Big Data Insights
Whether you like it or not, “Big Data” is here and quietly rewriting the rules. The benefits are so compelling that adoption by the CG industry is inevitable. CGT’s Publisher Albert Guffanti turns to Robert Byrne, CEO, Terra Technology, for answers to the burning “Big Data” questions on every CG executive’s mind.There is a lot of talk about Big Data changing the very nature of forecasting. Why is this?
Byrne: Companies run on estimates: finance and supply planning, an excess or a lack of inventory, responsiveness to growth opportunities. In short, a company’s wins and losses are all based on its ability to predict its customers’ demands. Big Data provides the opportunity to transform demand prediction from traditional historical analysis to predictions based on current demand signals from across the supply chain. Peeking into your customers’ supply chains can dramatically improve your ability to predict what they will order next. As a result, companies can respond faster and more efficiently to shifts in demand, better meeting consumer needs and increasing revenue for both manufacturers and retailers.
What does that mean in terms of competitive advantage?
Byrne: The financial industry, where fast access to accurate market information is a competitive necessity, has long used sophisticated algorithms to analyze the impact of Big Data on stock prices. Any technological development that gives traders access to market information before other institutions, even by a split second, creates a distinct competitive advantage. The same opportunity is now available to manufacturers. In mature markets, like the United States or Europe, growth often comes from capturing market share from competitors. Companies that dynamically sense market changes have a clear advantage in responding to an unexpected rise in consumer demand. Immediately responding to shifts helps reduce stock-outs and ensures products are on store shelves when consumers are ready to make a purchase. The key to a meaningful financial advantage is the systematic analysis of your entire business — it’s not that helpful if Big Data programs are limited to a single product line or retailer.
How is this changing the industry?
Byrne: The longer you wait to use Big Data, the bigger the competitive gap you need to close and the harder it will be to catch up. Market volatility and rising material costs will continue to put pressure on manufacturers to improve cash flow for the foreseeable future. Lowering inventory is high on everyone’s list but indiscriminately cutting stock risks hurting customer service and revenue. Companies that use Big Data applications to analyze daily information across the supply chain get a far more accurate picture of future orders than is possible with traditional solutions that rely on decades-old demand planning technology. This gives manufacturers the visibility to identify excess stock and free cash flow by confidently cutting days of inventory while simultaneously improving customer service and revenue — even in volatile markets. Far from a vision of the future, this is happening right now with leading multinationals and is on boardroom agendas of those following closely behind. The one question remains — will you be a leader or a laggard?