses have since put in place contingency plans in preparation in case similar events occur in the future.

Reaping the rewards of the cloud
Before successfully adopting big data into supply chain management, businesses must have suitable means of managing the information. Given the potentially vast quantities, maintaining the data effectively is vital in harvesting the full potential big data offers. Whilst conventional data storage would struggle to cope with the additional data, the cloud could be just the solution.

Research shows that UK businesses are slower to adopt the cloud than their European counterparts; UK adoption is at just 48 per cent, compared to 60 per cent in Europe . However, I firmly believe that the cloud can be an enabler for business growth by supporting companies in making fast and confident decisions, even in volatile markets.

For those working in the technology arena, a reluctance for businesses to realise the benefits of the cloud can at times be frustrating, but I believe that big data could be the driving force for many businesses to harness the potential that the cloud offers.

By means of a web-based cloud application, businesses can carry out accurate demand forecasts and planning in a fast, secure and easy manner via the internet – anytime, anywhere. By operating independently from a platform and with the ability to be used on mobile devices, cloud-based demand planning software enables company departments and management teams to view key figures regardless of the time and place.

This becomes even more important when businesses are dealing with a plethora of data, meaning that information can change rapidly. Instant access to up-to-date information can therefore be business critical.

The driving force of change
Efficient and flexible demand planning and forecasting is the lifeblood to supply chains and subsequent business success. Organisations must take advantage of the challenge that big data brings and use it as an opportunity to instigate changes in supply chain management, by ensuring processes are adapted and updated in-line with the changing environment that big data creates. I firmly believe that those businesses which incorporate effective methods to manage big data will be the ones to reap the most reward in the long term.

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