The Missing Data Ingredient To Manage Inevitable Supply Chain Disruptions

Given that supply chains tend to be seen as a cost center for modern business, some might argue that technology investments weren’t a priority for the supply chain prior to the pandemic.

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Untangling the web of global supply chains has been a focus for many companies in the last two years due to the pandemic. However, with the multitude of factors that impact businesses today — natural disasters, trucker strikes, The Great Resignation, chip shortages, geopolitical issues – there really is no end in sight. Recent reports by White House economists concluded that “the pandemic exposed vulnerabilities in the supply chain, it didn’t create them.”

As with all technological curves, there are some industries that are traditionally slower to adapt. Given that supply chains tend to be seen as a cost center for modern business, some might argue that technology investments weren’t a priority for the supply chain prior to the pandemic. I think we can all agree that the past two years have been more challenging than most, creating the continuous game of catch up that many companies are grappling with now to digitize their supply chains and lead with data.

What we now know as supply chain ‘disruptions’ will be supply chain ‘business as usual’ long after the pandemic wanes. In fact, McKinsey estimates that significant disruptions to production now occur every 3.7 years, on average, so it’s not as “black swan” as it seems. It’s why I believe one of the most critical elements that a business can leverage today to better prepare for tomorrow is end-to-end visibility of data as real-world events happen. This full spectrum of data will be the holy grail for companies to build their supply chain muscle and long-term endurance. Let’s examine what end-to-end data visibility in the supply chain looks like and how it can affect business.

The supply chain’s data (r)evolution

As businesses seek to address vulnerability in their supply chain and become more resilient long-term, there have been tried and true ways to successfully approach this puzzle. Many companies have long modeled or built forecasts based on past data – what a customer bought, key peak times of the year, or even how weather patterns impacted demand. When things don’t go as planned though, past data is not nearly as effective in providing businesses with insights to make accurate or actionable decisions as real-time data. There is no greater example than how the pandemic turned this type of planning on its head. Discretionary items like seasonal spring wear fell by the wayside (literally and figuratively) in favor of items like toilet paper, masks and hand sanitizer.

With this painful realization, the rise in real-time data analytics as part of the forecasting process came into sharp focus. Business shifted from taking a passive approach to data and focused instead on technology enhancements that would give them active intelligence to make real-time decisions. Some companies, like Amazon, had already been making investments in technology to ensure these types of capabilities were built into their business model. This is evident by the Amazon Prime two-day shipping program that they introduced in 2005 which slowly became the norm in the retail industry. And now, with the pandemic as the accelerant, one-day, same-day and even two-hour shipping is an expectation.

With more businesses filling their supply chain data pipeline with past data and working to update their technology to capture real-time insights, one key element that I often see missing is third-party data. Paired with internal findings, third-party data gives businesses a deeper and more full spectrum understanding of the forces that impact their supply chain. It is also a key ingredient in helping businesses see the next waves of disruption coming to be able to take earlier action and mitigate consumer impacts.

Gaining access to third-party data can be challenging, especially with a global supply chain, as it requires suppliers to share the data they capture. And depending on the type of industry, this can mean hundreds to thousands of suppliers – on average, for example, an auto manufacturer has around 250 tier-one suppliers. One way to at least start the conversation and begin feeding your data set with vendor data is to spell out your data requirements in all third-party contracts from the beginning. This will at least provide a baseline for your expectation and ensure that partners understand what data needs to be captured and shared on their end. It’s not a process that happens overnight, but when it does kick in, absolute magic can happen.

Data-sharing success

I’ve seen the success of data sharing firsthand in Qlik’s involvement with COP26, the United Nations Climate Change Conference (UNFCCC), particularly with the creation of the Negotiations Status Snapshot (NESS). Utilizing Qlik Cloud, UNFCCC staff were given open visibility into the development of negotiations throughout the sessions, tracking progress on different key issues with visualizations that showed the relative positions of countries or groups of countries. This open access to data in real-time led to the creation of positive social capital and fostered a collective sense of unity around combatting significant challenges of our time.

A similar approach is necessary to bring about actionable steps that will drive positive change in improving the global supply chain. The outcomes will benefit all of us, and it starts with examining your organization’s existing data sharing technology and capacity. This requires a synthesis of massive amounts of information and analysis across various sources in real time. And this is just on the back end. On the front end, it needs to then be shared through a common analytics experience embedded into your workflow. This ensures that your decision makers are all reviewing and reacting to the same insights and analysis and forming conclusions with a controlled variable.

Go forth and get that third-party data

In many ways, the pandemic shined a light on the multitude of challenges that existed within our global supply chains, and in doing so, gave us a better understanding of the opportunity in front of us to improve. Organizations can build up their long-term endurance knowing that there is no looking back as the forces that impact the supply chain will always be here. Digitization of the supply chain and embracing all facets of data, including coupling internal data with third-party data, will help businesses gain a full spectrum understanding of impacts to the supply chain. This allows the business to make the most informed, real-time decisions to navigate each storm and succeed long-term.