Data-driven decision-making in the supply chain

04 Mar 2024


Data-driven decision-making is helping chief supply chain officers (CSCOs) identify and prioritise their next steps. This is a key takeaway from the study Data-led innovation for the modern supply chain, which highlights CSCOs’ plans to focus on artificial intelligence (AI), machine learning and the Internet of Things.

The CSCOs interviewed by IBM’s Institute for Business Value in partnership with the consulting firm Oxford Economics are keen on generating more data and reports as a way to address disruptions in logistics processes.

CSCOs are committed to data-driven decision-making

“There has been a consistent flow of serious events for the last three years with Covid, extreme weather, logistics challenges, war, etc. In many respects, all of our supply chain teams have been delivering heroic efforts to keep products moving,” says Greg Jozwiak, CSCO of Dow (US). For one in every two CSCOs, the approach to facing these challenges has been to reorganise their workforce, collaborate with partners and adopt new technologies, including automation.

To future-proof operations, CSCOs’ top priorities include delivering better customer experiences (52%), improving efficiency and profitability (49%) and making more accurate forecasts for decision-making (47%).

The need to collect data

Recent events have underscored the need to be prepared for multiple scenarios. “I believe CEOs and boards got us into this situation by looking at the supply chain as a way to cut costs. We did that very well for 20 years. But then we had a major tremor — and now they understand. Supply chain can’t just be a cost centre. It’s got to be an enabler of growth,” says Mike Corbo, CSCO of Colgate Palmolive (US).

CSCOs are progressively employing automation and AI technologies. Data collection is a common necessity and 25% of the organisations surveyed have already implemented predictive analytics. Machine learning and automated workflow management are the next most widely used tools.

Technological innovation in decision-making

One in five CSCOs is ramping up the implementation of technological solutions. Their strategies focus on scaling hybrid cloud infrastructures, creating AI-driven workflows, being transparent and customer-centric and closely monitoring cybersecurity.

These CSCOs, which the IBM Institute for Business Value calls “the Innovators,” succeeded in increasing their companies’ annual profits by 11% compared to other respondents in 2021. Most of them claim to use AI and advanced analytics to manage demands and forecast outcomes through predictive technologies. Digital twins are another tool employed by CSCOs. “If I started my career again, I would create a digital twin of everything. The importance of the data those digital twins generate is learning. Learning how you operate with those insights allows the ability to tackle the next issue faster. I think that comes from knowledge in that data,” says Sophie Bechu, COO of Philips (Netherlands).