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What Role Will Big-Data Play in Electronics?

In a previous post, I wondered why, if there is so much data available, businesses continue to miss the mark. The PC industry is one example. In the fourth quarter of 2012, PC sales weren't anywhere near where vendors and analysts expected. One reason is the seismic shift occurring in the PC market as users move to tablets and smartphones. The other reasons can be consolidated under “Our best guess was wrong.”

The phenomenon of big-data — the collection of information from internal and external inputs — is expected to improve the supply chain. One key function of the supply chain is forecasting demand, and big-data will parse overall demand information into increasingly granular segments — who is ordering products, where they are ordering from, what color they prefer, and so on. The better the data, the thinking goes, the better decisions businesses will make.

This type of information is already available through supply chain systems. ERP/MRP systems analyze the big picture. POS data is more granular, and SKUs narrow things down to specific items that were ordered. However, this data is being shared only within a specific supply chain network. Big-data will share that information with any partner that could benefit from it. The consulting firm McKinsey said in a 2011 article (registration required) that sharing data will be a major obstacle for businesses to overcome.

One big challenge is the fact that the mountains of data many companies are amassing often lurk in departmental “silos,” such as R&D, engineering, manufacturing, or service operations — impeding timely exploitation. Information hoarding within business units also can be a problem: many financial institutions, for example, suffer from their own failure to share data among diverse lines of business, such as financial markets, money management, and lending. Often, that prevents these companies from forming a coherent view of individual customers or understanding links among financial markets.
Some manufacturers are attempting to pry open these departmental enclaves: they are integrating data from multiple systems, inviting collaboration among formerly walled-off functional units, and even seeking information from external suppliers and customers to cocreate products. In advanced-manufacturing sectors such as automotive, for example, suppliers from around the world make thousands of components. More integrated data platforms now allow companies and their supply chain partners to collaborate during the design phase — a crucial determinant of final manufacturing costs.

There are, of course, many more challenges. McKinsey makes a point particularly pertinent for the electronics supply chain: When it comes to big-data, not all industries are created equal. The nature of an industry's inventory is one of the differentiators. In real estate, a potential customer's demographic data (children, income, current neighborhood, etc.) is quite valuable. In this case, the inventory (the home) already exists. In the electronics supply chain, things are different — inventory is built in response to estimated demand.

Christian Verstraete, chief technologist for cloud strategy at HP, wrote in an EBN/Velocity magazine article, “Let’s Move Supply Chain Collaboration to the Cloud,” that the electronics industry is still limited by time and space. In most cases, it takes two to three months to build components and six weeks or so to ship finished goods around the world.

It may be way too soon to gauge big-data's impact on the electronics supply chain. The McKinsey article said big-data also requires tools such as established and emerging IT infrastructure in the supply chain.

At the outset, we'll acknowledge that these are still early days for big data, which is evolving as a business concept in tandem with the underlying technologies. Nonetheless, we can identify big data's key elements. First, companies can now collect data across business units and, increasingly, even from partners and customers (some of this is truly big, some more granular and complex). Second, a flexible infrastructure can integrate information and scale up effectively to meet the surge. Finally, experiments, algorithms, and analytics can make sense of all this information.

Electronics companies are beginning to use the cloud to manage big-data. {complink 577|Avnet Inc.} is using E2open's cloud-based platform for its Control Tower offerings. Control Towers give users real-time visibility into supply chain activities and help them share that information with pertinent partners. It's one way to break through the silos of big-data — and possibly reduce the impact of best guesses.

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12 comments on “What Role Will Big-Data Play in Electronics?

  1. Ariella
    January 24, 2013

    @Barbara at best, big data can lead to more accurate predictions because more information is taken into account. But even an 85% rate of accuracy — which is considered excellent — is not a 100%. One can be right about everything, but with one key aspect missing, the whole puzzle is not complete, and the predictions will be off. But big data is likely going to play larger and larger roles in business decisions in future, as it becomes more common and more affordable to implement.

  2. bolaji ojo
    January 24, 2013

    Inaccurate forecasting is a big problem in the electronics industry. Big Data analysis can help but often the issue is really bad data and not insufficient information.

  3. prabhakar_deosthali
    January 25, 2013

    I think one of the problems that sharing of all information by every partner in a supply chain in the Big_Data scenario, is that the partners will have the fear of their data being used their competitors and vice-versa and hence may not share the sensitive data on the B.D. platform.

    Also taking the services of the Analytics service providers may be a costly affair for medium and small supply chain chain partners .

  4. _hm
    January 26, 2013

    Big data is good for prediction. But alongwith this, at top management, one needs to have quintessence foresight and lots of common sense to probe the pulse of market. If not this, all organaization will act alike.

  5. itguyphil
    January 26, 2013

    That might not necessarily be the case. We can share huge amounts of data and interpret it in different ways.

  6. Himanshugupta
    January 26, 2013

    Analysis of large amount of data and come up with useful recommendations is a huge task. I do not think that traditional sofware or techniques are enough to handle this. This is kind of good news for electronics as we will need probably specilized gadgets on which specialized sofwares can run and give useful information on big data.

  7. t.alex
    January 27, 2013

    The use of cloud-based software is very important to analyze big-data. Firstly, it has the capability to sufficiently link all the relevant components together, for example among company apartments or between companies. Secondly, it should be designed to provide various insights into the data. Some employees need to have detailed view of the data such as how much inventory left for a specific product. And at the same time, management of the company can also view at the macro level, for example what is the inventory trend for the past 1 year of this specific product. Oftentimes, I see management make decision based on some powerpoint or excel chart, and typically this chart is manually built in just 1-2 day based on some data people can grab within this short time frame. Management should as well have instant and real-time macro-view for better decision making, not waiting till the end of the quarter for some reports.

  8. SP
    January 28, 2013

    Big data will play a very big role in shaping electronics industry future. We must first deside what data to keep and what can be left away with. I guess electronics will also play a big role in how big data can be managed.

  9. Taimoor Zubar
    January 28, 2013

    I think Big Data will impact the electronics industry just like every other industry. However, what makes the electronic industry a special case is that there's more data available related to purchase of electronic products than in other industry. For instance, companies like HP and Dell are able to uniquely identify who purchases their products and they know their consumers better compared to companies like P&G which sell to the masses and are not able to identify their customers uniquely.

  10. Taimoor Zubar
    January 28, 2013

    “Inaccurate forecasting is a big problem in the electronics industry. Big Data analysis can help but often the issue is really bad data and not insufficient information.”

    @Bolaji: I agree. Forecasting with the help of Big Data is certainly an important benefit. Already, as you said, the electronic industry is plagued with the problem of inaccurate demand prediction. Using Big Data to analyze trends and integrate it with other factors can help in better forecasting.

  11. Taimoor Zubar
    January 28, 2013

    Barbara, do you have any idea about the cost of these Big Data Systems that electronic companies can use? Is the cost low enough for medium and low level companies to afford these? I think the cloud will also have an impact in cutting down the cost besides giving more flexibility.

  12. dalexander
    January 29, 2013

    @Prabhakar… I agree. The balance between co-operation and competition is a bit of a sticky wicket. I think given the choice, most companies will go with competition. However, there are experiments called Living Labs underway that bring not just the supply chain partners into sharing activities, but also the government wherby container information is accessed by the government participants to allow for trusted companies and those in the authorized supply chain to be bypassed for detailed inspections and therefore port of entry delays. The other thing that comes to mind is that BIG Data may be too big to examine in a timely manner. The dynamics of the supply chain change several times a day. The term VACU – Volitility, Ambiguity, Complexity, and Uncertainty seems to be the constant forces mitigating against a smooth, completely informed supply chain.

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