There’s a famous quote by W. Edwards Deming, one of the most influential thought leaders in manufacturing quality and continuous improvement. It says: “In God we trust; all others must bring data.”
The quote has been a favorite of many business executives. It means that any effective exchange must be anchored by data, not trust or judgment-based insights. This is nowhere truer than in the supply chain. Understanding supply chain health requires accurate performance data. Designing the optimal network requires accurate demand and supply data. Selecting the right suppliers requires accurate spend and risk data.
But there is also another implication to this quote. To have a meaningful conversation and tell a story, executives need to put the data in context. Picture a supply chain executive presenting to the CSCO on the current sales forecast against the monthly plans. The executive has come armed with loads of data. But the CSCO is not interested in raw data or even in tables or charts. The CSCO wants to understand what the data tells about the supply chain’s ability to support business priorities or customer requirements. To be able to explain data and analytics and tie it back to business value, the executive needs to be data literate. The executive needs to be bilingual in the languages of business and data.
Data literacy is comprised of three capabilities: understanding data constructs, understanding analytics and resulting business value. Gartner has been on the forefront of the topic of data literacy since our research has time and again demonstrated that lack of data literacy is a top roadblock. And what we have also found is that supply chain leaders — for example, those who consistently appear on the Top 25 ranking — have reaped great returns on the investments they have made in improving their organizations’ data literacy.
Gartner recently conducted a survey to better understand the need for data literacy and its impact on supply chain performance. The survey demonstrated that there is a critical need — 84% of respondents indicated the need for more data-driven insights to serve their customers better, while 79% reported the need for better data to enable visibility and orchestration among suppliers. Similarly, 84% of respondents indicated the need for more accurate data to predict future conditions.
The survey also found a strong link between having a data literacy training program and the ability of the organization to meet its objectives across a variety of supply chain metrics (see figure). For example, 77% of respondents with formal training programs say they meet their organization’s key performance indicator (KPI) for transportation costs (as a percent of revenue), compared to only 41% of those who do not have a formal training program.
Interestingly, the survey found that while many organizations report having a data literacy training program, most do not have a comprehensive program that spans topics like how to improve process with data, how to build reports, or basic analytics approaches and data sources. In fact, only 2% of companies surveyed reported having a comprehensive training program that spans the three required tenets to build a data-literate organization.
One finding that requires the attention of analytics leaders is that, on average, supervisors — those managing teams — are more data literate than individual contributors. Organizations need to close this gap. To have a truly data-literate organization, all levels — managers, directors and individual contributors — must be proficient in using and communicating data. Training programs must be targeted and tailored to different roles, based on analytics proficiency, business acumen and job responsibilities. This finding underscores the need for democratizing data and analytics across the entire supply chain organization.
How can supply chain analytics leaders start their journey toward their organization’s data literacy? A good place is to conduct a data literacy assessment to gauge current team competencies. Gartner offers an assessment tool to support that effort. Once the leader understands the current state, data and success stories can then be used to build a strong business case for data literacy training programs. Only then will the supply chain organization effectively converse in the language of analytics and put its trust in the data.
Distinguished Vice President
Gartner Supply Chain