DC Velocity - IdeaBook 2015

and computer games more accurately and more quickly than can traditional approaches. 10 Big data analytics solutions can help users to not only understand what has happened in the past, but also to analyze what is happening as it happens, and then to simulate the impact of any related decisions, a point stressed by Jan-Willem Adrian of Quartet FS, a supply chain software provider offering an in-memory aggregation and analytics technology using streaming data. 11

In a supply chain context, the major advantage of big data is the velocity of data availability, enabling (almost) real-time monitoring or forecasting. In order to take advantage of this, the Swiss industrial company ABB uses structured and unstructured data sources to collect and consolidate information to increase the resilience of its supply chain against a variety of risks. (See the sidebar for more about how ABB’s supply chain has benefited from big data analysis.)

Having information instantly available transforms
daily operations. It allows a supply chain to dynamically
adapt to requirements for the near future or even to
real-time customer demand. In an exploratory research
project with a parcel-delivery service in Switzerland, for
instance, we were able to improve the accuracy of the
company’s weekly predictions of key business clients’
shipping volume by up to 34 percent by adding publicly
available search query data to autoregressive models.
Such models predict future developments based on his-
torical data and are the prevalent forecasting method for
a wide range of applications. The new procedure helps
the parcel carrier improve short-term resource alloca-
tion during peak periods.
In transportation operations, such capabilities can
have a major impact on both efficiency and cost. For
example, a major U.S. airline improved the prediction
algorithm it uses for estimating the time of arrival of
approaching aircraft at its major hubs by connecting
publicly available data about weather and flight sched-
ules with internal data such as feeds from radar stations.
The improved estimates that resulted reduce idle time
for ground crews and could save the airline several mil-
lion dollars annually. 12

In mega-cities, traffic jams are a daily burden for commuters and commercial traffic. To avoid standstills, some express delivery services use global positioning satellite system (GPS) data to dynamically adapt their routes during the last-mile delivery. In one pilot project, DHL is using GPS data provided by taxis to dynamically

The Switzerland-based engineering company ABB’s technology can be found in factories, in trains, power plants, and even out in space. To protect its global supply chain from disruption, ABB sets benchmarks for supply chain risk management and applies a well-balanced mix of risk management strategies.

For example, multisourcing with local suppliers increases the flexibility of its production network and incorporates resilience in the core design of its supply chain. The company also applies legal measures whenever feasible, but since they do not provide risk prevention, ABB goes far beyond that.

The engineering company proactively approaches the risks its supply chain is facing. Regular risk reviews estimate risk exposures both locally and globally. Consequently, the identified risks can be reduced to an acceptable level. Additionally, the regular reviews provide the basis for business contingency plans, which define responsibilities and mitigation measures.

A key risk mitigation tool is a software program called Emergency Dashboard. This dashboard is activated in the event of any real or potential disruption to ABB’s supply chain, due to any natural or man-made event, by tapping several different types of data sources. The Emergency Dashboard determines ABB’s exposure, by business line and supplier, in regions affected by adverse events. This enables the company to put together a proactive mitigation plan, which has helped ABB in the past to either completely eliminate or minimize losses due to a disruption.

For example, in 2011, when a monsoon was heading toward the mainland of Thailand, the Emergency Dashboard prevented supply chain disruptions by alerting responsible managers, who immediately took action. During the subsequent flooding, the combination of prepared managers and an information advantage successfully protected ABB’s supply chain from disruptions—a benefit many other companies did not achieve.