The growing importance in Supply Chain of Data Analytics and Big data

big dataDavid Wilkins, the supply chain leader of Raytheon, the US’s giant defense contractor, has spoken out about how new technologies the likes of data analytics and Big Data are transforming supply chains, making them quicker and smoother.

Raytheon roll out their Supply Advisory Council

Whatever industry sector businesses operate within, the best companies are in the throes of improving their supply chains in order to obtain a competitive advantage in the marketplace. To facilitate this, Raytheon is in the process of rolling out their Supplier Advisory Council facility, but in addition, they are also welcoming other technologies with open arms; technologies that include data analytics, Big Data, and new innovations such as 3-D environments.

Just looking to innovate is not enough

It’s probably safe to assume that most businesses are now looking at such innovations and deciding what benefits they can bring to their supply chains. However it is also a foregone conclusion that only a small number of these companies are putting their thoughts into action. One thing you can be sure of however, is that Raytheon is in the throes of putting their money where their mouth is.

The main driving forces behind the rebirth of Raytheon’s supply chain

Last month (June 2015) Mr. Wilkins explained at the Chief Supply Chain Officer Forum, held in Chicago, that predictive data analytics and Big Data has been utilized by Raytheon in their supply chain to create a competitive advantage. Mr. Wilkins was then asked what the main driving force was behind Raytheon’s supply chain rebirth.

In response Wilkins replied that Raytheon’s supply chain is now under more intense scrutiny that at any time before within the defense sector. He went on to explain that Raytheon’s customers are asking them to do more with less; a request that is leading Raytheon to trying to provide the most advanced technological products at the most economical price.

With approximately 70% of any particular programs costs emanating from raw materials, Raytheon understand that they have to reduce their costs through smart sourcing. In order to do this they are making best use of data analytics and collaborative technology, together with an internal strategic sourcing framework they referred to as “Enterprise Sourcing and Performance Excellence.”

How do does data analytics improve Raytheon’s supply chain operation?

Wilkins was then asked how Raytheon are using data analytics to better their supply chain operations.

Mr. Wilkins explained the complexity of Raytheon’s supply chain, by saying that they are a business that comprises of four separate entities, with over 8000 programs, and that they have more than 10,000 suppliers within their various supply chains. He went on to say that they recently realized that they needed a new platform that would give them the capability for making data driven decisions across all of their complex factors. To do this Raytheon developed “Supply Insights” which goes about collecting information from both structured and unstructured sources that exist inside and outside of the company.

He said that they were able to monitor their suppliers’ financial stability and performance levels on various key factors. If a natural disaster strikes that could affect their suppliers ability to provide goods and services, this gives Raytheon the ability to recognize the situation immediately so that they can then make rapid decisions that will help to minimize any adverse impact on their clients.

How can data analytics help to reduce costs in the supply chain?

The next question thrown at Mr. Wilkins was how data analytics had helped to reduce costs within Raytheon’s supply chain.

According to Wilkins, Raytheon now have the wherewithal to take a look at the landscape of their supply chain in terms of both programs and suppliers, in order to establish ways of minimizing costs. It transpires that the analytics that “Supplier Insight” provides, allows Raytheon to negotiate improved costs by minimizing the number of suppliers, and agreeing long-term contract with those left, to provide multiple programs. Establishing where the lowest costs lie, and determining which suppliers have the best technology, helps to minimize Raytheon’s costs on internal spending in relation to research and development.

The new collaborative technologies that Raytheon use

Mr. Wilkins was then asked to explain some of the unique technologies that they use within the supply chain in order to collaborate with their suppliers.

Wilkins advised that last year (2014) Raytheon opened their Immersive Design Centre (IDC) at their Andover factory in Massachusetts. The IDC is a 3-D all-encompassing environment that allows Raytheon to promote product excellence and speed up the time to market using co-development and co-production of various products.
The IDC provides users with a 320° 3-D image of data and its interaction. It provides better alignments between internal engineers, external suppliers and end users. People using the IDC don 3-D goggles to enable them to interact with virtual representations of products which are projected into the room. It enables users to look for potential problems and modify designs without having to experiment with expensive prototypes. It is the very materialization for futuristic business technology in action.

Raytheon use a special remote device that permits suppliers and customers around the world to interact with this system.

What the future holds for supply chain technology and operation

Finally, when Mr. Wilkins was asked what the future holds for big data and their supply chain, he replied that they are still at the early stages of playing around with supply chain decision-making that is driven by Big Data. Although Raytheon believe that there is still much to be wrung out of their current technology, they do believe that everything that can be achieved today will be achieved in an improved, quicker and smoother way in the future.
Raytheon believe that ultimately, Big Data will enable their supply chain to operate with small groups of suppliers, but operate with them more strategically. They are also of the opinion that Big Data will allow them to spot new, small but high performing and innovative suppliers.

One of the tasks of their data analytical platforms is to perpetually mine for new supply partners; a facility which will help Raytheon to keep constantly improving supply chain performance while protecting the bottom line at the same time.

Is your company contemplating introducing new, innovative technologies into their supply chain? If so what are they, and what benefits does your company hope to gain from them? Have your say at the feedback section below.

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