Big Data-A Boon to Supply Chain

Orhan Bazna, Sr Director of Global Supply Chain, Mondelēz International [NASDAQ:MDLZ]

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Orhan Bazna, Sr Director of Global Supply Chain, Mondelēz International [NASDAQ:MDLZ], Orhan is the Senior Director of the Global Supply Chain, Gum & Candy Category at Mondelez International. Prior to his roles at Mondelez, Orhan wor... More >>

Every time consumers make purchases they leave data behindand those are recorded on some server, somewhere in the world.We are talking about mega servers holding tons of data. All this data provides an opportunity to better understand consumers, in particular, their spending behavior.

As a professional working in a major CPG company I believe none of the business leaders would debate the importance of knowing more about market place. Some would use the expression "data is king". Do I think big data is what leaders looking for? I do not think so. My view in that big data is important but if only you know what you are looking for.

Creating meaningful insights from the big data is the key for success. That means judging the data through a series of meaningful analysis is important for decision making. However, very few professionals running the operations have a true understanding of the amount of data available and what that data can tell us. The problem lies in the limited ability for [IT professionals] mining all that data into something palatable for businesses to use. The biggest barriers are in companies that have siloed organizational structures and not having people with the right capabilities to combine both operational knowledge, and information management capability to create meaningful interpretations.

Creating meaningful insights from the big data is the key for success

Even though my focus is supply chain, I do not see big data usage in supply chain as the only way to make a step change on the financial performance of the company. Supply chain discipline, as a separate silo within the business, is important and in many cases supply chain is the core of operations but will that alone makes a big difference on a company’s financial performance?

Let’s look at the usage of big data in two buckets:

1- Better prediction of consumer pull and help driving revenues
2- Improved efficiencies throughout operations and help driving costs down

The first bucket has very little to do with the supply chain efficiency. Having more data about the consumer and creating meaningful analysis, are important for more accurate insights about what consumer wants. Can you imagine you exactly know the relationship between all factors driving demand? To help illustrate, imagine a weather forecast and major sports event in a city impacting e-commerce activity on a specific weekend in a specific area. With that level of data, you could design specific sales events and even products customized for that specific scenario.That example helps us to see a powerful way for predicting and even creating demand and increasing revenues through improved customer service. Thiswould be a great way to drive the topline of a company, but not enough for top-tier financial performance if not integrated with operational excellence.

To complete the picture, we need a view that includes operations efficiencies. Imagine if at any given moment, you could not only know your demand, but your stock on shelf, stock in your customer's warehouse, goods in transit, what is being manufactured, and whatthe production plan is. Now, imagine the ability for your suppliers to also have a similar reach on that integrated view. That will for sure be a major enabler on improved on shelf availability, reduced cost of goods from a manufacturing and logistics point of view and improved cash flow through reduced stock values.

CPG companies already see the importance of e-commerce but very few realize the revolutionary change in the market place which is beyond known e-commerce trends.

Some companies will be early adopters and complete their transition, and integrate their ways of working to e-commerce and big data. They will integrate their organizations in a way that those dynamics will work for them.

Others (and in my view majority) will take a spectator role and be a follower.

As many have stated, we are the brink of a 4th Industrial Revolution that will have us interacting and using technology in new ways. And that will translate into major changes for how business is done. That 4th Industrial Revolution will also impact the organizational structure, in particularly the role IT will play, moving beyond just being a support role. That will also mean a major shift on expectations for leadership competencies, requiring multi-disciplinary knowledge such as knowing how data is generated, sensing mechanisms, storage of data, gateways and user interfaces. Leaders with multidisciplinary experiences and especially leaders with e-commerce knowledge will be high in demand.

We will all witness this industrial revolution in terms of the way we do business and educational needs. New leaders will be introduced and will be watched and studied by the world, just like the pioneers that came before them.