Wednesday, February 19, 2014

The technology revolution - a glimpse of the future of supply chain operations

The Economist article,, discusses the increasing availability of data, and consequentially, the accelerating shift towards decision-making based on data and analytics rather than on personal choice (human intellect/knowledge). As a MISM - analytics track major, I find this article particularly interesting because it speaks to what my field of study is able to achieve. It provides examples of how companies in diverse fields are using modern technology to collect more data, and make forecasts that lead not just to demonstrably better decisions, but to a fundamentally transformed operations process.

What I find remarkable is the often-discussed gap between the decision-making process that most people--even in management positions--are accustomed to, and what technology is able to achieve. This gap speaks to a very clear lag between the technology revolution and the skills of people living today. In the work space, although many of us are superficial users of technology, few are able to understand and creatively leverage data.

Similarities can be drawn to other production and work process transformation periods in history, such as the industrial revolution. In the beginning of a transformation period, the labour population is largely untrained in the terms of the new production process. I expect it will take several generations before the working population shifts from consuming or using technology to developing a deeper understanding that empowers decision-making.

This lag is relevant to supply chain operations because it shows that likely, many companies and managers have not caught up to the technology and data revolution. As we consider the trend-setting examples of data-intensive companies, we need to realize that these companies represent a minority. When the data revolution becomes more pervasive, we will see enormous changes in the customary business process.

For instance: one aspect of "big data" is continuous data collection, or the ability to continuously monitor--in real-time--a variable, be it a patient's blood pressure or the sales of a particular product. This translates to the ability to make decisions rapidly and continuously--to change operations in real time, to become as flexible and responsive as the rest of your supply chain permits, and to perceive trends (or changes in trends) faster.

Contrast the phenomenon of live information flow (above) with the more traditional connection between data and decision-making, in which a) The data collection process is periodic, and/or b) Data analysis is performed on historical data. In either "traditional" scenario, new decisions are made with less frequency, and the perception of trends is slower.

Looking at examples of how live information tracking can transform operations, we see that supply chain operations might become entirely altered in the future. For instance, Walmart allows its suppliers to see--in live time--the quantities of their products in stock at all of Walmart's stores. Due to this transparency, Walmart is able to allocate to its suppliers the decision of supplying how many and which products to which of Walmart locations at what times. The role of information systems and big data in this example is transformational: it allows a company to essentially "work less" -- to pass the decision-making process on to its suppliers, and to do so in a manner that increases efficiency and reduces the impact of communication time lag or communication error.

Walmart's use of big data provides a glimpse of its potential. Remind yourself, however, of the idiom: you are only as strong as your weakest link. Information is only as transformative as the managers who use it.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.