Six ways big data will revamp supply chains
Big data is bringing big changes to the way that supply chains and warehouses operate.
As more data is captured, digested and shared, the way supply chains – and warehouses – are managed is being improved.
Becoming more efficient when moving and storing stock is the end goal. A more accurate and timely picture of demand could speed up delivery times and cut the amount of inventory being held.
“Big data has the potential to substantially improve the transparency of supply chains and, by doing so, make them more efficient and reduce costs” says Jon Sleeman, Head of EMEA Industrial & Logistics Research at JLL. And while inventory won’t be eliminated from supply chains due to supply lead times generally being longer than demand lead times and goods coming from different locations, big data could enable significant reductions in inventory.
Here are six likely benefits of big data as its impact starts to be felt across supply chains.
- Enhancing predictions and planning
What do customers want and when? Being able to predict the demand of shoppers can make supply chains and warehousing more proactive. Greater use of consumer spending data through algorithms should make supply chains more nimble and reactive.
“Major events in the year, such as Black Friday or Cyber Monday, can alter requirements of companies greatly – and at certain times of the year, retailers need additional capacity,” says Sleeman. “Being able to get a greater overview of demand is a major plus-point. More data means more responsive supply chains and less leftover stock.”
- Keeping a closer eye on goods
Technological advancements mean it’s now easier to track and trace products than ever before. But big data, says Sleeman, can help to improve transparency further.
“Track and trace systems are already in place for consumers and for companies where this is best practice,” says Sleeman. “But it doesn’t necessarily mean it disseminates into the wider business world.
“The Internet of Things could provide the next generation of track and trace,” he says. “That will create more certainty along the entire supply chain.”
- Getting more from distribution networks
Many businesses only review their distribution networks on an infrequent basis, often using incomplete data sets and with limited insights on developing trends. This is where big data could prove useful.
“Businesses looking to optimise their existing operations can use data to good effect,” says Sleeman. “But it’s also vital for those looking to grow or to change approach.”
Big data can inform businesses on potential future demand trends, helping them to identify the right size and location of warehouse. “Businesses can more efficiently assess if 50,000 square metres on the edge of town is enough – or indeed unnecessary,” says Sleeman.
- Delivering goods more efficiently
The growth of e-commerce has meant that more packages leave warehouses than enter them; one box of gadgets from a wholesaler could go on to 10 or more separate addresses. Being able to improve scheduling and routing of deliveries is a potential cost cutter, says Sleeman, especially when it involves multiple drops.
“Using data to improve efficiency is particularly important for warehouses based in the final or last-mile of delivery,” he says. “Keeping delivery vans moving is more likely when you can get a grip of real-time traffic information.” Online grocery firm Ocado, for example, has routing software which uses big data to create a real-time optimisation algorithm.
- Reducing risk from the elements
Big data can help lessen supply chain risk from external factors – such as the weather.
“With more extreme weather events, the supply chain, for a grocery retailer or original equipment manufacturer for example, can be hugely disrupted,” says Sleeman. “Mitigating that risk has become more important for warehouse occupiers,” says Sleeman – pointing to Japan’s tsunami and Thailand’s floods in 2011. “Such events can massively disrupt the supply chain.”
Sleeman says companies with global supply chains are increasingly using big data to monitor not just the weather, but – through news feeds – potential industrial action within the workplace.
- Creating smart warehouses
Another way to improve efficiency and cut costs is within the walls of the warehouse itself. More connectivity – for example through new 3D digital tools – can boost the efficiency of operations inside, as well as energy performance.
“It may not work for all, but there are certainly operational and financial benefits on offer for those who can successfully run a smart warehouse where data is transmitted to decision-makers,” says Sleeman.
Evolution not revolution
More data is always welcome, says Sleeman. But how to digest and use it will take time, meaning the warehousing world will change at varying speeds.
“How big data informs decisions will vary greatly from business to business,” he says. “However, longer term, big data and the advanced analytical processing capabilities that enable insights to be derived from this data, will drive significant changes in supply chains and the role and operation of warehouses.”
Radical change could, he says come when warehouses are “truly smart and can practically run themselves. We’re for now some way from that – but there’s huge potential.”