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SCDigest Expert Insight: Supply Chain by Design

About the Author

Dr. Michael Watson, one of the industry’s foremost experts on supply chain network design and advanced analytics, is a columnist and subject matter expert (SME) for Supply Chain Digest.

Dr. Watson, of Northwestern University, was the lead author of the just released book Supply Chain Network Design, co-authored with Sara Lewis, Peter Cacioppi, and Jay Jayaraman, all of IBM. (See Supply Chain Network Design – the Book.)

Prior to his current role at Northwestern, Watson was a key manager in IBM's network optimization group. In addition to his roles at IBM and now at Northwestern, Watson is director of The Optimization and Analytics Group.

By Dr. Michael Watson

May 26, 2015



Caesars Entertainment's Customer Data is Worth $1B - How Much is Your Supply Chain Data Worth?

Part of the Big Data Movement is the Realization that the Data you Collect can be Valuable; are you Doing Enough to get that Value from your Supply Chain Data?


Dr. Watson Says:

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...the supply chain is a source of a lot of potentially valuable data...
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A few months back, the Wall Street Journal reported that Ceasar’s “big-data customer loyalty program” was valued at $1B.  This highlighted again the idea that data is becoming an ever more valuable asset. 

A good book, Big Data, discusses how firms are realizing that that the data they are collecting may have value outside of the reason they collected. 

For example, it is well known that Google collects data on the flu.  This obviously helps them sell more ads during the search.  It also leads them to do interesting studies where they can track outbreaks.  With this information, an article pointed out how Google could sell this information to Clorox so they could send more Clorox Wipes to areas where the flu was about to hit.


Previous Columns by Dr. Watson

Supply Chain by Design: How You Should be Using Multi-Echelon Inventory Tools

Supply Chain by Design: You Don't Need the Optimization in Multi-Echelon Inventory Optimization

Supply Chain by Design: On Network Modeling - Blaspheming the Baseline

Supply Chain by Design: Profit Maximization Feature and Amazon’s Focus on Lead Time to Grow Revenue

Supply Chain by Design: Using Profit Maximization to Minimize Cost

More

In another example, farmers realized that the data that seed and tractor companies were collecting to help them improve yields (which it does) could have much more value in predicting the size of the harvest and possibly the future price of crops.  This is why farmers are very interested in making sure they own that data.

Although supply chain data might not be worth $1B, supply chain managers should make sure they are maximizing the value from the data they are collecting or could easily collect.  Here are some questions to ask to see if you are maximizing the value of your data:

 

1.

For the data that you do use, is it organized and clean so you can quickly test new ideas and solve problems?  Often we see firms wasting valuable time collecting, cleaning, and organzing data that they already have. 

2.

Are you collecting valueable data that you don’t even use?  For example, are you monitoring your facilities, machines, and trucks, but not doing anything with the data?  Are you using your detailed ship-to information to spot trends, predict orders, and predict when your carriers may reject your loads? 

3.

Is there data you could be collecting that would add new insights?  For example, are you collecting external data that could help you better predict order patterns—things like weather, events, demographic and economic data, customer sentiment, or even the types of products that you and your competitors feature in advertisements? 


Final Thoughts

One of the lessons we are seeing coming out of the sometimes over-hyped Big Data movement is that companies should treat their data as an important asset. And, the supply chain is a source of a lot of potentially valuable data.

Let me know your thoughts at the Feedback section below.
 

Recent Feedback

Very interesting. I think collecting data but not using it for strategic or tactical planning is something which a lot of companies do and they can stop doing it 'now'!  


Kumar Rahul
Senior Consultant
Infosys Ltd
Jun, 04 2015
 
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