Big Data Technology: Impact on supply chains

Sources

https://www.supplychaindive.com/news/what-Big-Data-supply-chain-application-primer/435865/

https://www.mckinsey.com/business-functions/operations/our-insights/big-data-and-the-supply-chain-the-big-supply-chain-analytics-landscape-part-1

 

What is Big Data

Big Data as a concept requires three distinct layers before application: more data, processing systems, and analytics. If Big Data only recently entered the supply chain management spotlight, then, it may be because the technology only recently reached the last layer to deliver insights.

Information processing

Businesses are no stranger to data; supply chain managers have been producing reports, tracking trends and forecasting for decades. So when data exploded to become Big Data, companies were quick to rise to the challenge of collecting it for future use.

“What the CIOs and IT organizations were asked to do, early part of this decade – probably even the latter half of the last decade – was ‘hey there’s a lot of value in data, let’s actually keep on collecting data,’” Suresh Acharya, Head of JDA Labs told Supply Chain Dive.

But even if a pedometer generates bits and bytes each second, the information created remains unpalatable unless it is stored with previous data to be analyzed over time.

Therein came the need for information processing systems more powerful than spreadsheets.  Many of these are now known by their three letter acronyms (e.g. ERP, CRM, TMS or WMS), but their purpose is similar: to store, collect and simplify information for the average user. Such processors became so ubiquitous, it is now common for a company to boast nine or ten distinct systems supporting supply chain management in a single plant.

Insight and decision-making: The next frontier

There’s a new wave of data processors on the market promising to reap the benefits of Big Data for supply chains.

Supply chain solutions companies often offer to integrate the various systems from the previous generation, allowing companies to visualize data sets at each corporate level for the increased granularity and analytical capacity desired from Big Data.

Yet, Big Data is not only the ability to process more information, but the ability to innovate, automate and use data for enhanced decision-making. The toolkit is meant to be applied, not simply possessed.

A look back at our pedometer example may help illustrate the difference between having a software solution and actively unpacking Big Data. At first, the pedometer could only track information – making it a data generator. If connected to the Cloud and transmitting to a data processor, the device could be considered as helping to generate Big Data. But it was never a Big Data device because it never actively helped a user make decisions.

Meanwhile, the Fitbit – which tracks steps, heart rates and other biometrics – can analyze and apply the data it collects to guide the wearer to better health habits; for example, it alerts the user when they have been sitting too long and reminds them to go take a walk.

 

 

Big Data applications in supply chain

Manufacturing

Big data and analytics can already help improve manufacturing. For example, energy-intensive production runs can be scheduled to take advantage of fluctuating electricity prices. Data on manufacturing parameters, like the forces used in assembly operations or dimensional differences between parts, can be archived and analyzed to support the root-cause analysis of defects, even if they occur years later. Agricultural seed processors and manufacturers analyze the quality of their products with different types of cameras in real-time to get the quality assessments for each individual seed.

The Internet of Things, with its networks of cameras and sensors on millions of devices, may enable other manufacturing opportunities in the future. Ultimately, live information on a machine’s condition could trigger production of a 3D-printed spare part that is then shipped by a drone to the plant to meet an engineer, who may use augmented reality glasses for guidance while replacing the part.

Warehousing

Logistics has traditionally been very cost-focused, and companies have happily invested in technologies that provide competitive advantage. Warehousing in particular has seen many advances using available ERP data. One example are “chaotic” storage approaches that enable the efficient use of warehouse space and minimize travel distances for personnel. Another are high-rack bay warehouses that can automatically reshuffle pallets at night to optimize schedules for the next day. Companies can track the performance of pickers in different picking areas to optimize future staff allocation.

New technologies, data sources and analytical techniques are also creating new opportunities in warehousing. A leading forklift provider is looking into how the forklift truck can act as a big data hub that collects all sorts of data in real time, which can then be blended with ERP and Warehouse Management System (WMS) data to identify additional waste in the warehouse process. For example, the analysis of video images collected by automated guided vehicles, along with sensor inputs including temperature, shelf weight, and the weight on the forklift, can be used to monitor picking accuracy, warehouse productivity and inventory accuracy in real time. Similarly forklift driving behavior and route choices can be assessed and dynamically optimized to drive picking productivity. The data can also be used to conduct root-cause analysis of picking errors by shape, color, or weight, to help to make processes more robust.

New 3D modelling technologies can also help to optimize warehouse design and simulate new configurations of existing warehouse space to further improve storage efficiency and picking productivity. German company Logivations, for example, offers a cloud-based 3D warehouse layout planning and optimization tool.

Transportation

Truck companies already make use of analytics to improve their operations. For example, they use fuel consumption analytics to improve driving efficiency; and they use GPS technologies to reduce waiting times by allocating warehouse bays in real time.

Courier companies have started real-time routing of deliveries to customers based on their truck’s geo-location and traffic data. UPS, for example has spent ten years developing its On-Road Integrated Optimization and Navigation system (Orion) to optimize the 55,000 routes in the network. The company’s CEO David Abney says the new system will save the company $300 million to $400 million a year3.

Big analytics will also enable logistics providers to deliver parcels with fewer delivery attempts, by allowing them to mine their data to predict when a particular customer is more likely to be at home. On a more strategic basis, companies can cut costs and carbon emissions by selecting the right transport modes. A major CPG player is investing in analytics that will help it to understand when goods need be shipped rapidly by truck or when there is time for slower barge or train delivery.

Point of Sale

Brick and mortar retailers—often under heavy pressure from online competitors that have mastered analytics—have understood how data driven optimization can provide them with competitive advantages. These techniques are being used today for activities like shelf-space optimization and mark-down pricing. Advanced analytics can also help retailers decide which products to put in high value locations, like aisle ends, and how long to keep them there. It can also enable them to explore the sales benefits achieved by clustering related products together.

Search engine giant Google has acquired Skybox, a provider of high resolution satellite imagery, that can be used to track cars in the car park in order to anticipate in-store demand. Others have explored the use of drones equipped with cameras to monitor on-shelf inventory levels.

Questions:

Q) What role can Big Data play in the optimization of Supply Chains across industries?

Q) What are the cost implications in companies leveraging big data to organize their supply chains?

Q) How is Big data different from data analytics?

 

 

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