If there is one thing truckers know at this point in the “digital age” of supply chain operations, trying to manage data is far from easy – or fun for that matter.
Indeed, data management is only one of many challenges confronting motor carriers as they try to navigate the information flows surrounding them – right up alongside issues such as the trustworthiness of trucking data and cybersecurity needs.
But in a new study compiled by service integration provider DiCentral Corp., SAP and the Global Supply Chain Institute at the University of Tennessee (UT) Haslam College of Business, some other “ugly truths” about supply chain data are coming to the fore, such as that the “governance” of supply chain information flows can be dirty, thankless work – but work that, if it’s riddled with errors, can really hurt the bottom line.
According to this new study, dubbed Proactive Partnerships: Creating Supply Chain Value in the Digital Era, “information governance” is defined as “the articulation and management of processes, rules, and structures with respect to how information is shared, accessed, and used. There’s also a “subset” of information governance as well – data governance – which is about ensuring the integrity of data.
Here’s the thing, though: according to this report, companies are simply not lining up to do this stuff; at least not until there is a data-related supply chain disruption or breach.
“In today’s age of digital technologies transforming the way organizations operate, creating a digital supply chain network is a business imperative for supply chain and EDI [electronic data interchange] managers across the globe,” noted Thuy Mai, president and CEO of DiCentral.
“But it is not easy to tie governance of supply chain information flows to the bottom line, at least not in a positive sense,” Mai added. “Governance is a process, not a project; it is continual with no defined end state. As such, governance initiatives are costly, time consuming, and in the minds of some, ‘not worth the investment.’”
However, Randy Bradley, assistant professor of information systems and supply chain management at UT’s Haslam College of Business and chief researcher for DiCentral’s report, pointed out that its results run counter to that “not worth it” sentiment.
“Consider that 60% of reported [supply chain] transactions per month are affected and/or suspended because of some data-related anomaly,” he stressed. “Governance of supply chain information flows should be a high priority. This is especially true considering the potential revenue at risk when 60% of order transactions are suspended or halted as a result of data issues that could have been addressed, but were not.”
Mai also emphasized that in today’s “instant-gratification” buying culture – one fueled by e-commerce – buyers and suppliers must be in lockstep when it comes to the supply chain.
“Suppliers operate in a world of slim profit margins and tight deadlines, and late shipments for failing to follow the packaging requirements of a retailer – such as a misplaced barcode – can result in costly penalties,” Bradley pointed out.
According to 80% of DiCentral’s survey participants, customers operate some sort of EDI compliance program, which can result in penalties, and nearly 75% of survey respondents have been subject to fines due to noncompliance. Among those receiving fines, some 3% said they were hit with fines totaling more than $100,000 in a 12-month period.
For small- and mid-sized businesses (SMBs), such fines can have a material impact on profits, Bradley stressed.
On top of that, more and more companies are embracing such “automation tools” and supply chain analytics to remain competitive, reduce costly human errors and improve customer service levels.
According to DiCentral’s study, 76% of those polled expect growth in their electronic supplier connections up to or more than 25%. More than 75% of those surveyed also agreed that their current system can process most inbound EDI or XML connections without human intervention, and 60% of participants report business-to-business integration has enabled them to improve customer service levels.
“Not a single participant in this study indicated experiencing or expecting a reduction in electronic linkages with customers or suppliers in the near future,” Bradley stressed.
“Study participants showed an overwhelming emphasis in integrating customer-facing supply chain solutions, suggesting a likely disproportionate investment in revenue-generating activity over solutions that focus on cost-cutting,” he said. “Technology continues to improve and evolve at a frantic pace, so companies must act now, or get left behind.”
Yet another reminder that trucking can’t afford to get caught behind the digital eight ball.
