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What is entitlement management?

  
  
  

Is it one of those terms you hear but aren’t exactly sure what it means? Is it like digital rights management? Well, sort of. DRM refers more to copyrights and authorized sharing of documents and files, while entitlement management belongs squarely in the enterprise software space.

Think of it this way: the number of times you can burn a CD of purchased songs on your iTunes library is controlled by DRM. Your ability to access an Oracle database at work or your ability to access the Quicken help desk based on your one year subscription is controlled by entitlement management.

Software companies have a product to sell, but obviously not a physical product in the traditional sense. Once it’s purchased, the product is made available to the buyer on media like a CD (less common now than 10-12 years ago) or via direct download online. The CD option is easy, but how can you prove you bought the product so you can download it? This is important, basic inventory management for both the buyer and the seller and you were probably given a code or a key that unlocks your right to download the program. It’s a bit like buying a new sofa and then having to drive to the warehouse and show your receipt to pick it up. In the software world, this verification system is a big part of getting products to market.

But software is clearly an interactive product and what the buyer clearly expects with this purchase is an initial transaction, followed by an ongoing relationship with the seller of some kind—usually in the form of updates, patches, support, upgrades, discounted subscription renewals and the like. And this is where managing the life cycle of the purchased product can become a bit more complicated for both parties.

The best entitlement management software solutions not only grant initial access to the purchased product, but they help the seller and the buyer automatically and seamlessly manage all subsequent interactions to the benefit of both—neither party suffers missed opportunities. Additionally, truly robust entitlement management systems are able to easily track entitlement data across multiple parties, for example the purchase history and rights of a distributor or a Value Added Reseller, in addition to the ultimate end customer, are documented and managed. Stay tuned – we have an interesting case study on ModusLink’s Poetic entitlement management solution coming soon.

 

SEPA is coming to town – Are you ready?

  
  
  

SEPA logo resized 600SEPA, the so-called Single Euro Payments Area, is a combined effort of the EU governments, the European Commission and the European Central Bank to create one integrated payments market across Europe for all organizations or individuals making or receiving payments. By replacing today's fragmented national payment systems with a single set of SEPA standards, organizations and individuals will be able to make payments to anyone within the area through their existing bank account using standardized payment methods.

The European institutions have agreed on a deadline of 1 February 2014 for the phasing out of domestic credit transfers and direct debits, and moving to SEPA. Banks will only be able to accept SEPA credit transfers and SEPA direct debits. This deadline applies to all EU member states in the Eurozone, whereas member states outside the Eurozone have until 31 October 2016 to migrate to SEPA. An important feature of SEPA standardization will be the move from present day account numbers to a new account ID in the form of the International Bank Account Number (IBAN) and the Bank Identifier Code (BIC). Systems need to be adapted to be able to process SEPA payments and adjusting direct debit mandate forms.

SEPA will enable consumers to pay domestically and cross border throughout the whole of Europe. Customers will be able to pay invoices and directly debit accounts in the SEPA area from a single bank account improving customer safety and security. Additionally they will be able to reach all accounts SEPA-wide from one home country account. It is also expected that a uniform payments market is beneficial to competition, which can result in better products, greater efficiency and lower costs.  The European institutions hope to have created an environment for enhanced competition in the provision of payment services rules to benefit both organizations and individuals.

For small to medium enterprises, SEPA promises to offer faster settlement and its simplified processing will improve cash flow and reduce costs. For large merchants and corporations, common standards enable the assembly of one standard platform for payments in the whole of Europe resulting in major savings.

The two main SEPA products are the Credit Transfer and the Direct Debit. Each of these product schemes will impact companies' financial supply chain in multiple ways. For businesses, the challenge of migrating to SEPA will be to complete the integration process without any loss of information or control.

SEPA Direct Debit requirements will impact collections, credit and risk and mandate management. It includes restructuring of existing direct debit processes and procedures, in which all mandates are migrated to SEPA standards. There are two versions of SEPA Direct Debit; the B2C and the B2B. The differences however are rather minor.

Here is a basic list of the steps which will need to be taken:

  • Banking and accounting software must support the technical messaging standards used for SEPA Payments (ISO20022 - XML)
  • Get the BIC/IBAN of all your customers and suppliers
  • Print your BIC & IBAN on ALL your business papers (not only for cross-border business)
  • Identify any optional or AOS (Additional Optional Services, which are services a bank can offer in addition to those in the SEPA Rulebooks) that have been implemented in your country
  • Consolidate the local and cross-border payments in one SEPA system

Are you ready? Remember, transactions in old formats will not be processed by the banks after February 2014. In other words:  if you are not ready, you can’t pay or be paid anymore.

To enable merchants to be ready from day one, ModusLink has partnered with P4 Solutions to process SEPA transactions in a secure manner. This involves risk management, a white labelled payment page for the online customer with authentication features like signature, SMS, PIN-TAN, email and quality call, transaction processing with the bank and management of the various e-mandates on a secure e-mandate server, as well as format reconciliation and bank file generation. 

 

More than just payments: financial complexity in global e-commerce

  
  
  

square euros resized 600While developed markets continue to command a significant share of global online retail sales, they show signs of saturation. To find new growth avenues, online merchants should consider looking beyond their domestic and developed markets.

However, when planning international expansion, online merchants should thoroughly consider how a broader e-business strategy will fit within their existing value-chain, specifically in areas of customer service, finance operations and logistics. The challenge is to balance consumer preferences and expected purchase experiences against the cost of increased complexity in back-office operations.

Global expansion will increase the complexity businesses face. Diverse government structures, unique social and business cultures, and an ever-changing array of legal requirements and compliance policies make it difficult to overcome country-specific challenges.

Online shops must be fully localized in terms of language, terms and conditions, pricing, check-out process and culturally preferred payment methods. Add the complexity of various import taxes (sales tax, VAT, GST) and foreign exchange and repatriation rules that need to be carefully attended, and it’s clear that a business may need to consider a country-by-country strategy. The online shopping experience continues long after payment and includes shipping, customer support and possible returns or repairs. All these factors need to be adjusted to the local flavors. A “one size fits all” approach will not be successful.

Of the various challenges, the complexity of government-based monetary policies can quickly become an organization’s biggest headache. Even very attractive emerging markets, for example Brazil, pose this problem. In fact, multifaceted tax, import and repatriation rules can be some of the most difficult issues to untangle and manage over the long-term.

E-Commerce taxation is a complex and dynamic field, as governments’ modify tax regulations to cater to ever-changing public policy needs. In the past decade, administrations have struggled to agree on tax treatment for cross-border transactions. In the context of international e-commerce, this complexity is compounded as online merchants have to deal with the differing tax treatments of multiple countries. For online merchants, the risk of non-compliance can be direct penalty cost, as well as indirect cost in terms of reputation damages and for those reasons it is imperative to carefully manage this element.

Consider as an example, the changes the European Union has introduced  to its VAT rules as a way to level the playing field when selling cross border e-services (e.g. downloads). Currently the applicable VAT rate is based on the merchants’ locale. However, in 2015, both EU and non-EU merchants will have to collect applicable VAT rates based on the consumers’ residence. For instance, the applicable standard VAT rate in Germany is 17%, compared to 21% in the Netherlands. Assuming product pricing is the same in both countries, Dutch consumers currently have a higher incentive to buy from an online merchant based in Germany, but this will change. The online retailer has a rather large responsibility to its consumers and countries where it does business and must understand and appropriately apply these changes to its model.

Conclusion

The critical difference between you and your competitors isn’t always about who offers the better product or service, but the experience customers have throughout the end-to-end purchasing event. A prerequisite for you to be successful is to fully understand the characteristics and regulations of the markets you are targeting. This positions your business to operate at a more professional level, with less risk of consumer dissatisfaction with a transaction.  As a result, there is potential to gain a competitive advantage by developing an optimized payment mix in combination with a competitive e-commerce model.

Choosing the right partner can be the make- or-break decision that determines success in expanding your global footprint. An experienced partner can not only to help you tackle country- and industry-specific challenges, but also to help you grow as your e-commerce strategy evolves. In some cases, going a step further beyond payment transaction basics and outsourcing the primary elements of financial management operations, the supply chain and e-commerce processes provides the optimal solution, empowering you to focus on your core business. After all, e-commerce success is more than just payments.

When expanding your e-commerce strategy, look for a partner that is ready and able to extend your market reach, offering localized shopping experiences such as regional payment options and processing, multilingual contact center support and deep knowledge of local logistics, import and export complexities.

 

Apps and the future supply chain

  
  
  

describe the imageApps are changing the face of the supply chain. It is already possible to order products and track parcels through apps. However, there are some more innovative apps that have caught my eye over the last few weeks that will undoubtedly have an effect on how we build supply chains in the future. One such app is Postmates.

The Postmates concept is to provide one hour delivery of a product in a local area by matching customers with couriers and bike messengers who have free capacity to deliver an item. Currently the system operates in San Francisco, Seattle and most recently New York. Couriers register online and receive information about their next pickup and delivery through their smartphone. It’s similar to the way the Hailo Taxi app works—the customer can see information about the courier and track the delivery.

Currently, the main customers for the service are restaurants and local stores. Whole Foods has embraced the service and pays the delivery fee for the customer. This innovative method of delivery will not go unnoticed by the large retailers and e-tailers and it will be interesting to see how they will capitalize on the service.

Another app that will change supply chains in terms of getting more accurate data on shelf detail from retailers is Easyshift. It allows the general public to earn extra cash by taking small shifts to photograph shelves in stores and take simple notes on a product’s availability. After each task is completed, the person gets paid immediately. The beauty of this app is that a company can immediately see how a marketing campaign or the demand for a product is going without relying on ERP data from the retailer.

The app space is growing and will undoubtedly change the supply chains of the future and there is clearly no shortage of innovation.

 

A must for e-commerce: make it easy to pay

  
  
  

E-Commerce payments have seen tremendous development in the past decade. During the last 15 years, the market has expanded and is still growing. The e-business industry, however, suffers from a lack of standardized, country-specific rules and regulations. The impact of not identifying necessary measures such as local acquiring, offering local payment methods, and taking cultural differences into account has a tremendous effect on revenue, fraud expenses, operational effectiveness and is a threat to the overall success as such.

On Tuesday I’ll be part of an expert panel discussion at the CNP EXPO addressing “Breaking into Brazil (and other cool places)”. The main theme will be to discuss the pitfalls merchants face trying to take card-not-present payments in a faraway land. These range from legal issues to currency conversion, import tax to repatriation issues—and there are many more.

Planning the elements of your end-to-end e-commerce strategy starts with your product or service and culminates with the successful completion of the payment process (although the sales cycle can continue long after payment to include shipping, customer support and possible returns or repairs.) Your proposition is key, determines your online strategy and can be impacted by the payment process. The effort to create a pleasant experience on your website will not have the wanted effect if the checkout flow and payment pages are not well thought through and don’t take the right payment method mix into account. In the end, that’s where it’s happening, that’s where the deal is closed, where shoppers convert to buyers.

We will be sharing tips and tricks on how to be successful, increase conversion rates and comply with local tax and repatriation rules while avoiding profit-damaging surcharges for yourself and your merchants.

Don’t forget that the critical difference between you and your competitors isn’t always about who offers the better product or service, but the experience customers have while dealing with you throughout the end-to-end e-commerce process. When choosing your payment partners largely on cost considerations, cheap can turn out to be very expensive.

 

Expanding your global footprint into Brazil's booming online economy

  
  
  

describe the imageWith the increasing complexity of the world’s consumer markets, businesses face various challenges when it comes to expanding their footprint into the different corners of the world. Diverse government structures, unique social and business cultures, and an ever-changing array of legal requirements and compliance policies make it difficult to overcome country-specific challenges. 

This is especially true in the e-commerce space. Web-shops have to be fully localized in terms of language, pricing, check-out processes, and culturally preferred payment methods. Add the complexity of various import taxes, foreign exchange and repatriation rules that need to be carefully attended, and it’s clear these companies need a country-by-country strategy. A “one size fits all” approach simply will not, in most cases, be successful.   

Of the various challenges, the complexity of government-based monetary policies can become an organization’s biggest headache. Even very attractive emerging markets, like Brazil, pose this problem. In fact, Brazil’s multifaceted tax, import and repatriation rules can be some of the most difficult to untangle and manage over the long-term.

Likely the most pervasive barrier encountered by the incautious would be the “Custo Brasil” or the “Cost of Brazil.” This term refers to a variety of extra—often unanticipated—costs of doing business in Brazil including legal and bureaucratic impediments, excessive taxation, poor infrastructure, inflation and the like. This explains why the World Bank ranks Brazil #130 out of 185 economies in the world for the ease of doing business. The overall cost percentage is difficult to assess and while it has generally decreased in recent years, it remains a real burden and the cause of great frustration for international organizations doing business in Brazil. 

Examples of “The Custo Brasil” 

  • A 60% tax on imported products with value higher than $50 USD
  • A $3000 USD value cap on individual imported products
  • The need for a local presence or partner to help protect revenue, as repatriating funds often requires up to 30% withholding tax
  • Numerous popular Brazilian credit cards are not enabled for cross-border transactions, which means merchants must use a domestic acquirer to achieve desired conversion rate
  • In order to contract with a domestic acquirer, a local bank account or local partner is a prerequisite
  • In order to open a local bank account, a local entity is needed
  • 53% of credit card transactions are based on installment plans or “parcelas”

The Brazilian economy is still heavily reliant on cash, reflected in the 35% market share of Boleto Bancário, a prefilled bank slip for both traditional and online purchases

Despite all these hurdles and challenges, Brazil remains one of the hottest investment opportunities in the world. With a population of 195 million, Brazil represents one of the top world economies in terms of GDP.  As the purchasing power of the Brazilian population has grown in recent years, the demand for imported products, especially from the US and Europe, has been growing as well. Finally, adoption of online buying is skyrocketing, resulting in an expansion opportunity that, despite some difficulty, e-retailers should not miss. In order to avoid the bureaucratic and monetary tripwires, it is imperative to do ample homework in advance. 

To balance opportunity and risk, entering the Brazilian market with an experienced partner is highly recommended. Many companies are able to address some of the critical e-commerce issues, such as language, on their own. However, achieving good conversion rates relies on a complete offering of local payment options. Many times, as is the case with Brazil, a partner is fundamental to fully understanding more basic questions of import regulations, what taxes have to be paid when and even repatriating funds. Several companies, including ModusLink, specialize in guiding companies in the development and execution of their e-commerce strategy. Additionally, this kind of service is available from specialized third party logistics providers, who may also help with distribution and order fulfillment. 

Conclusion:

Choosing the right partner can be the make or break decision that determines success in Brazil—not only to help you tackle country- and industry-specific challenges, but also to help you grow as your e-commerce strategy evolves and the Brazilian market matures. Some things to consider in the selection process include:

  • Determining if your partner has direct access to local payment methods.
  • Is the partner able to remit funds to your primary location?
  • Does the partner offer a tailored package for your product and your industry?
  • Can the partner support all steps in your e-commerce development strategy?

In most cases, going a step further to also outsource the main elements of the supply chain and e-commerce processes provides the optimal solution, empowering you to focus on your core business.

-Andre Malinowski is a Global Vendor Service Manager at ModusLink 

 

Luxury brands embrace digital and social

  
  
  

MB polish resized 600For those of you that attend your share of industry conferences each year, you will recognize the fact that they can range from the intellectually stimulating to the painfully commercial.  This week I had the pleasure of attending Luxury Interactive in New York, which to the credit of the organizers and the many speakers that gave their time, was a fascinating glimpse into how many of the world’s leading luxury brands are embracing the new worlds of digital and social to reinvent their customer engagement and retail strategies.

Leading brands such as Tourneau, Louis Vuitton, Donna Karan, Mercedes Benz, Swarovski, Four Seasons Hotels and Resorts, Tods, Tory Burch, Tumi and L’Oreal were among those to present, which made for an interesting cross section of the luxury industry and an ever so slightly more stylish conference than yours truly is in the habit of attending.

It was clear from the offset that the sheer pace of change that the explosion of social interaction has driven in the industry. While nobody is declaring victory on these social strategies, there are clearly those that are making significant progress in figuring out how to engage global brands in a meaningful dialogue with individual customers around the globe. This conversation is occurring across multiple social platforms – Twitter, Facebook, Pinterest, YouTube and Instagram being the most common. Each social tool has its own role in engaging customers, yet there is also a centralized strategy and social framework with regional and local empowerment of employees that is required to effectively participate in conversation.

The engagement does not exist exclusively in the digital realm, however. Retailers such as Tourneau demonstrated how their customers are using digital commerce to initiate transactions that end up delivering a more compelling brick and mortar retail experience. Although I will not do it justice, think of customers engaging on the aspirations and desires associated with a product, building a virtual ‘watch tray’ or wish list on line and scheduling time with a retail associate to review this tray and complete the purchase in store. By providing this information to the retail associate—perhaps with iPads in the store—think of how much more meaningful that in-store interaction can become. 

What strikes me as particularly compelling about this approach is that it is almost the exact opposite of the ‘showrooming’ concepts that many electronics retailers complain about where their brick and mortar stores are used as showrooms for transactions completed online with Amazon and other retailers. While the electronics retailers seem engaged in a race to the bottom in cost, it is maybe not surprising that luxury brands seem to be using similar technologies to create value by creating desire.

What I will call ‘humanizing’ the brand seems to be another critical element of the success.   Whether it is the empowerment of a trusted employee to live the values of the brand in a digital environment as in the case of ‘DKNY PR GIRL’ (@DKNY – Aliza Licht) or the empowerment of associates in each of the Four Seasons properties around the world or the training and empowerment of retail sales associates in the case of Tourneau it is clear that Luxury brands really understand that people buy from people and want to engage with people rather than companies.

It is rather a timely reminder for me as I look at our client satisfaction surveys and recognize that in our own B2B service environment, our clients that scored highest for satisfaction also called out our front line people that enabled that satisfaction. Thank you to our team and our clients for that reminder—honestly, not a surprise but a good reminder.

Thanks to all who shared their time and experiences at the conference. In addition to the insights above, you have inspired some much needed further personal research on the emerging range of social sites, tools and best practices to better engage our customers and deliver value on behalf of ourselves and our clients.

 

Cloud Computing from a Business Viewpoint (part 1)

  
  
  

Make Buy Cloud resized 600Based on a recent presentation that I gave at an IT executive seminar entitled Cloud Computing, When the Mist Has Disappeared,  I had discussions with several CIOs and CTOs on their experiences and views on cloud computing. What was noticed from those discussions was that cloud computing is still being seen as a pure IT topic, regardless if it is an Infrastructure as a Service (IaaS) or a Software as a Service (SaaS) solution. My view is that if an organization really wants to benefit from a cloud solution, such an implementation must be performed as a business project. This as most of the times the implementation will have a change on the business model, especially with implementing a SaaS solution.

A different approach
It is strange to see that “regular” outsourcing deals are being performed with a lot of control mechanisms and yet the same approach is not always performed for selecting and implementing a cloud solution. The technology part is given much attention but the impact on the business is often overlooked. My first question, likewise for any outsourcing deal, to a cloud vendor is always, “What is your exit strategy?” This as it's easy to get into a cloud relationship, but it can be very difficult to leave.

Business perspective on cloud computing
Does this mean that cloud solutions are a no-go area? No, as mentioned in one of my previous blogs, cloud computing provides a wide range of opportunities that will help to leverage eCommerce services.

As the current business climate is still unpredictable, business organizations like to gain agility with variable, volume-based costing models. It allows them to be more flexible than ever before.
The benefits of cloud computing are obvious and can be grouped into three categories.

IT on demand- This category emphasizes the IT functionality available “at a finger click.” These characteristics are improved:

  • Flexibility and scalability
  • Availability and manageability
  • Time to market
  • IT resource independency

 Service portfolio- This category underlines the ability to quickly add business functionality; the key features are:

  • New (reliable) functionality
  • Responsiveness to market
  • Location independence

Cost optimization- This category contains the benefits that come with the new financial models of cloud computing like:

  • No or less CAPEX
  • Costs aligned with usage
  • “Pay as you grow” 

So, what is new?

There is a lot of fuss about cloud computing. Is it a revolution? No not really, many cloud computing services have been available in the market for many years. Is it about new technology? No, the IT systems are being used for many years. Is cloud computing the next step in the IT as commodity evolution? That’s the most reasonable answer. Based on the increased network capacity, IT services/solutions have become available through the internet.  IT services have become location independent, and due to virtualization, the services can be used in almost any business format. Is it a new flavor? If we put cloud computing in the business perspective it can be seen as a new service model. Until now we had two service options: make or buy. With the introduction of cloud computing services, we have an additional option: rental, also known now as cloud computing.

Control demand management and IT roadmap
As described in my blog Increasing Complexity of Managing a Global e-Commerce Function, it is essential to channel the demand from multiple directions of the organization. The need to channel these demands is increasing to avoid conflicting directions which will jeopardize the ability to manage the IT (internal/external/cloud) solutions in an effective way.  If not managed well, the change for creating sub-optimized solutions is plausible. 

The tool used to map available cloud computing solutions in the overall IT roadmap is not critical, as long as the process is being followed.  During the mapping, a validity check needs to be performed on the fundamentals: architecture validity, economic validity and business risk containment.

Beneath a graphic overview of how this can be done: Part 1 graphic resized 600If such an IT Transformation roadmap has been created it has to be maintained. As cloud solutions in the market mature and many new solutions are being offered rapidly, the need to perform a periodic review and map the available services/solutions into a roadmap is more needed than ever. If a SaaS (Software as a Service) solution has been implemented it becomes an integrated part of the application portfolio.  Be aware that probably not all applications in your portfolio are cloud ready (can be virtualized) and therefore can put boundaries on your ability to migrate solutions to the cloud. 

In my next blog I will provide more insight on the basic steps to select and implement a cloud solution.

 

 

Nuggets of real value in a mountain of supply chain content

  
  
  

describe the imageWith 24 simultaneous learning and information tracks, each meeting eight times over a three day period, there is no shortage of information for attendees of CSCMP’s annual global conference. 

Within that much content and choice, it can be at times hard to find the sessions that provide real value and new insights. I would love to see the CSCMP consider taking a more aggressive approach in pruning the content—maybe by as much as half—and be more disciplined in the track themes and structure. There were many cases where competing sessions had similar themes and where attendance was sparse.

That said, I must take my hat off to all those that put the effort in, mostly on a voluntary basis, to pull together tracks, sessions and presentations. Having been responsible for the logistics of just one session I got a sense of the scale of the task of pulling together an event such as this.

This is an event that is closing in on its 50th year and still attracts 3,000 supply chain professionals, so they must be doing something right. I have found it worthwhile to attend for what is my sixth time (which still makes me a newbie in CSCMP circles) and each year I find sessions that shed new light on my perspective on supply chain and I add a few more people that I will try to follow up with in the future.

The learning from the event comes from a combination of seeing the themes that are trending in the sessions—to use a twitter analogy—and finding those sessions with real practitioners that have achieved amazing things in their supply chain and the visionaries that challenge your thinking on the future of supply chain.

Trending strongly this year were risk management and the impacts of e-Commerce in supply chain.

Risk management has always featured strongly at the conference and the events of Japan and Thailand are still fresh in the memory. Geo-tagging of supply base and extending visibility beyond the initial tier 1 suppliers are becoming accepted best practices, but there is recognition that just improving visibility is not enough. A prioritized approach to risk mitigation such as the Value at Risk metric developed by the Supply Chain Council is needed to quantify risk impact and inform risk mitigation decisions.  It was also interesting to see executives challenge the blunt instruments of additional inventory and dual sourcing as potentially effective but expensive tools in managing risk. It is no secret that we at ModusLink are strong proponents of the role of postponement in addressing risk and it was refreshing to hear senior supply chain executives echo that sentiment.

e-Commerce can no longer be dismissed as a complex but insignificant channel within the overall supply chain. The significant progress of on-line retailers in the overall retail mix now has the attention of major brands and traditional brick and mortar retailers. Projections see e-Commerce breaking through the single digit percentage of sales mark and companies are coming to terms with the implications for their business:

  • Distribution center footprint and configuration

  • Multi-channel distribution sites versus dedicated e-Commerce fulfilment centers

  • Shipping payment models

  • Consumer expectations for next day and same day delivery

  • International e-Commerce needs and requirements

  • Supporting finance and customer care processes

Top of my list for individual case studies at the event were The Home Depot’s retail distribution center transformation and Kraft’s commitment to and use of retail demand data in their supply chain. The use of retail data in this manner is an area where high tech and consumer electronics companies can really learn from the leaders in CPG. Look out for more detail on that in future posts on this blog.

 

Big Data and the Supply Chain

  
  
  

BigDataBlogImageGoogle “Big Data” and your top results will be from the leading names in enterprise IT: Oracle, IBM, Intel, McKinsey and the like. It’s a hot topic with tremendous business-driving potential. Big Data is loosely defined as huge, complex data sets that require powerful analytical tools and the industry at large has described three dimensions: volume, velocity, and variety. Recently, there’s a lot of discussion about a “fourth V” – veracity, which speaks to the difficulty businesses have in deriving value from their information. These “Vs” are key to understanding what’s new about Big Data.

  • Volume: There is so much of it—12 terabits of tweets per day for example. 
  • Velocity: The data may need to be analysed in real-time, such as with financial transactions that can happen instantaneously.
  • Variety: The data can be generated from an ever-growing list of sources like social media, text, images, sounds, sensor readings, RFID and many more.
  • Veracity: Businesses simply don’t trust much of the information they have on hand to make business decisions. This challenge is compounded by the other 3 Vs.

The volume of big data is ever increasing—every day we create 2.5 quintillion bytes of information. So with this increasing amount of data in the eco system, the question is what do we do with it and can it be useful to assist in improving the supply chain?

Some of the core areas of Big Data that relate specifically to the supply chain according to Oracle are:

  • Web Logs – Customer shopping patterns, order data, browsing information. 
  • Trailer Tags – Tracking data on trailers or shipping containers including transit times, temperature logs and security data.
  • Pallet/Case Tags – Travel and dwell times for individual pallets or cases.
  • EOBR’s (Electronic on-Board Readings) – Vehicle transit times including driver hours and productivity. 
  • Mobile Devices – Application usage by employees, partners and customers.
  • Social Platforms – Social media information on the popularity of products and profiles of users. 

These sources are above and beyond the more traditional sources of supply chain data which include:

  • EDI – Order information, goods receipt data 
  • Planning Data – S&OP including suppliers and customer plans
  • Financial Transaction Data – Purchase orders, payment details

Well-planned analysis of big data represents a huge opportunity to optimize supply chains by giving more detailed information than ever before at every aspect of the supply chain. By harnessing the data, supply chain improvements can provide big business benefits

  • Products demand can be better forecasted 
  • Changes in demand will be picked up more quickly improving supply and inventory
  • Bottlenecks in materials procurement, assembly, and transit can be identified and better managed
  • Products can be further customized and targeted at specific groups or individuals

In order to take advantage of the opportunities, a key competency will be how to manage the data flows through the supply chain utilizing ERP systems and more importantly automating processes to effectively analyse the data. We’ll look at advancements in information technology within the supply chain in future posts.

 

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