Why You Must Build Your Supply Chain System on a Solid Foundation of Data
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Data is at the forefront of every consideration for organizations in the modern era, with significant importance for procurement and supply chain systems. Yet, in a world replete with various technological solutions, it must still be remembered that without a strong data foundation, even the most advanced systems will falter.
Since the turn of the decade, an ever-increasing number of organizations are realizing the need to be agile, efficient and adaptable in the face of uncertainty. This is especially relevant for supply chain management, where failure to achieve these qualities can threaten the viability of the business.
The route to achieving this?
Building your supply chain on a solid foundation of data, including all aspects of supplier data.
The dangers of not utilizing data effectively in the supply chain
Organizations that disregard the importance of holistic supplier data inevitably face a wide array of challenges. It can cause internal processes and operations to not function, lead to a loss of reputation within the market, and result in lost business opportunities.
Increased costs
When there is disruption in the supply chain, it can occur at a global level, such as health crises, major route disruptions or resource shortages; it may occur at country level such as political events and war; or it may be at a hyperlocal level, such as a fire or flooding event. It could involve a physical or a digital disruption, such as a cybersecurity incident. Depending on the type of event, it will involve communicating and collaborating with different groups of suppliers throughout the supply chain, who will either be directly involved or, in other cases, impacted in different ways.
However, if supplier data is not accurate, up-to-date and accessible, this can involve massive manual labor. There is the cost and time impact of having to extract the data, check the data, correct the data where needed and make it available for distribution, which all needs to take place with utmost urgency in this type of scenario.
Without the ability to segment suppliers at a granular level, for example, by location and type, the lists of suppliers that need to be contacted for various different messages needs to be compiled manually on an ad-hoc basis. This adds further cost and delay. It means that communications cannot be targeted and subsequent follow-ups are also therefore subject to inefficiency.
Loss of market reputation
End customers’ expectations are based on both product quality and receiving goods in a timely and reliable fashion.
When there are kinks in the supply chain, even occasionally, this can lead to customer dissatisfaction, impacting the organization’s reputation and even leading to the customer opting to purchase from a competitor in the future. Without highly precise, efficient communications and collaboration with suppliers, unforeseen delays can become commonplace. For those working in just-in-time operations, these delays then have serious repercussions.
Not only does a lack of supplier data impact logistics, but a lack of coherent communications can also lead to product quality issues slipping through the net or not being followed up upon correctly, leading to sub-par products, potential recalls and further customer dissatisfaction.
Every error within the supply chain, no matter the size or the underlying reason, erodes the trust customers place in a business. Over time, this translates into diminished customer loyalty and brand equity.
Lost opportunities
Markets have become increasingly volatile and accurately anticipating customer demand has never been so important. Organizations that have access to strong supplier data benefit from being able to initiate more frequent targeted interactions and can refine their predictions and align their strategies more appropriately.
Accurate supplier data and improved engagement with the right suppliers at the right time, mean that supplier-led problem resolution and innovation is more readily facilitated, reducing the risk of these otherwise lost opportunities.
Using data to gain a competitor advantage
Organizations that effectively use supplier data can gain more accurate foresight into supply chain strategies and execute them with precision. Embedding supplier data into your organization’s supply chain processes not only empowers the business to overcome challenges but also provides your organization with a solid competitive advantage.
Enhanced operations
Inefficiencies in many supply chains can often be challenging to pinpoint and identify; this is especially true for organizations not utilizing data. Over time, these inefficiencies in supplier data can grow from minor problems into issues that severely impact the supply chain and cause significant delays.
Investing in supplier data means that organizations can identify any issues in the supply chain sooner and plan for their resolution.
This allows organizations to be proactive in problem-solving, instead of reactively addressing issues with the supply chain as they arise. This ensures that problems can be addressed before they evolve into more extensive operational disruptions. The sum of these data-driven insights and proactive measures leads to a leaner and more efficient supply chain, leading to reduced costs and increased profitability.
Enhanced customer experience
As discussed earlier, customers now have higher expectations than ever when it comes to delivery timelines and updates on the progress of their delivery. With accurate supplier data being used to drive better communication, delivery timelines are no longer hopeful estimates, but will be underpinned by two-way information exchange.
When combined with other supply chain data, collaboration during the execution of processes is improved, meaning issues can be mitigated earlier. It leads to fewer delays for customers, and thus is a contributory factor in increasing brand loyalty through much improved customer experiences.
Strategic evolution
Data ensures that organizations can identify discernible patterns and market trends, emerging demands and potential disruption with greater clarity. Insights into external factors, including geopolitical developments, environmental changes and regulatory updates, allow organizations to react quickly in areas related to sourcing, production and distribution.
This ability to remain agile is a hallmark of success. Organizations that harness data and that can act upon this information are prepared for supply chain shifts and are able to communicate necessary adjustments, while ensuring they are fully aligned with the market’s current needs and future direction.
Creating a data-centric supply chain
Moving to, or further strengthening, a data-centric supply chain requires strategic vision and tactical know-how.
Utilizing supplier management software & tools
Supply chain management software is not just a repository of data but an analytics powerhouse. Organizations prioritizing fully customizable supplier management software means the supply chain is empowered with the required insights, prediction and optimization recommendations to drive business success.
Focus on data quality
The value of an organization’s data is directly linked to its integrity, coherence and timeliness. Organizations must ensure that supplier data is accurate (free from errors), consistent (in format and measure) and up-to-date. Supplier data must be free from duplicates and outdated entries. This not only ensures that decision-making is accurate but also ensures that systems and processes are efficient.
Advocate data synergy
Silos are common when it comes to supplier data, but this can harm performance. Ensure there is advocacy for an ecosystem that allows data to flow seamlessly to and from suppliers, enabling comprehensive overviews and insights. Supply chain software that allows all parties to collaborate should also be a priority. This ensures that every stakeholder in the supply chain can have access to relevant data and actions can be synchronized.
Prioritize data security
Data is a valuable asset and its protection is paramount. Correct governance mechanisms must be in place, while vulnerabilities must be proactively identified and rectified.
While organizations should aim to ensure that data is as accessible as possible, at the same time not every piece of data should be available to the entire organization. Stringent access controls must be in place to ensure stakeholders can only access data relevant to their roles and responsibilities.
Supply chain management is becoming increasingly competitive and data should not be seen as an accessory. It is central to an organization’s success. Organizations benefit from short- and long-term success by designing and implementing supply chain systems focused on data and supported by solid supplier data. Every procurement professional should avoid viewing data as just another tool but as the cornerstone of modern-day supply chain excellence.
Article updated September 24
