In the world of supply chains, clear communication is the linchpin of success. Yet, ambiguous business definitions can turn even the most promising innovations into stumbling blocks. From visibility to data integration, the lack of precise operational definitions leads to confusion, inefficiency, and missed opportunities within digital supply chains. Today, the supply chain industry has a major operational definition problem that is costing us billions of dollars a year. Worse, this untenable situation is also preventing us from realizing the true benefits of advanced data-intensive technologies such as AI, Internet of Things (IoT), data analytics, data integration tools, digital freight matching to name a few.
In this article, I’ll explain why supply chains need measurable operational definitions. Indeed, we need more than agreed-upon dictionary definitions; we need business definitions that make supply chain data both machine-readable and understandable. To illustrate the problem, I’ll provide five real-world examples on how fuzzy business definitions derail supply chain operations. These examples include cross-border trade glossaries, shipment visibility, intermodal operations, and data integrations. Also, I’ll identify specific data-intensive technologies that stall due to the lack of operational definitions.
What Is an Operational Definition and Its Role in Supply Chain Interoperability?
Surprisingly, our fragmented supply chain industry lacks a standardized business glossary. However, more than ever we need a common language to communicate with suppliers, manufacturers, logistics providers, and transportation carriers. Indeed in this digital age, we must have explicit business definitions that are understandable to both humans and machines. Moreover, especially when data is transmitted, it needs to be measurable to assure no misunderstandings. This is what is called an operational definition. See description below.
“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
Without a doubt, operational definitions assure effective understanding and collaboration between businesses. This same type of interoperability is needed when we leverage data-intensive technologies such as AI, data analytics, Decision Intelligence, data integration methods, enterprise systems, and Internet of Things (IoT). For a more detailed discussion on operational definitions, see my article, Poor Operational Definitions Impede Supply Chain Tech Adoption: Now Is the Time For A Big Change.
“What gets measured gets done.”
Tom Peters
Examples of How the Lack of Operational Definitions Are Hobbling Supply Chains Tech Adoption.
Without a doubt, supply chains are plagued by inefficiencies stemming from a fundamental lack of operational clarity. This critical deficiency, specifically the absence of clear operational definitions, is also actively stymying the adoption of essential technology. below, I’ll share with you five notable examples. This includes clarity challenges with cross-border trade glossaries, shipment visibility, intermodal operations, data integrations, and tech adoption overall. Moreover, I’ll also offer practical insights and strategies to overcome these operational ambiguities and unlock faster, more effective supply chain tech adoption.
- 1. Supply Chain Glossaries for Cross-Border Trade: No Industry Agreement on Business Definitions.
- 2. Supply Chain Visibility: A Need for Business Specificity on Type of Visibility Needed.
- 3. Intermodal Interoperability: Absence of Business Definitions, Both Physical and Digital Specifications.
- 4. Data Integrations: A Lack of Operational Definitions for Digital Interoperability.
- 5. Supply Chains Struggle with Tech Adoptions Due to the Industry’s Lack of Operational Definitions.
1. Supply Chain Glossaries for Cross-Border Trade: No Industry Agreement on Business Definitions.
The ASTM F49 Committee is a Standards Development Organization (SDO) that sets standards for digital information in the supply chain. As part of their standardization efforts, they reviewed common supply chain glossaries associated with digital cross-border trade. Specifically, this included glossaries such as from the Maritime Transportation Data Initiative (MTDI) Lexicon, UN/CEFACT, WCO, GS1, IMO, IATA, ICC, and others. Not surprisingly, they found a lot of overlap and inconsistency in terms used by these different supply chain glossaries. Click here for more information on this initiative. Without a doubt, as long as the supply chain industry continues to maintain overlapping, inconsistent business glossaries, we will continue to miscommunicate, hobbling both collaboration and digital interoperabilitystymied.
For more examples about the challenges with supply chain business glossaries, see my article, Feeble Business Glossaries: Know It’s The Greatest Killer Of Supply Chain Collaboration And Data Interoperability.
“People work in the system. Management creates the system.”
W. Edwards Deming
2. Supply Chain Visibility: A Need for Business Specificity on Type of Visibility Needed.
Businesses have long pursued the elusive prize of total supply chain visibility. For instance, they have invested heavily in digital twins, real-time capabilities, and BI dashboards. However, because of ill-defined business requirements many of these efforts have fallen short. As a result, too many IT visibility projects are expensive, time-consuming, and directionless, leaving businesses overwhelmed by data but lacking insights. Without a doubt, for an effective visibility solution, supply chain leaders must clearly specify their needs to IT. Otherwise, the IT department will provide a suboptimal solution based on data available. For example of specifyic visibility solutions, below is a full range of solutions that a business may need depending on their requirements, timing, and budget.
What Type of Supply Chain Visibility Is Really Needed?
- Transportation Visibility: “Where’s My Stuff?”
- Capacity Visibility: Identify Choke Points in the Supply Chain.
- Shipment Data Analytics Visibility: Measure Performance.
- Rates Visibility: Manage Transportation Spend.
- Supply Chain Planning Visibility: Prepare for Future Operations.
- Supply Chain Operational Visibility: Proactively Manage Current Operations.
- Strategic Supply Chain Visibility: Innovate And Optimize Processes.
For more details on types of supply chain visibility, see my article, Surprisingly Supply Chain Visibility Has Many Forms: See Which One Is Best To Be Your Business’ First Focus.
“Just because you can measure everything doesn’t mean that you should.”
W. Edwards Deming
3. Intermodal Interoperability: Absence of Business Definitions, Both Physical and Digital Specifications.
Without a doubt, intermodal transportation revolutionized the International trade with standardized shipping containers. However, today the intermodal industry struggles to adopt new technologies because they are saddled with ambiguous industry definitions and limited cooperation between logistics partners. Also, the industry is further hampered by extensive operational complexities to include conflicting regulatory authorities, physical interoperability challenges, many financial entities, and countless stakeholders. As a result of these operational complexities coupled with a lack of a coherent business terminology framework, keeps the intermodal industry stagnant.
For more detail discussion on intermodal interoperability challenges, see my article, Intermodal Transportation Requires A Breakthrough To Overcome Its Interoperability Problems.
“Quality starts in the boardroom.”
W. Edwards Deming
4. Data Integrations: A Lack of Operational Definitions for Digital Interoperability.
A lack of operational definitions significantly challenges supply chains when it comes to data interoperability, especially data integrations. Indeed, most businesses can transfer data using file transfer or an Application Programming Interface (API). However, the real problem is that the receiving system doesn’t understand or act on the data sent. In short, the data often gets “lost in translation.”
As an example of this “translation” issue, a supplier transmits to a buyer that a package with their product order has “shipped”. However, in reality the supplier has only printed the shipping label. Worse, the carrier is not scheduled to pick up the package until next week. In this case, the “shipped” data transmission is not just useless, it creates distrust in the supplier. Indeed, these misunderstandings are quite common. This is because businesses, and particularly the supply chain industry, do not have agreed upon operational definitions that are understandable between logistics partners. Indeed, businesses need to better define and agree on industry terms and definitions that are measurable.
For a more detailed discussion of logistics data interoperability, see my article, Achieving Logistics Interoperability: The Best Way to Breakthrough The Tangle Of Dumb Data Integrations.
“ [Semantic Interoperability is] … ensuring what is sent is what is understood”
EIF
5. Supply Chains Struggle with Tech Adoptions Due to the Industry’s Lack of Operational Definitions.
Indeed, clarity in business communications is the key for supply chain success. Moreover, without business clarity, the return on investment (ROI) for new tech innovations is difficult at best. Further, these business communications issues extend far beyond the tech examples I discussed above. For instance, these interoperability issues extend to other data-centric tech innovations such as digital identity, knowledge graphs, digital transformation, data analytics, digital freight bill processing, and Decision Intelligence to name a few.
“One accurate measurement is worth a thousand expert opinions.”
Grace Hopper
Conclusion.
So in this article, I first explained why supply chains need operational definitions that are measurable. Indeed, we need more than dictionary definitions that we agree upon. What we really need are measurable business definitions that make our supply chain data both machine-readable and understandable. Also to better illustrate the problem, I provided you five real-world examples of how fuzzy business definitions derail supply chain operations. These interoperability examples include cross-border trade glossaries, shipment visibility, intermodal operations, data integrations, and the industry’s on-going challenges with tech adoption overall. For more information on supply chain interoperability and collaboration challenges, see my article, Supply Chain Business Communications Need Clarity: This Is What is Hobbling New Tech Innovations.
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.
For more from SC Tech Insights, see the latest articles on Interoperability, Data Analytics, and Supply Chains.
Greetings! As a supply chain tech advisor with 30+ years of hands-on experience, I take great pleasure in providing actionable insights and solutions to industry leaders. My focus is on supply chains leveraging emerging LogTech. I zero in on tech opportunities and those critical issues that are solvable, but not well addressed, offering industry executives clear paths to resolution. I have a wide range of experience to include successfully leading the development of 100s of innovative software solutions across supply chains and delivering business intelligence (BI) solutions to 1,000s of shippers. Click here for more info.