You need a "data plan"

Why you really need a "data plan"

March 15, 2023
By John Soderberg | Senior Executive Vice President of IT

A quick internet search tells me that Mark Twain once said:

“Data is like garbage. You’d better know what you are going to do with it before you collect it.”

This shows us two things. First, you can’t trust everything you see on the internet.* And second, you really should have a plan regarding data.

*Editor’s Note: We reached out to a Mark Twain scholar who confirmed this is HIGHLY UNLIKELY to be a Twain quote.

Data matters in supply chains more than ever

Why is data important to supply chains?

Short answer: Accurate and timely data lets companies make informed decisions.

This is because data can offer insight. Organizations can then use it to optimize operations and improve efficiency. An example: distribution operations and logistics. Everything from route planning to vehicle usage can be improved and optimized based on data.

We commonly see this in our lives via package tracking. In real-time – no matter where it may be in the world – we can see where a shipment is and even the mode of transportation it’s on.

Data is also critical in forecasting and demand planning.

It allows supply chain experts to better understand current and future demand for products and services. By understanding purchasing patterns and stocking locations, teams can more efficiently manage the supply chain for both external (customers) and internal (production) needs.
Plus, data can be used to mitigate risk within a supply chain. It can track current inventory levels and optimize them to reduce waste while improving efficiencies.

In other words, data can help you avoid unplanned expenses and costly delays.

How 'good' data adds value

Let’s first define what good data means. We work with our customers and business partners to make sure we properly understand, define, and catalog data. This is done so that when the data is used, there is lineage, definition, and governance tied to it.

This really means data integrity. This data needs to be what everyone believes it is in order to contribute to what I would say is ‘good’ or trusted data.

So, good data should improve the decision-making process because you can see what has been measured or captured. It provides a lens into what is happening and allows you to evaluate measurables for improvement.

In the end, data should be seen as a competitive advantage. Whether it comes from understanding where time is spent or how products and services are being used, data should help increase efficiencies. It should provide the ability to respond more quickly and realize opportunities sooner.

How data helps supply chains

Improve visibility Collecting data helps companies identify – and adapt to – bottlenecks, delays, and disruptions.
Optimize planning: Analyzing demand trends and production capacity can help meet customer demand.
Expand collaboration: Sharing data with suppliers and logistics providers can help them identify and address inefficiencies.
Boost efficiency: When data identifies inefficiencies, you can streamline operations and even reduce costs.

Getting more data out of your supply chain

The way too short version: Add technology to your supply chain.

The full version goes like this: To get the right data from your supply chain, it’s best to understand what problem you are trying to solve. Start by defining it: You want to identify how to measure the components surrounding the problem (or opportunity). Once defined and measured, you can move forward.

Uncovering more data from your supply chain requires understanding what your current systems and software do or can do. Many times, this leads to capability “discovery” where previously unknown data and insights can now be captured and put to work.

The activity around this process deepens the understanding of how to get more data out of your supply chain (and perhaps your supply chain partners as well). And when considering partners, consider these two questions.

Who can provide data?
What data do they offer?

Consider the technology they run and the information they can capture and share. You’ll want to confirm it’s good data and understand the definition behind it. Sensors, pushers, scales, and IoT devices each collect data within the supply chain. All these capture options help bring visibility and support to your operations.

Starting a program

Here’s a quick truth: The outcomes and visibility that you seek to achieve should drive the creation of any new program. Also, the level of investment required to implement a program should be clear from the beginning.

At Fastenal, we have many conversations around the processes that capture data through our support of supply chains. We focus on products and services. From sourcing to inventory management, the entire supply chain can hold opportunities to gather data.

These lead to identifying efficiencies, productivity, and visibility. Once you begin to receive more data from your supply chain, it’s important to use analytical reporting tools and dashboards to further your insights and opportunities.

Areas to consider:

Inventory
Monitoring
Ordering
Receiving
Restocking
Locating
Issuing
Tracking
Transferring
Requesting
Sourcing
Accessing
Control options

How to get more data out of supply chains

Add technology: RFID tags, weighted scales, and sensors can track the movement of goods in real-time. This leads to data on location and inventory levels.
Use data analytics tools: With analytics, you can identify patterns, trends, and opportunities for improvement.
Collaborate with partners: Suppliers can offer access to additional data and insights that can help optimize operations.
Conduct reviews: Regular reviews can help identify areas for improvement and collect data on key performance indicators (KPIs) such as delivery times, quality, and cost.

How Fastenal uses data

Dig into the data: By analyzing sales and demand patterns, we can forecast future demand and adjust inventory levels accordingly. This helps us avoid both shortages and excess inventory, which can help us meet customer needs and drive costs down.
Adjust logistics: Data helps us optimize our distribution network and identify opportunities for cost savings. For example, data on shipping routes, transit times, and cost helps us shape the most efficient and cost-effective way to get products to customers.
Retain agility: Tracking the performance of suppliers and monitoring key metrics such as on-time delivery and quality helps us identify and address any issues that may affect the supply chain.

Future-proofing the supply chain

As we’ve seen, disruptions are everywhere. So, using data can improve resilience and adaptability within your supply chain, pushing it to be more future-proof. Tracking and analyzing trends will allow you to optimize operations and identify risks. In other words, data can make your supply chain more responsive to change.

All of this goes back to what “good” data is and how much of it you have. You start by understanding the available data in your current state (including the processes, behaviors, and risks). Then, you work to determine your goals, challenges, and opportunities.

Finally, you’ll want to identify the partners and technology out there today that can capture and measure what you are working to improve.

Yes, these activities require time and focus, but they also strengthen your ability to adapt as needed while also making the common goal visible to your team.

How Fastenal can help

Fair to say what we’ve covered so far is what we are doing at Fastenal in partnership with many of our customers and internally within our business. Different areas fall into different levels of maturity whether internally or externally but shining the light on areas to improve, once backed with good data, drives common cause behind goals.

We feel it is our responsibility to work with our customers to help them achieve these goals, and, as Mark Twain definitely did NOT say: Data is the validation of improvements.

If you have questions about data and supply chains, just send me, John, an email at theblueprint@fastenal.com. I don’t have Twain-level prose, but I will answer any questions you have!