Many companies struggle to fully leverage tech solutions such as AI, digital transformation, and IoT despite the excitement and much investment. The often-overlooked obstacle is a lack of operational clarity among business organizations and their systems. Specifically, clear operational definitions are needed for both business systems and organizations to ensure that what is communicated is understood. Positively, without a shared and precise understanding of key terms and processes, supply chain innovations will continue to falter. This is particularly true of logistics and transportation operations. It’s time for a big change.

In this article, I will explain what operational definitions are and why they are crucial to supply chains, both for achieving operational excellence and for adopting new technologies. Next, I will provide examples of how a lack of operational clarity is hobbling our supply chain industry. The main reason for this is our overlapping and ambiguous business glossaries that are suppose to define our supply chain terms and concepts. Finally, I will suggest five actions that organizations within the supply chain industry can take to enhance operational clarity and collaboration. Indeed, these measures can lead to rapid technology adoption, improved interoperability, and overall supply chain excellence.

“What gets measured gets done.”

Tom Peters

1. First, What Is an Operational Definition and Why Aren’t Traditional Definitions Good Enough?

Many of us may have heard of an operational definition, but what is it? Moreover, what does it have to do with supply chain operations and tech adoption? Well, I’ll explain. First, below are descriptions for dictionary and operational definitions.

a. Definitions: Operational and Dictionary

First, below is a description of an operational definition.

“a definition that gives communicable meaning to a concept by specifying how the concept is measured and applied within a particular set of circumstances.”

W. Edwards Deming

Next, let’s compare that to the definition of a dictionary,

“a reference book that contains words listed in alphabetical order and that gives information about the words’ meanings, forms, pronunciations, etc.”

Britannica

If you look closely, these definitions are significantly different. Specifically, operational definitions include an additional specification, a measurement or metric, of the term or word being described. Indeed, it is a definitive measurement of business terms that will assure shared meaning between supply chain partners.

b. Why Operational Definitions Provide More Clarity?

So, the description for an operational definition explicitly states that it “defines a measure”. Another way to say this is that an operational definition includes a metric, a standard for measuring or evaluating something. Especially for system-to-system data integrations, it is key that “what was sent was understood”. To illustrate, see Discover 6 Sigma diagram below that depicts a flow chart with an example. This flow chart shows how an operational definition is used to affirm (decide) that there is a common understanding of such things as a concept, a situation, or a business terminology.

1) Example of Where a Lack of Definition Results in Confusion.

To illustrate how important measurements are for business definitions, let’s look at the news stories that were generated surrounding the 2017 Hurricane Maria and the number of deaths cited. Surprisingly, various new sources reported “deaths” from this storm ranging from the official death count of 64 to much higher counts up to 4,645. Why the discrepancies? It was because there was a lack of definition of what a “death caused by the storm” is. See Craig Tickel’s article, The Stormy Truth Behind Operational Definitions for more details on Hurricane Maria reporting on storm deaths. Moreover, there are countless examples like this within the supply chain industry where we have ambiguity even for common business terms.

2) More References on Operational Definitions.

For more detailed discussion on what is an operation definition, see CommonCog’s article, What’s an Operational Definition Anyway? and Advantive’s article, Operational definition. Also, see Master of Project Academy’s article,  Why Operational Definition is Important in Six Sigma Measure Phase? on operational definitions from a Six Sigma perspective. Additionally, see SPC Software’s article, Operational Definition of a Consistent Measurement System for detailed examples of operational definitions.

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.”

W. Edwards Deming

2. Examples of How Supply Chain Innovation Is Losing Its Way Due to a Lack of Operational Clarity.

Indeed, the absence of robust operational definitions acts as a roadblock to realizing the full potential of supply chain innovations. Without a shared understanding of key terms and processes, organizations struggle to align their strategies, workflows, and systems properly. This ambiguity leads to miscommunication, errors, inefficiencies, and a lack of standardization.  As a result, this adversely affects both operations and digital technology initiatives. Indeed, ambiguous business terminology is impeding technological innovation within our supply chains. Below are examples where a lack of operational clarity is hobbling technology adoption.

a. Business Glossaries

Supply chains have many overlapping business glossaries based on ambiguous dictionary definitions. This is especially a problem with cross-border trade with many stakeholders that need absolute clarity when transmitting operational, compliance, and financial information.

b. Supply Chain Visibility.

Here, we have too much data with little insights due to lack of business specificity. For instance, is visibility needed to “find stuff”, identify choke points, measure performance, or for future planning?

c. Intermodal Interoperability.

Without a doubt, lack of cooperation and specificity hobbles digital tech adoption. As a result, data interoperability challenges are immense between various stakeholders to include rail, trucking, ocean carriers, and 3rd party service providers.

Revealing Examples Of How Murky Operational Definitions Really Foul Up And Make Feeble Supply Chain Interoperability

d. Data Integrations.

Indeed, data gets “lost in translation” due to lack of business definition. This makes it difficult to adopt data-intensive technologies such as AI and data analytics.

e. Emerging Information Tech.

Many supply chain tech projects fail due to operational clarity issues. For instance, this includes tech like digital identity, knowledge graphs, digital transformation, data analytics, digital freight bill processing, and Decision Intelligence to name a few.

For more details on these examples, see my article, Revealing Examples Of How Murky Operational Definitions Really Foul Up And Make Feeble Supply Chain Interoperability.

“One accurate measurement is worth a thousand expert opinions.”

Grace Hopper

3. Current Business Glossaries Do Not Have the Operational Definitions to Enable Cross-Supply Chain Collaboration, Nor Achieve Data Interoperability.

Now, here’s the painful truth: you can spend millions on the latest supply chain software, but if your business glossary is weak, you’re building on quicksand. For instance, when Company A’s “urgent order” means “ship within 24 hours” but for Company B this means “ship next available,” no amount of technical integration will prevent service failures. This misalignment isn’t just causing confusion – it’s destroying value across your supply chain, one misinterpreted term at a time. To sum it up, there are basically two major deficiencies with our current supply chain business glossaries. These include:

Deficiencies with Current Supply Chain Business Glossaries

• Business Glossaries Lack Measurable Business Definitions to Enable Understandability. The current state of our supply chain business glossaries are subject to misinterpretation, both operationally and for advancing digital innovations. 
• Overlapping Business Glossaries Hobble Collaboration and Interoperability. Without a doubt, today there is no “master” business glossary that applies to all logistics functions or is universally accepted globally. Indeed, disparate business glossaries, some proprietary, are a major cause contributing to functional data silos that are hobbling supply chain operations today.

Feeble Business Glossaries: Know It’s The Greatest Killer Of Supply Chain Collaboration And Data Interoperability

Indeed, business glossaries are the critical link that enables common understanding for supply chain collaboration and data interoperability. Moreover, business glossaries are more than data dictionaries. These technical dictionaries really only help IT departments to set up systems’ data interfaces to minimize data errors. However, these technical dictionaries do not assure that the data sent is understood. That is where business glossaries come in.

Today, supply chain business glossaries lack measurable criteria to assure common understanding between trading partners and their systems. For a detailed discussion and examples of how existing supply chain glossaries fail, see my article, Feeble Business Glossaries: Know It’s The Greatest Killer Of Supply Chain Collaboration And Data Interoperability.

“If you cannot measure it, you cannot improve it.”

Lord Kelvin

4. Leveraging Operational Definitions: Actions We Can Take Now to Both Improve Supply Chain Collaboration and Enable Rapid Tech Adoption.

To address these business glossary challenges, supply chain leaders must prioritize the development and implementation of robust operational definitions. Indeed, this is what we are missing in our supply chain glossaries – understandable, measurable definitions. To do this involves collaborating with subject matter experts to develop clear, specific, and actionable definitions for key processes, measurable criteria, and data elements. Ideally, these operational definitions should be widely accepted, updated regularly, and available to all stakeholders. By increasing operational clarity, companies can facilitate better collaboration, faster technology adoption, and ultimately, superior supply chain performance. Below are five actions we can take now to help move forward with improving operational clarity within supply chains

Steps to Establish a Unified Set of Operational Definitions for Supply Chain Glossaries

1. Create a Sense of Urgency to Fix Ambiguous Business Glossaries: They Are Hobbling Both Data Quality and Operational Excellence.
2. Adopt an Operational Definition Format for Business Glossaries.
3. Leverage Knowledge Graph Technology to Provide Definition and Context to Business Glossaries.
4. Move Toward a More Encompassing, Shared Business Glossary for the Supply Chain Industry.
5. Foster a More Collaborative and Definitive Process for the Development of Supply Chain Glossaries.

For a more detailed look at these solutions, see my article, A Refocus on Supply Chain Glossaries: The Best Way To Unlock Data Interoperability, Strengthen Collaboration And Leverage Tech

A Refocus on Supply Chain Glossaries: The Best Way To Unlock Data Interoperability, Strengthen Collaboration And Leverage Tech

Need help with an innovative solution to make your supply chain systems work together? I’m Randy McClure, and I’ve spent many years solving data interoperability and visibility problems. As a supply chain tech advisor, I’ve implemented hundreds of successful projects across all transportation modes, working with the data of thousands of shippers, carriers, and 3rd party logistics (3PL) providers. I specialize in proof-of-concept and operational pilot projects for emerging technologies. If you’re ready to modernize your data infrastructure or if you are a solution provider, let’s talk. To reach me, click here to access my contact form or you can find me on LinkedIn.

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