The State of Distribution Analytics

This is an excerpt of the original article. It was written for the November 2019 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2019

We hear a lot about emerging technologies like artificial intelligence, machine learning and robotics. We hear less about one of the enabling technologies that makes the others possible:

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Anyone who attended a supply chain conference in the last couple of years has heard the message that Big Data and analytics are changing the way that supply chains and supply chain processes operate. Warehousing and distribution professionals are no exception: They understand that analytic capabilities are important to the continued survival of their organizations In fact, in a survey of warehousing and distribution professionals we conducted in conjunction with WERC and Supply Chain Management Review, 85% of the participating organizations are actively involved in using analytics and Big Data to drive improvement efforts (see About our research).

At the same time, our research also found that before analytics can become commonplace, a number of gaps need to be addressed. Warehousing and distribution continue to operate in isolation from other functional areas and partners in the supply chain. Resource allocation and the support of top management is still missing, which leads to a misalignment of culture. And the talent and skills required to make use of the data being gathered, along with the sophisticated analytic tools that can make a difference, are in short supply.

Culture eats strategy

Many managers often don’t appreciate the power of culture when it comes to changing their company’s goals or the means of achieving them. Management is often under the illusion that if we just show them a better way, employees will embrace this new approach. We all know it doesn’t always work out that way, or, in a phrase attributed to management guru Peter Druker, “culture eats strategy for breakfast.” Because culture is both valuable and difficult to change, it is important to understand how people within an organization define their collective values, beliefs and principles.

With that as background, we began our exploration of analytics in warehousing and distribution by concentrating on the role culture plays in developing a data-driven decision-making company. Some 57% of study participants reported that analytics was a top-down mandate driven by the company leadership (see Table 1). However, when this finding is compared to the percentage of respondents that also indicated that the use of analytics is important and will create a competitive advantage for the company (91% and 86%, respectively) it reveals a potential orientation gap between top executives and functional managers. The gap presents an inverted situation as the results suggest that an analytics-oriented culture is being pushed more by warehousing and distribution managers than by top executives.

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