In recent years, companies have heavily invested in tools to collect and create new data sets. Yet they continue to face challenges in translating that data into valuable business insights that lead to supply chain improvements.

The ability to draw on data within one’s supply chain and transform it into action is critical. It enables competitive advantage. It allows companies to quantify, analyze and measure their supply chains to improve performance and cut costs. 

However, the volume, velocity and variety of data generated by today’s supply chains can overwhelm even the most sophisticated of organizations. It’s the ultimate data paradox: On the one hand, there’s an abundance of data available. On the other, that data is meaningless if it can’t be translated into valuable insights that result in desired performance outcomes. 

Here's a five-step plan that organizations can use to put supply chain data and business insights to work for the business.

Start with a goal. What problems you are currently trying to solve? How can data help solve those problems? Establishing clear goals for your data initiative, aligned to desired business performance improvements, can clarify and direct your data strategy. Such goals could include measuring supplier performance, improving forecasts and managing inventory. Common mistakes companies make with data are implementing large-scale data platforms throughout the entire organization without having a clear purpose or understanding of how to fully make us of their data. The best approach would be to assess the maturity level of the company, start small by identifying a pilot or use case that can be achieved in a realistic time frame, then test, refine and, once confident in the result, begin to scale.

Understand your data and create a data strategy. Once goals are in place, create a data strategy tied to your overall business strategy. It’s important to ensure that your supply chain performance goals align with overall business goals. Begin by understanding what you want to track, which data is relevant, and where that data exists. Assess who within the organization will be involved in the project, and in what capacity. Determine which tools and resources are required to achieve your goals. Having a clear understanding of your data and where it’s coming from is crucial to improving supply chain transparency and operational efficiency, and reducing costs. Unfortunately, many companies don’t trust their data due to existing manual processes and the complexity of managing global networks. But third-party providers can help clean up your data. By acquiring a greater understanding of your data, you can interpret and translate that information into meaningful insights. 

Determine important KPIs. Key performance indicators are an effective way of measuring the performance of businesses across various departments. Incorporating KPIs into your supply chain can help measure your objectives and ensure that you’re making advances toward a more strategic level of planning. KPIs will vary depending on each business’s goals, but important ones to consider measuring at the start include: 

• On time in full (OTIF) orders,
• Customer lead time,
• Total supply chain cost,
• Procurement cost,
• Inventory turnover, and 
• Cash to cycle time.

Each of these KPIs focuses on the correlation between service, cost and inventory. By measuring your service, cost and inventory, you can ensure a more equal balance within your supply chain.

Invest in real-time analytics. Many companies still use slow-moving technologies that delay data feeds by hours or even days. This translates into slow decision-making. Accessing real-time analytics is key to making more agile decisions. Supply chain disruptions constantly arise, and having the ability to identify anomalies sooner will allow for more proactive responses. Real-time visibility allows you to review the performance of your orders, suppliers and products. By measuring supply chain performance based on real-time insights, you can identify areas for cost savings, and improve customer satisfaction.

Measure results and look for improvements. Wrap up your pilot program by measuring the results of your program. Determine if your goals and objectives were met, and identify what might need to be refined in your process to achieve the final desired results. Once you refine your strategy and reach a solution that works, begin to scale. By tying goals to business objectives, a data strategy, KPIs and real-time analytics, you can reach desirable outcomes that translate into improved supply chain performance.

An efficient, high performing supply chain is a competitive advantage. It plays an essential role in customer success and, ultimately, the success of a company.

The key to improved supply chain performance lies in a sound data strategy, including the ability to mine data in real time and translate that information into specific business intelligence. This will increase visibility across your supply chain and lead to enhanced performance. You’ll be able to identify anomalies more quickly, which in turn will promote faster responses. Beginning with a pilot program is cost effective, helps reduce risk, ensures that your team fully understands how to make use of their data, and creates a framework for data implementation that other supply chain departments can duplicate when they’re ready to measure performance.

Hugo Fuentes is chief executive officer of The Owl Solutions.