Tuesday, January 28, 2014

The Importance of Visualizing Data for Inventory Control

Throughout the readings for this week we were reminded of the importance of data analytics for inventory management and controls. While companies such as Walmart have powerful inventory management software that provided automated inventory decisions most managers are unable to comprehend a giant spreadsheet . Marcus Shingles with Deloitte Consulting believes that data visualization is the missing link to effective inventory management decisions.This brings up a more subtle point about data and how it needs to be clear to the user. Companies spend millions on technology and analytics but do not focus on ensuring the results of these computations are efficiently disseminated through the organization and its suppliers.

In order to improve Safeway’s inventory management Deloitte employed the use of their Highly Immersive Visual Environment facility to improve data visualization regarding the supply chain. Safeway and PepsiCo found that improving the visualization techniques related to inventory data greatly improved performance and reduced the frequency of stock-outs. The visualization of the data helps managers and employees make important intuitive changes to prediction models. Safeway found that after employing data visualization techniques managers in some areas were able to tweak prediction models and increase their accuracy by 35%. 

Below are some examples of the types of innovative visualizations used by Safeway which include heat maps of areas with frequent stock outs.

It seems likely that smart data visualization can be used to decrease the intensity of the bullwhip effect through the supply chain since complex information is distributed in a simple fashion. This article brings up how simple technology and design can sometimes be more useful than cloud computing  and complex analytics for mitigating the bullwhip effect. Can this be a solution to the bullwhip effect in low tech supply chains such as those involving farming and mining in third world countries ?


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