We live in a digital age in which, according to Yossi Sheffi (@YossiSheffi), Director of the MIT Center for Transportation & Logistics, big data is an organization’s most valuable asset. “The well-worn adage that a company’s most valuable asset is its people needs an update,” he writes. “Today, it’s not people but data that tops the asset value list for companies.”[1] Staff writers at Gadget go even further. “With the Digital Revolution in full swing,” they write, “data is to business what oxygen is to mankind.”[2] As a result, experts have, for years, encouraged businesses to transform into digital enterprises and employ digital supply chains. Unfortunately, notes Shawn Muma (@smmuma), Director of Supply Chain Innovation and Emerging Technologies at Digital Supply Chain Institute (DSCI), too many businesses have turned their focus inward instead of outward. He explains, “For years, management experts have championed the power of globally integrating enterprises to optimize business performance and ensure global brand and operational consistency. While that has become part of the fabric of global enterprises, companies have focused on optimizing internal operations only within their four walls. But in an increasingly digital world, extending beyond enterprise boundaries from sourcing to customer engagement is now essential to achieve sustained competitive advantage.”[3]
If you are like me, you might find Muma’s insight — that companies have been focusing inward — a bit surprising. After all, supply chains or value chains are characterized by connectivity. Digitally optimizing only internal processes ignores important pieces of the value chain. As Muma observes, “Fundamentally, a digitally integrated value chain is about reimagining your business from the customer back to the beginning of the supply chain in a way that allows the business to respond to changes in customer buying behavior (or other external factors) far faster and align the supply chain with demand dynamically.” And, as the Gadget staff noted, data is the lifeblood of a digital enterprise or a digital supply chain.
Data and the Digital Supply Chain
Muma’s colleague Craig Moss, Director of Data and Change Management at DSCI, admits that digital transformation can be difficult. He writes, “Transforming to a digital supply chain isn’t easy. You need to keep running the supply chain while you transform.”[4] He also asserts that businesses must recognize that the proper use of data lies at the heart of transformation. “Companies are racing to use data,” he writes, “and develop new data models, to provide greater supply chain visibility and resiliency. But traditional data models where the supply chain function is disassociated from the customer no longer work. A customer-centric digital supply chain is needed.” He also notes, “No longer is supply chain a back-office function.” That is exactly what Lora Cecere (@lcecere), founder of Supply Chain Insights, has been arguing for years. Almost a decade ago, she wrote, “The supply chain IS Business, not a department within a business.”[5] In other words, you can’t become a digital enterprise without a digital supply chain.
If you accept Sheffi’s assertion that data is a company’s most valuable asset at face value, you might conclude that the more data you have the better. According to Moss, that’s not always true. He explains, “Too often companies think that more data is better. But companies that win aren’t the ones with the most data. The winning companies are those that correctly identify the problem to solve — the performance metric to improve. They define the right goal to achieve. The data model will put a spotlight on the missing data. Of course, this leads to the question, where are we going to get the missing data? Internally, from other departments? Externally from companies in our supply chain? The best approach is to start small. Approach departments or companies with a specific proposal identifying exactly what data you need and what you can offer. Sophistication in the acquisition and utilization of new data is a competitive advantage.”
One of the first things Enterra Solutions® does when we engage with a new client (or begin a new project), is to help them identify the data needed to achieve desired goals. As Moss notes, “The gap between [enterprises] that are good and those that are not will quickly widen as the strategic use of algorithms, Artificial Intelligence (AI) and Machine Learning (ML) grows, and as companies evolve to more data-driven decision-making.” And, as Bain analysts, Michael C. Mankins and Lori Sherer (@lorisherer), explain, “The best way to understand any company’s operations is to view them as a series of decisions.”[6]
They add, “People in organizations make thousands of decisions every day. The decisions range from big, one-off strategic choices (such as where to locate the next multibillion-dollar plant) to everyday frontline decisions that add up to a lot of value over time (such as whether to suggest another purchase to a customer). In between those extremes are all the decisions that marketers, finance people, operations specialists and so on must make as they carry out their jobs week in and week out.” Commonsense tells us that companies making the best decisions on a consistent basis perform better than their competitors. And Mankins and Sherer insist they have the data that backs that up. They report, “We know from extensive research that decisions matter — a lot. Companies that make better decisions, make them faster and execute them more effectively than rivals nearly always turn in better financial performance. Not surprisingly, companies that employ advanced analytics to improve decision making and execution have the results to show for it.” That’s why Enterra® is focusing on the advancement of Autonomous Decision Science™ (ADS™).
Concluding Thoughts
Anyone who follows the news is well aware of the challenges currently facing supply chains. Although there are no silver bullet solutions to those challenges, enterprises well into their digital transformation journey are finding themselves better equipped to deal with them. Clayton Nicholas (@ClayJNicholas), Founder and CEO of Vibronyx Inc., explains, “Data may not be considered a revolutionary concept, but today, it is considered a fundamental component of digital transformation. Data is the key to achieving breakthroughs in supply chain management that the industry once considered impossible. … Organizations must invest in effective data analytics to mine data for valuable, proactive insights and accelerate intelligent decision-making.”[7] And business writer Bob Violino (@BobViolino) adds, “Supply chain woes continue to plague organizations around the world and in virtually all sectors. For some, leveraging data and analytics tools is proving to be an effective way to address the challenges. … Technology can’t resolve every supply chain issue. Goods need to be produced and moved from point to point. But the latest analytics tools, powered by machine learning algorithms, can help companies predict demand more effectively, enabling them to adjust production and shipping operations.”[8]
Although much of the attention given to digital transformation focuses on technology, a more holistic approach is required. Nicholas explains, “Data-based decisions require a fundamental change in how supply chain organizations think about data. Implementing data analytics is not solely a matter of tacking on new technologies, but rather a series of digital initiatives to capture the full value of data analytics and intelligence.” Tricia Wang (@triciawang), a self-described Tech Ethnographer & Sociologist, adds, “‘Digital transformation’ at its best [is] a total paradigm shift in the culture and operations — it’s not just about buying the latest digital tool, but about creating a new system, new cadence, new mindset.”[9] Transformation (or change) is never easy. That’s why it requires a champion to see it through. CEOs and supply chain professionals should become those champions.
Footnotes
[1] Yossi Sheffi, “What is a Company’s Most Valuable Asset? Not People,” LinkedIn, 19 December 2018.
[2] Staff, “Big data is oxygen to business,” Gadget, 4 October 2019.
[3] Shawn Muma, “In a Digitally Integrated Value Chain, Data is Power and Competitive Advantage,” Supply Chain Management Review, 3 January 2022.
[4] Craig Moss, “The Digital Supply Chain Runs on Data,” Supply Chain Management Review, 4 January 2022.
[5] Lora Cecere, “Sage advice? Only for turkeys.” eft, 1 February 2013.
[6] Michael C. Mankins and Lori Sherer, “Creating value through advanced analytics,” Bain Brief, 11 February 2015.
[7] Clayton Nicholas, “Transforming The Supply Chain With Data Analytics And Intelligence,” Forbes, 14 March 2022.
[8] Bob Violino, “Supply chain woes? Analytics may be the answer,” CIO, 5 April 2022.
[9] Trevor Miles, “Let’s be clear: Digitization is not the same as Digital Transformation,” Kinaxis Blog, 8 December 2017.
