A hot topic for our manufacturing clients is the use of Big Data in the effective management of supply chains. Many businesses are aware that they are not using the data they hold effectively, let alone being ready to move into full exploitation of data from third party sources. Most only use their data as an historic tool, looking at what has happened and why. Whilst this offers value to the business, there are huge opportunities to make far greater use of the data in the business.
Here we look at what the opportunities are for the use of data and consider some of the legal issues that may arise.
- Use of data to predict trends and patterns can then be fed through into smoothing demand and throughputs for products in the supply chain to match those trends;
- Data gathering needs to be across the business and not simply in silos to enable better identification of trends and patterns;
- Effective use of data needs good analytics, both in terms of software and staff. Skilled analytics personnel are needed to interpret data and make the right decisions. A key barrier to growth and expansion can be the lack of skilled people. This is likely to generate a new business model for organisations that can offer supply chain analysis services;
- To develop a holistic picture, a business will need to accumulate data both from the supply chain and also from its customers. Parties working together can help identify the “win win” for all.
- Impact on forecasting and ordering/delivery clauses in contracts. These could be increasingly driven by data analytics and may need to respond to “trends” which are identified, “flexing” as time goes on and demands alter.
- New types of contracts will be needed to deal with the implementation and use of data analytics software and also the “enablers” that allow data to be collated and analysed, with opportunities for third parties to offer supply chain analysis services.
- Use and sharing of data raises issues around compliance with data protection law, an area of rapidly developing regulation both in Europe and the United States:
- Disclosure of data can engage industry specific regulation (such as ITAR in the defence industry); competition law; confidentiality; compliance with ISO standards; and risk of security breach;
- Cybersecurity is a key concern. Who will bear the risk of securing the data from attack/loss? Contingency plans will be needed to deal with a situation where a loss of data occurs/a breach in security occurs;
- Finally, what will happen to data at the end of a relationship or when it becomes obsolete or outdated? Contracting parties will need to consider whether it should be returned to the “owner” or destroyed.
We expect to see players in the manufacturing supply chain develop their expertise and practice in the use of Big Data. They will need to stay on top of the legal issues so that compliance and contract drafting keep pace.