Do you use a smartphone? How about social media? Or a search engine?
If you’re like most, the answer to each is: of course. But do you realize just how much data is collected from those everyday activities? Add that to the fact that things like refrigerators and cars can now also record users’ habits and the result is a ton of data. Big data. And with help from some savvy experts, big data is bringing big changes to the way companies do business.
“All of us are generating data every day — massive amounts of data. Just with your cell phone alone, the average person is generating four to five megabytes of data a day,” said Morgan Swink, executive director of the Center for Supply Chain Innovation at the Neeley Business School at Fort Worth’s Texas Christian University.
While teaching at TCU, Swink keeps a close eye on ever-evolving trends in modern logistics to pass along lessons to the next generation of supply chain managers and business owners.
Until recently, much of the retail industry has relied on guesswork.
“A lot of the way business works today is what we call anticipatory, which means we guess what consumers are going to want and when they’re going to want it,” said Swink, who was an engineer at Texas Instruments for a decade before teaching.
But for retailers, getting the right product to the right place at the right time and at the right price is essential. Big data is a powerful tool for making that happen.
The information, tons of it, is collected from our activities on computers and smart phones. It’s also gathered from items we handle every day – the “Internet of things” made up of network devices, vehicles, buildings and other items with sensors capable of collecting data.
“Whether it’s a truck or facility or airplane, there are all kinds of sensors on it, and these sensors are collecting data all the time about how it’s doing, how it’s performing … all these things are connected to the Internet and they’re talking to each other,” Swink said.
Companies use big data to restock inventory, design products and spot business trends to greater effect than ever before.
“All this information can allow us to perfect efficiency and quality so we don’t need so much inventory, there are fewer defects and we are not making products people don’t want,” Swink said. “It helps put the products in the right place at the right time at the right quality. That’s the goal.”
Swink gives an example of customers ordering a blue sweater at an online retailer. These orders feed into a data bank of consumer demand, which helps determine the number of blue sweaters needed to manufacture and sell.
“With big data, [businesses] learn more about that person or the demand in general for blue sweaters,” Swink said. “The idea is to be able to predict demand and to use these technologies to fulfill that demand very quickly. Smart computer algorithms collect the data in real time, analyze it and give us the best solution — the best, most reliable, inexpensive solution that’s going to lead to huge savings of time and money.”
Even more amazing is the way big data is transforming the process of coming up with new products. Traditionally, businesses cranked out new items in the hopes that people would want them. But with analytics now available, businesses gain a powerful window into the future – knowing what customers want before it even exists.
“This computing power, and what some people call artificial intelligence, offers the ability to apply that scope of data to come up with better answers and solutions,” Swink said. “In the not-too-distant future, as we get better data or predictive data on what consumers will want, we can be more responsive.
This brave new world for retail raises some concerns, too, so academics like Swink examine the ethical considerations to find ways to handle big data responsibly.
“Technology uses artificial intelligence to gain all kinds of insight about people, companies and organizations. That’s the part that has to be managed closely to make sure we use big data in ways that are profitable, productive and responsible.”
Either way, big data is here to stay. In 2008, Swink said, “we had more devices talking to each other on this planet than there were people on the planet. By 2020, just four years from now, we’ll have 40 billion devices talking to each other.” That’s five times the world population. Big, indeed.