Recently I read an editorial by Robert Safian, editor of Fast Company magazine, entitled “What I’ve Learned.” A key statement caught my eye:
“In an age of flux, it's worth reminding ourselves that every day should be an education.”
Both individuals and business enterprises that stop learning are nearing the end of their useful lives. This is particularly true of business enterprises as participating members of their supply chain communities.
FAST DATA BEATS BIG DATA
As I’ve said before, in today’s fast-changing world of economics and business, fast data is even more important than big data.
Fast data is the flow of near real-time data across the supply chain in a way that keeps sources (like raw materials providers and manufacturers) aware of demand and changes in demand by end-users of products almost instantaneously. When a product moves off a shelf at the retailer, the entire supply chain is “educated” regarding this demand in near real-time.
In the article referenced above, Safian also said that “[t]here are no rules” in the face of constant change.
Statistical forecasting models are nothing more than “rules” and—no matter how sophisticated—they simply cannot keep pace with change in today’s world. Reliance upon forecasts rather than fast data will inevitably lead to out-of-stocks and overstocks (simultaneously), thus needlessly tying up resources in the production and transportation of the wrong goods at the wrong time while, at the same time, preventing the production of the right goods at the right time.
The bottom-line is that all this leads to a smaller bottom-line for your firm and, probably, for all the participants in your supply chain.
FAST DATA AND AGILITY GO HAND-IN-HAND
Fast data is not enough all by itself. Fast data must go hand-in-hand with supply chain agility if making the change is going to contribute to significantly better profits for you and your trading partners.
It makes little sense to have fast data informing your entire supply chain of changes in consumer demand while half the supply chain participants are still determining production and transfer batch sizes by “rules” that have been in place for 30 or 40 years. The world was a different place when your daddy made those rules about production batch sizing and “efficiencies.”
THE HIGH COST OF NO DATA
And, what about the dangerously high cost to your business that comes from executives and managers reliance upon no data?
“What do you mean?” I hear you say.
Here is precisely what I mean:
Much of the data that is most critical to the profitability of your business enterprise is unknown and unknowable. For example, you cannot know with any sense of precision, the size of your market, or how much money you lose due to lost sales, or how many customers you lose as a result of one (or too many) out-of-stock occurrences, or how many potential customers never will buy from you at all because of a poor order fulfillment reputation.
All of these numbers are unknowable, in the final analysis.
But that does not mean that the numbers are equal to zero.
Yet, a great many executives and managers ignore the impact of such numbers on their business enterprises simply because the KPI (key performance indicator) values cannot be calculated. They fail to take actions to improve in areas where the numbers are unavailable to them.
They treat no data as though the KPI value—if it could be calculated—is zero.
In essence, some of the most critical options available for moving a business forward toward success are ignored by too many executives and managers simply because they have no data upon which to hang their decisions.
As a result, they continue to cling to old and outdated “rules” of operation at a time when constant change is relentlessly calling for agility and innovation.
This they do to their own peril.
END THE STIFLING AFFECTS OF BUREAUCRACY
Fast data and agility will never evolve in an organization mired in bureaucracy and entrenched in “rules” for which the die was cast ten, 20, 30 or more years in the firm’s past. There are ways to break the mold, but it means opening up to new ideas and new ways of looking at what may seem to be old problems.
Remember! “Every day should be an education.”
