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Welcome to the Data-Driven Supply Chain

New IoT data sources are allowing companies to apply tried-and-true methodologies, from the manufacturing world to supply chain management.
By Rob Stevens

Lean and Six Sigma
These new tools are also helping managers to integrate data-driven Lean and Six Sigma methodologies into the supply chain. Lean refers to the concept of systematically removing waste from a process, while Six Sigma is a set of tools and methodologies for improving quality and reducing risk. IoT tools have made it possible to bring a new level of data-driven analysis to bear, enabling the IoT-powered supply chain to reach new levels of Lean and Six Sigma success.

Visibility into every link of the chain, in combination with the SPC analysis described above, helps companies develop a baseline for normal deviations in shipment time and inventory at every point. This enables managers to implement targeted increases in safety stock at critical vulnerability points, while removing excess safety stock in other parts of the chain. In addition, greater visibility into the real-time location and condition of goods gives companies the ability to respond to problems with agility, preemptively rerouting and calling on backup suppliers when demand surges occur. Instead of relying on large amounts of safety stock, companies can use the data from an IoT tracking system to run lean, distributing inventory efficiently without sacrificing risk tolerances.

That brings us to the concept of Six Sigma. Six Sigma is all about leveraging data to reduce risk and improve quality within a given process. With real-time data for all shipments, a manager can optimize shipping processes to minimize the rate of delays or damages per million products shipped. This data makes it possible to set up success metrics and ensure quality along every step of the supply chain.

The implications of the data-driven supply chain are huge. New IoT data sources are allowing companies to apply tried-and-true methodologies, from the manufacturing world to supply chain management. Ultimately, this data-driven approach is helping companies reduce waste, lower costs and, ultimately, increase bottom-line revenues.

Rob Stevens is the co-founder and chief revenue officer at Tive, a provider of sensor-driven tracking solutions designed to deliver full visibility into products as they move through the supply chain.

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