Big Data Molds A New Supply Chain Business Model

Every day, supply chains manage a flow of freight, goods and products, at each step generating massive amounts of information. As more and more companies embrace the Internet of Things (IoT) data sets only grow larger. Millions of items are now issuing real-time reports—from their size and weight to their location and status. The potential to extract value from existing data is huge and has yet to be fully explored. Finding ways to harness the power of data is redefining the supply chain — helping the manufacturing sector by designing new business models, updating operational processes and controlling costs. Powered by Big Data and the IoT, supply chain management software is poised to help businesses translate data-driven intelligence into a business advantage.

According to a new report from Gartner, software designed to aid companies manage, plan and operate complex supply chains is rapidly growing. Sales jumped nearly 11 percent in 2014 to $9.9 billion, a substantial climb from 7.5 percent growth one year earlier. Strong performances from top players led the way, but it was specialized performers who saw massive growth.

San Francisco-based risk-management provider saw revenue increase 70 percent last year, thanks in part to software that standardizes the collection of supplier data. Focused on retail and telecommunications clients, software designed to aid in forecasting and inventory management helped Boston’s ToolsGroup Inc. grow more than 30 percent. Top 10 vendors including Oracle and JDA Software Group maintained their status as “Leaders,” but saw sales in the supply chain management sector either decline or remain flat. The Gartner report notes, “Niche vendors maintained dominance within individual submarkets through new capabilities and focus on customer intimacy.”

Recent research from the University of Johannesburg in South Africa highlights the perfect storm of forces, which have given rise to the current push for a more intelligent supply chain. Without growing supply chain data, cheaper data storage, faster processing power, anywhere, anytime connectivity, better analytical tools, and advanced visualization to show and present huge volumes of data visually, the future of supply chain management would look a lot different. Big Data requires analysis. Without it, the value of the IoT remains untapped. According to the paper’s author, Hans Ittmann, analytics is essential. Ittmann believes the supply chain is at the beginning of recognizing the value of data and analytics, shifting away from “gut-feel” decision making to accurate, data-driven insight.

Some have already begun to embrace the shift on a wider scale. Big Data and IoT could be considered part of the “fourth industrial revolution.” Following steam, electricity and assembly line production, Internet-enabled technology is the most powerful disruptor and data its most valuable currency. Intelligent supply chain management is at the core of its new “Made in China 2025” vision of the future. Moving away from heavy industry, the government noted the need of the nation’s manufacturing industry to become increasingly integrated with the Internet. In the United States, the Supply Chain Innovation Initiative supports similar goals — including automation, cloud computing, Big Data and analytics.

The age of data is already here. Supply chains are quickly evolving with innovations like Big Data, IoT and the cloud playing a much larger role. Actionable data is at the heart of IoT. Without it, data is just information. Supply chain management software is crucial to the expansion of the next-generation supply chain. Supply chains are industry-specific. Software makers able to craft tools that can address the particular needs of their clients will come out on top.