Logistics data management: Focus on the foundation

This is an excerpt of the original article. It was written for the September-October 2023 edition of Supply Chain Management Review. The full article is available to current subscribers.

September-October 2023

Best of the best. Best in class. The elite. Whatever terminology you use to describe the top performers in industry, they all have one thing in common: Companies try to emulate them. That is not easy, of course, but honors such as the annual Gartner Supply Chain Top 25 provide a roadmap for firms hoping to reach the upper echelon. As we do each year here at Supply Chain Management Review, our September/October issue dedicates significant real estate to the Gartner Supply Chain Top 25. Why do we do this? Because our mission is to help inform you, the supply chain practitioner, in all the best ways to make your own supply chains more efficient and…

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With ever-evolving technology influencing the enterprise and driving media headlines, it can be easy for supply chain professionals to get distracted by the newest trends. In recent years, professionals have been inundated by hot topics like blockchain, big data, and now generative AI. Although all these tools have the potential to reduce workload and improve business outcomes, supply chain professionals cannot overlook the importance of a strong foundation of processes and well-managed data.

Related APQC Infographic: Information maturity yields business benefits in logistics

An organization’s data processes must be optimized before it can see the full benefit of any technology. No technology development can make up for a lack of solid practices and processes. The foundation of supply chain performance is data. To perform well, organizations must optimize their data accuracy and data availability.

APQC’s research indicates that organizations with more mature practices for ensuring data accuracy and availability benefit from improved supply chain performance. The benefits also extend to their relationships with customers, as these organizations have higher net promoter scores (NPS) than organizations with less mature data practices.

Data availability and accuracy

For its “Open Standards Benchmarking in Logistics” survey, APQC asked supply chain professionals about their organizations’ information maturity. Specifically, APQC asked how accessible their organizations’ critical logistics and warehousing information is both within the enterprise and with external partners such as suppliers.

APQC used this information to create two groups of organizations: one with low information maturity and one with high information maturity. Then, APQC examined the organizations’ decision-making cultures, how they evaluate data sources, and the extent to which they can always identify product locations.

Decision-making culture

Organizations with greater information maturity can support more advanced decision-making, according to APQC’s research. Thirty percent of organizations belonging to the high information maturity group proactively support decision-making with next-generation systems using machine learning or AI. Among the organizations with low information maturity, only 17% have adopted this practice.

Organizations with high information maturity have taken the next step beyond making information available broadly across the enterprise and to their suppliers and partners. By laying the foundation for data accuracy and availability, they have extended their capabilities into adopting advanced technology that can make better use of supply chain data in decisions.

Figure 1: Impact of maturity in information availability on evaluation of data sources

Source: APQC

Evaluating data sources

An essential element of information maturity is regularly re-evaluating data for accuracy. This is especially important for data sources used in making key business decisions. This ensures that the organization is making the most informed decisions possible and providing AI systems with high-quality data.

As shown in Figure 1, organizations with greater information maturity evaluate their data sources to a greater extent than organizations with lower information maturity. It is clear that mature information availability efforts include an emphasis on data quality and consistency, as well as the regular re-evaluation of data sources for accuracy.

Yet it is not enough to only evaluate data after it is collected; organizations should ensure that all business units use the same structures and definitions for each data element. Data consistency makes it much easier for an organization to evaluate the data’s accuracy.

This affects the organization’s decision-making because if the data quality is poor, then the decisions based on that data will be poor.

Further, an emphasis on ensuring data accuracy ensures that organizations are prepared for change. Inevitably, changes occur within a market, among products, and within an organization. Data sources that support high-quality decision-making today may not continue to do so without regular assessment. Looking at data structures and definitions at regular intervals helps organizations ensure that their data sources provide valuable information despite change. To support regular data reviews, organizations should have a solid governance process that outlines the steps to take in a review and the time intervals at which reviews take place.

Identifying product locations at all times

Another key differentiator among organizations with high information maturity is their ability to track products at all times. These organizations can obtain clear updates on a product’s location from the warehouse, during shipment, and to the point of delivery. As shown in Figure 2, organizations with higher information maturity have this ability to a greater extent than organizations with lower information maturity.

Figure 2: Product locations always known

Source: APQC

Accurate tracking allows organizations to quickly identify disruptions that can impact their order deliveries. Timely information on extreme weather events, labor strikes at ports, and other disruptions enables an organization to quickly implement contingency plans. Additionally, accurate, up-to-date product tracking provides a clear benefit to an organization’s customers because they can stay informed about the location of their orders, leading to greater satisfaction.

So what?

Greater information maturity can enhance an organization’s ability to make high quality business decisions, maintain accurate data, and track product locations. There are additional benefits. Data availability also corresponds with improved customer sentiment.

APQC’s research indicates that better data availability can ultimately have a positive effect on an organization’s NPS. This powerful tool measures customer loyalty, and in its simplest form, the NPS survey asks customers to rate the extent to which they would recommend a business’ products or services on a scale of 0 to 10. Scores in response to the survey indicate three broad categories of respondents.

• Detractors: The customers responding with a score of 0 to 6. These customers are dissatisfied with the company.
• Passives: The customers who assign a score of 7 to 8. These customers are satisfied with the company overall but are unenthusiastic about the products or services.
• Promoters: The customers who assign a score of 9 to 10. These customers are loyal to the company and are enthusiastic in their support.

An organization’s NPS score can range between -100 to 100. It is calculated by subtracting the percentage of detractors from the percentage of promoters. In general, an NPS score from 0 to 30 is considered a good score.

To use data maturity as an avenue for a higher NPS score, organizations should first ensure that accurate order data is available across the enterprise. APQC’s research on order visibility confirms that connecting and giving visibility of order data to relevant functions, including logistics and finance, improves the responsiveness, accuracy, and speed of the business. More than two-thirds of organizations report that their sales teams can view the status of orders, indicating that many organizations have implemented data visibility to some degree.

The next step is to make the data available externally to customers. Order visibility is quickly becoming an expectation within the business world. According to APQC’s research, nearly two-thirds of organizations enable their customers to access information on order status, whether through a web portal, push notification, or both. This level of transparency ensures accountability and creates closer relationships with customers, leading to benefits such as better insight into customer desires.

Extending order visibility to include last-mile status escalates the impact of data availability on an organization’s NPS. Figure 3 shows that the greater the extent to which customers have last-mile visibility, the higher the organization’s NPS.

The difference between organizations among the top and bottom quartiles of NPS is striking. Thirty-six percent of organizations in the top quartile of NPS have enabled customer visibility to the last mile to a very great extent: a difference of 17 points compared to organizations in the bottom quartile of NPS.

Wrap up

Maintaining effective processes for data management and visibility are critical to an organization’s ability to successfully adopt new and emerging technologies. This is especially important given the technological advances that offer new capabilities to the supply chain.

Figure 3: Extent of customer last-mile visibility and net promoter score

Source: APQC

When considering the latest in AI and automation technologies, organizations should not lose sight of the foundation of logistics data management. The management and visibility of data are critical. Organizations that are more mature in their information management tend to regularly re-evaluate their data sources for accuracy and are able to track products from the warehouse to arrival at the customer. This maturity can have a positive impact on an organization’s relationships with its customers, and in turn its NPS. A higher NPS means that more customers are loyal to the company and are enthusiastic in their promotion of its products and services. Not only are these customers likely to remain customers, but they also will spread positive sentiment about the company to others.

About APQC

APQC helps organizations work smarter, faster, and with greater confidence. It is the world’s foremost authority in benchmarking, best practices, process and performance improvement, and knowledge management. APQC’s unique structure as a member-based nonprofit makes it a differentiator in the marketplace. APQC partners with more than 500 member organizations worldwide in all industries. With more than 40 years of experience, APQC remains the world’s leader in transforming organizations. Visit us at apqc.org and learn how you can make best practices your practices.

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