The Return on Investment for Supply Chain Data

Using Big Data in a supply chain strategy is more than just supporting analytic technology and making predictions for the future. Big Data used in supply chain risk management can actually become a big return on investment.

Here are ways that supply chain data can be a return on investment:

Supply Chain Risk Management

Supply chain risk management processes allow a company to map an incident and the impact to suppliers in a geographic area around the event, e.g., what suppliers sit within a 50- or 100-mile radius of an earthquake, flood or other natural catastrophe, and begin to take almost immediate action to contact suppliers and start identifying alternate suppliers.

Cisco has attributed its fast reaction and savings of millions of dollars following the Japan earthquake in 2011 to its supply chain risk management team and the dataset they had collected.

Amgen, for example, has used the sub-tier supplier data Resilinc collects for them to support their operations mission “to ensure that product is available for every patient, every time.”

Other companies such as EMC and Cisco have leveraged their supply chain risk data to implement “design for resiliency” programs. These minimize the number of single and sole source parts used during product development that could cause continuity challenges once the product goes to market.

Improve Productivity in Other Areas of the Business

Information and analytics investments allow companies to improve productivity of their supply chain experts, and invest their expertise in other areas of the business that cannot be automated. According to a white paper on the ROI of resiliency:

Good supply chain visibility significantly reduces two types of manpower costs in an average supply management organization: Supplier Information Management (SIM) and risk management event monitoring.

When one considers that a large organization can easily have 20,000 suppliers, maintaining supplier information takes a considerable amount of effort, especially considering the breadth of information required by the supply management, engineering, accounts payable, risk management and logistics departments of the organization.

In fact, Gartner found that an average $1 billion company spends 1,000 hours every week managing suppliers and their information. This time is primarily spent on data entry and maintenance, contact requests for updated data, compliance monitoring, performance monitoring, accounts payable and invoice verification. At least one-quarter to one-half of this time is spent on supplier information management alone, which is the equivalent of 6 to 8 FTEs (Full Time Employees) for a $1 billion dollar company.

Case in Point

Manufacturing companies should no longer think of supply chain risk management and the Internet of Things as an option anymore. Supply chain intelligence is now within reach of companies of all sizes and budgets, thanks to innovative companies like Resilinc.

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Source of NIST Whitepaper: U.S. Resilience Project: Best Practices in Cyber Supply Chain Risk Management