Imagine this common scenario: A shipper and carrier agree on a freight rate, but they have different ideas about what “delivery window” means. The shipper expects a precise 2-hour slot, while the carrier thinks it means a 4-hour period. This business communications confusion causes disputes, possible fines, and tension – all because of unclear definitions. Further, without standard meanings for terms like “inventory on-hand” or “shipped,” this confusion extends to technology adoption. Indeed, especially for supply chain commerce, companies struggle to innovate because of their disjointed systems are not interoperable. In turn, the root cause of many of these data interoperability problems is our lack of clarity in basic business communications and terminology.

In this article, I’ll first look at how commonplace it is for different supply chain organizations to misunderstand each other. This includes specific supply chain examples of how lapses in operational clarity cause major problems within supply chains. Also, I’ll identify how the poor use of business terminology is a root cause of why supply chains are not data ready, impeding technological innovations. Specific examples include supply chain visibility, intermodal interoperability, and data interoperability to name a few. Lastly, I’ll offer a way out of this operational confusion by having supply chains adopt business glossaries with measurable operational definitions that enables mutual understanding of business terminology by both humans and systems.

1. Examples of a Lack of Clear Supply Chain Terminology in Business Communications.

Without a doubt, clarity is essential in business communications. Organizations must ensure clear communication among employees so everyone understands their work tasks and how to collaborate effectively. Additionally, what is communicated must be understood in context. So, let’s look at some specific examples.

Examples of a Lack of Business Clarity

Supply chains use hundreds of industry-specific business terms in their day-to-day communications. Further, these business terms can be conveyed by various mediums such as verbally or digitally. As an example, let’s take the word “delivery” in the context of a supply chain operation. Below are two definitions of delivery.

Both these Delivery definitions are not clear enough for supply chain communications. Though both definitions are valid, they offer clarity only in specific situations and contexts. Too detail:

• The Cambridge Dictionary Definition Is too Vague. For supply chain operations, it neither provides criteria for determining if a delivery was completed, nor specifies what is delivered (e.g., part of a shipment, a newspaper, a baby).
• DCSA Definition Is too Narrowly Defined. This definition is tailored for the delivery of ocean containers, it does not apply well to other types of shipping. Specifically, this is because this definition is either irrelevant or unclear for other transportation modes such as parcel or Less-Than-Truckload (LTL).

Without a doubt, these “delivery” definition examples illustrate a fundamental challenge in supply chain communications. Namely, a single business term can mean different things across functions and organizations. As a result, in complex supply chains with multiple stakeholders and systems, misunderstandings multiply because both organizations and their systems communicate frequently with different, unfamiliar companies – each using the same business terms differently.

” a single business term can mean different things across functions and organizations … in complex supply chains … misunderstandings multiply …“

2. Examples of Supply Chain Costs Resulting from Misunderstood Business Communications.

What’s more, the “delivery” definition, shared above, is just one set of examples of a poorly defined business term. In reality, supply chain professionals and their systems use hundreds of operational terms like “shipped,” “delivered,” and “paid”—most are misunderstood daily. Indeed, this lack of business clarity has persisted for decades, creating two major problems: it hampers business communication and blocks digital technology adoption. The result: degraded operational performance and stalled digitization efforts. Below are some examples of the results of miscommunications:

The Cost of Supply Chain Miscommunications

Unintended Consequences: Everything You Need To Know With Examples, Causes, And Remedies

• Delayed Deliveries. A supplier mishears the delivery date as “15th” instead of “5th”, leading to a delayed shipment of critical components.
• Increased Costs. A procurement team fails to notice a clause about additional fuel surcharges, resulting in higher-than-expected transportation costs.
• Unfulfilled Orders. Due to a miscommunication about inventory levels, a retailer accepts customer orders for products that are actually out of stock.
• Misallocation of Resources. A forecasting team misinterprets a sales projection, resulting in overproduction of one product and underproduction of another.
• Regulatory Compliance Failures. Import staff misunderstand updated customs regulations, leading to detained shipments and potential fines.
• Quality Control Issues. R&D fails to clearly specify new material standards, resulting in prototype failures and rework.
• Customer Dissatisfaction. Customer service reps provide conflicting information about order status, leading to frustrated calls and potential lost business.

Without a doubt, the root cause of most supply chain miscommunications is that the business terms lacked definition, resulting in sub-optimal operational outcomes and unintended consequences because of misinterpretations and ambiguity.

” lack of business clarity … The result: degraded operational performance and stalled digitization efforts.”

3. Why Supply Chain Tech Fails: The Business Clarity Problem.

Indeed, the absence of robust business 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: Ambiguous and Overlapping Definitions Impede Information Exchange.

Supply chains literally have hundreds of overlapping, ambiguous business glossaries. For instance, cross-border trade suffers because of these overlapping glossaries. This is because any international operation involves many diverse stakeholders and systems. Without absolute clarity in business terminology, systems supporting supply chains can’t transmit actionable Information, thus, affecting key functions such as operations, compliance, procurement, and financials.

b. Vague Supply Chain Visibility Requirements Limits True Insights.

In many cases, business requirements provided to IT departments are too vague when specifying supply chain visibility requirements. For instance, is visibility needed to “find stuff”, identify choke points, measure performance, or for future planning? As a result, IT provides data that is available, not the insights that business decision makers needed.

c. Intermodal Transportation Interoperability Challenges.

In particular, the lack of cooperation and specificity within the intermodal industry hobbles digital tech adoption. This industry is more vulnerable to business communication ambiguity because of their physical interoperability challenges. Without a doubt, this industry needs crystal clear business communications to overcome the many physical inter-connectivity challenges to seamlessly move goods between rail, trucking, ocean carriers, and 3rd party service providers.

d. Data Integration: Actionable Information “Lost In Translation”.

In this case, data is transferred between systems, but gets “lost in translation” due to lack of business definition. Indeed, if humans can’t agree on the business terminology, how can we expect our systems to “understand” the data that they receive?

e. Emerging Information Tech Projects Fail.

Lastly, many supply chain tech projects fail due to operational clarity issues. This is because most new tech is data-intensive to include digital identity, knowledge graphs, AI, data analytics, digital freight bill processing, and Decision Intelligence to name a few.

For must more details on these examples, see my article, The Ways Poor Operational Definitions Compromise Supply Chain Interoperability.

The Ways Poor Operational Definitions Compromise Supply Chain Interoperability

“… ambiguous business terminology is impeding technological innovation within our supply chains.”

Conclusion.

So, this lack of clarity with supply chain terminology and definitions is a root cause of lack of data readiness, hobbling not only business communications, but information technology adoption. Without a doubt, it is time for supply chain professionals to work together to fix these business communications issues in order to improve supply chain operations and fully leverage new technologies. One way to do this is for our business glossaries to adopt better definitions that are more specific and measurable. For more information on this topic, See my article, Poor Operational Definitions Impede Supply Chain Tech Adoption: Now Is the Time For A Big Change.

Poor Operational Definitions Impede Supply Chain Tech Adoption: Now Is the Time For A Big Change

“People work in the system. Management creates the system.”

W. Edwards Deming

More References.

See below, for more references on how the lack of clear business terminology is hobbling the adoption of new technologies.

• Data Ladder’s article, The impact of poor data quality: Risks, challenges, and solutions, provides more details on the risks of poor data quality.
• Claravine’s articles, The Urgency of Digital Data Standards and Data Standards Defined and Explained: Learn How to Create Data Standards provide business cases for data standards and lessons-learned in the marketing industry.
• Peter Carter’s article, Lack of Traceability Standards Not the Issue, points out that the lack of digital trade standards is not necessarily the issue – rather the lack of awareness of those standards
• segura’s article, Supply Chain Compliance – Why we need shared industry data standards, provides examples of increasing business reporting requirements in the Fashion Industry that are not aligned such as deforestation, human rights, microplastics, sustainability, and much more.

Need help with an innovative solution to make your supply chain data ready? I’m Randy McClure, and I’ve spent many years solving data readiness challenges to help decision-makers gain better, faster insights and for organizations to leverage data-intensive technologies. 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 pilot projects and program management 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, and Supply Chain.