As success stories from the industry continue to illustrate, supply chain and logistics companies stand to profit big in the data modernization rush. Centralizing global distribution and supply chain data in a powerful cloud platform like Snowflake, driving data-driven decision-making with near-real time predictive AI, and monetizing existing data to generate sustainable and largely passive revenue are just some of the huge potential benefits that the modern data stack can offer these organizations.
Yet Hakkoda’s 2024 State of Data Report paints a clear picture of this industry as slow-to-adapt, lacking the internal data expertise and data tech “buy-in” necessary to develop a sustainably modern data stack. Developing a data-driven culture is a challenge for these organizations, and an aversion to investing in external data support appears to be a direct impediment to building and incorporating the sophisticated modern data tools and capabilities that will future-proof their operations.
In this article, we’ll look at some of the key takeaways for the supply chain and logistics company from the 2024 State of Data Report. These findings, in turn, will help paint a picture of what is holding these organizations back from data maturity and what areas for growth will determine which organizations are likely to be tomorrow’s industry leaders.
Distribution & Supply Chain Organizations Lag Behind Other Industries in Modern Data Practices
Distribution and supply chain organizations lagged behind other industries in many key categories when it came to modern data practices. They were less likely than the average to report a high level of internal data literacy, to have migrated data from legacy systems to a data cloud platform, and to report that they had leveraged strong data-driven decision making as an organization in 2023.
In fact, distribution and supply chain companies failed to exceed the average in any of the seven categories we tracked for data best practices, including GenAI and centralized data cloud platform usage.
This trend is surprising, given how critical logistical efficiency is for these organizations and how impactful modern data tools can be in facilitating shrewd decision-making. Custom-built, near-real time predictive AI capabilities could prove transformative for these organizations, taking the time-intensive guesswork out of their operations and equipping decision-makers with the best possible data.
So why is distribution and supply chain data modernization lagging behind, given how much these organizations stand to gain from a modernized data stack? The answer is no mystery; it’s right there in numbers. Distribution and supply chain companies lack strong internal data literacy and are outsourcing less of their data management than companies in other industries.
Data-Driven Culture is a Top Obstacle for Supply Chain Enterprises
These organizations were 14% more likely than average to report “creating a data-driven organizational culture” as a significant challenge—by far the highest such number of any industry.
These companies were also significantly less likely than those in other industries to report needing a significant amount of outside data support in the coming year. Paired with the reported lack of of internal expertise, this reluctance to leverage outside help could have significant downstream impact for supply chain and logistics enterprises.
It stands to reason that tomorrow’s leaders in the distribution and supply chain industry will be those who are fastest to adapt to the modern data landscape and embrace the transformation capabilities that come with it. It also stands to reason that those companies willing to seek outside help to reach their data goals will be able to bridge that gap faster.
Distribution & Supply Chain Data Tech Investments Produce High ROIs, Despite Inefficiencies
Though they tend to lag behind in terms of modern data practices, distribution and supply chain organizations reported some of the highest ROI numbers for data investments of all industries at a staggering 130% in 2023. Despite that impressive number, these same organizations reported that they’d only accomplished 55% of their data goals on average.
Both of those figures will only continue to drop, meanwhile, as the supply chain industry continues to fall behind other industries in their data modernization efforts. This downward trend is foreshadowed in the industry’s low rate of data monetization, with only 29% of organizations reporting that they have unlocked direct revenue sources from their data. Only 8.8% of supply chain and logistics organizations, meanwhile, reported achieving their financial goals last year.
Scalability Remains a Concern for Distribution & Supply Chain Organizations As Current Data Stacks are Built for Short-Term Success
Given the profile of distribution and supply chain organizations as resistant or slow to incorporate modern data tools, it might be surprising to learn that these companies lead all other industries in the use of LLM (large language models) and are above-average in the usage rates for AI copilots.
In fact, this trend makes a lot of sense, as these specific data tools are designed to assist data teams who lack deeper expertise to navigate and understand organizational data. In a sense, these tools are papering over organization weaknesses—a lack of strong internal data literacy—in order to prop up short term success.
But the broader outlook for these organizations suggests that the other shoe will eventually drop as internal data teams find themselves increasingly out of their depth as their companies’ business continues to grow.
Distribution and supply chain companies were the least confident when it came to the scalability of their current data stack, with 21% of such organizations reporting that they were either “not at all confident” or only “slightly confident, compared to a 6% average across industries.
Meanwhile, only 18% distribution and supply chain organizations reported they were “extremely confident” in their data stack’s scalability, compared to an average of 33% across industries.
This lack of confidence is, unfortunately, likely to be well-founded, as distribution organizations not only lag behind in broader data practices but also in the deployment of more granular AI functions that can be key to organizational success. These companies were below average in AI usage rates for automation, data governance and compliance, data cleaning and processing, as well as schema matching and integration.
These organizations were also less likely than other organizations to believe that their infrastructure was conducive to using GenAI (66% compared to an average of 83% across industries). In a landscape where advanced AI capabilities continue to set apart the “haves” from the “have-nots” — and where being AI ready increasingly means being data ready — supply chain and logistics enterprises run a serious risk of missing a critical window.
Distribution & Supply Chain Data Modernization is More than Possible with the Expert Support
Given that the resistance to data modernization appears to be largely consistent through the industry, distribution and supply chain companies may feel a lack of urgency to adapt to the evolving data space. But as soon as organizations within the industry begin to make a push toward data modernization in earnest, the dominoes will begin to fall, and those who are slow to embrace the modern data stack could well be left in the dust.
For those distribution and supply chain organizations committed to overcoming talent gaps and a lack of buy-in from internal data teams, Hakkkoda’s certified Snowflake experts are here to help their data modernization goals. Whether you’re ready to migrate your data to a central cloud platform or implement AI solutions that will drive rapid, data-driven decision-making, we have the right mix of industry depth and modern data stack expertise to help you build a sustainable, built-to-scale data stack that will set your organization up for success for years to come.
Supply chain organizations have arrived at a historic moment. The most agile among them have a unique opportunity to transform themselves into industry leaders—but that window of opportunity will close fast as the rush to modernize amps up. If you’re excited to take up the mantle of data modernization, let’s talk today about how Hakkoda can support your data journey.
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