Monday, February 24, 2014

The value of Big Data

Big Data is a really a hot topic today. Different people has different views on how to use the big data. We are more interested in how supply chain management intersects with big data [1]. For instance, Tesco is able to benefit from supply chain analytics to save £100 million [2].

Tesco needs to answer questions like how much inventory to maintain and storage space to allocate for each product and when Tesco should order the inventories from manufactures and how much.

Tesco has developed an analytics model that uses weather patterns to decide what to put on its stock store shelves. By studying its historical transaction data and predicting future temperature trends, Tesco is able to accurately assess what consumers want in a specific area and then prepare its inventories accordingly. For example, if warm weather is expected to come to an area after a particularly brutal cold spell, Tesco would ensure that surrounding stores are well stocked with more barbecue meats and less cat litter. The program is even powerful enough to detect local habits and adjust its stock levels based on the weather forecast, so its stores do not run out of the goods people want [3].

Another data analysis implementation is discounts and promotions. Tesco has over a thousand of promotions every day and Tesco is able to predict how popular these sales promotions will be in make it has enough - but not too much - stock to meet demand. The data analysis has revealed some interesting insights. For example, a "buy one, get one free" offer works better than a 50% discount for non-perishable goods, such as cooking sauces, but the reverse is true for fruit and vegetables [4].

By implanting the big data techniques, Tesco is able to reduce its inventory costs, increase its sales revenue and even increase its customer satisfaction. However, these techniques sometimes will take some personal data into the model. People are really concern about their privacies, when facing national security or government surveillance.  Are people willing to sell their privacy for daily commodities?


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