There's a lot of buzz these days about big data. But big data just for the sake of being big has little to offer supply chain. A spreadsheet with a million rows is no more or less insightful than one with ten rows. It depends on what is in the data and what tools we have to analyze the data. The tools and skill set component is a critical one. In fact, I think that big data can sometimes paralyze overwhelmed and understaffed supply chain departments.
Check out the results of a recent survey we did. The top pain for all respondents was the ability to get to data. Does more data make that task any easier? I would argue no. In some instances it is probably true that data doesn’t exist. In others, data exists and it is the task of slogging through it to find meaning that is the challenge.
At Supply Chain Insights, we have spent more than two years buried in financial data trying to understand the relationship between supply chain performance and financial performance. There is a large quantity of both. The challenge is finding meaningful relationships and actionable insights from the data.
This is a journey without a clear end and a math problem without a single solution. For me, coming from school, I spent a long time looking for the single answer. I am slowly coming around to accept that there is not a single answer. Why does the Index model depend so heavily on inventory turns and operating margin? It’s a good question. Those metrics are some of the most meaningful for supply chain leaders, they are objective and they are harder to game than other metrics. Would gross margin be better? Or days of inventory? Or something else entirely? Maybe. This is wholeheartedly a journey without a clear destination. The further we go, the more we discover and the better we are at asking important questions. I think what I’m trying to say is that more data doesn’t solve your problems. In fact, if you’re using it right, it probably just forces you to ask better questions.