Your Data Supply Chains Are Probably a Mess.

Here’s How to Fix Them

by Tom Davenport, Theodoros Evgeniou, and Thomas C. Redman
June 24, 2021

Jorg Greuel/Getty Images

Summary
Data is more important than ever, but most organizations still struggle with a few
common issues: They focus more on data infrastructure than data products; data is
often created with the needs of a particular department in mind, but little thought for
the end use; they lack a common “data language” with each department coding and
classifying with their own system; and they’re increasingly focused on outside data, but
have few quality control systems in place. By focusing on “data supply chain”
management, companies can address these and other issues. Similar to physical supply
chains, companies should think systematically, focus on end products, define standards
and measurements, introduce quality controls, and constantly refine their approach
across all phases of data gathering and analysis.
Data management has bedeviled large companies for decades. Almost all firms spend
a lot on it but find the results unsatisfactory. While the issue does not appear to be
growing worse, resolving it is increasingly urgent as managers and companies strive to
become more data driven, leverage advanced analytics and artificial intelligence, and
compete with data. In this article we’ll explore a powerful approach to data
management through the lens of “data products” and “data supply chains.”

Most companies struggle with a few common but significant data management issues.

First, companies have concentrated on the technical capabilities of data management,

which are controlled by the IT function and are needed to acquire, store, and move
data. This is no mean feat — building technical “pipes” is a challenging job. But in so
doing they have focused more on infrastructure and much less on the outputs: the
data products that are used to make decisions, differentiate products and services, and
satisfy customers.

Second, data is created in different parts of the organization to meet the needs of
various departments, not for later use by others in data products, business decisions,
or processes. Contrast that with a physical product, such as a car, where components
such as the chassis and the starter are designed with the end product in mind.

Third, most organizations lack a common data language. Data is subtle and nuanced
and has different meanings for different people in different contexts. Exacerbating this,
some departments, taking ownership for “their data,” may be reluctant to share. Or
while willing to share, they will not make time to explain these nuances so others can
use it effectively. This leads other departments to set up their own “near-redundant”
databases, adding to the overall confusion.

Finally, companies are increasingly interested in what happens outside their walls,
tapping external data to answer a variety of questions. But external data is largely
unmanaged, with little supplier qualification or data quality assessment.

Data supply chain management, with data products as the end result of the process,
can help to address each of these issues. It puts equal emphasis on all phases of data
management — from collection to organization to consumption of data products. It’s a
means of balancing the benefits of common data with those of unique and tailored
data in products, and it’s equally suited to internal and external data. Relatively few
companies employ data supply chain management, but those that do tend to report
better results.
Process and Supplier Management for Data Products

Companies have always produced data products in the form of financial statements,
reports to regulators, and so forth. Still, the range and importance of such products is
growing. For many, the goal is to embed analytics and AI-derived models into products
that serve both internal and external customers. Morgan Stanley’s Next Best Action,
LinkedIn’s People You May Know, Google’s many search offerings, and MasterCard’s
SpendingPulse and Business Locator are good examples. With the issues cited above in
full display, “wrangling” the data takes far longer than building the model and still
doesn’t solve all the issues.

Fortunately, there is a better way to source high-quality data. It builds on the process
and supplier management techniques used by manufacturers of physical products. In
particular, manufacturers extend deep into their supply chains to clarify their
requirements, qualify suppliers, insist that suppliers measure quality, and make
needed improvements at the source(s) of problem(s). This enables them to assemble
components into finished products with minimal “physical product wrangling,”
improving quality and lowering costs.

One organization employing supplier quality management in its data supply chain is
Altria, the U.S.-based provider of tobacco and smoke-free products. Altria depends on
point-of-sale data from more than 100,000 convenience stores daily to complete its
market reports and analysis. A team reporting to Kirby Forlin, VP Advanced Analytics,
manages this base. Data requirements are spelled out in contracts, and the team aims
to help stores meet them. To begin, Altria concentrated on its most basic
requirements. Quality was poor, with only 58% of daily submissions meeting them. But
the Altria team worked patiently, improving quality to 98% in three years. As the score
for basic quality improved, the Altria team added its more advanced requirements to
the mix. As Forlin noted, “This is a work in progress. The evidence that we can
increasingly trust the data saves us a lot of work in our analytics practice and builds
trust into our work.”
Steps Toward a Data Supply Chain

The data supply chain can be established within a company by following some of the
same steps used in process and quality management for physical supply chains:

1. Establish management responsibilities. As step 1a, the chief data officer or

product manager should name a “data supply chain manager” from their staff
to coordinate the effort and recruit “responsible parties” from each department
(including external data sources) across the supply chain. Step 1b is to put
issues associated with data sharing and ownership front and center. We find
that most issues melt away, as few managers wish to take a hard stance against
data sharing in front of their peers.
2. Identify and document the data and associated cost, time, and quality
requirements needed to create and maintain data products.
3. Describe the supply chain. Develop a flowchart that describes points of data
creation/original sources of data and the steps taken to move, enrich, and
analyze data for use in data products.
4. Define and establish measurements. Generally, the idea is to implement
measurements that indicate whether requirements are met. Start with data
accuracy and the elapsed time from data creation to incorporation into a data
product. Measures will vary for each data product’s supply chain.
5. Establish process control and assess conformance to requirements. Use the
measurements of step four to put the process in control and determine how
well the requirements of step two are met and to identify gaps.
6. Investigate the supply chain to identify needed improvements — overall and for
particular data products. Determine where gaps uncovered in step five
originate in the flowchart of step three.
7. Make improvements and continuously monitor. Identify and eliminate root
causes of gaps identified in step six, and return to previous steps if necessary.
Continuously monitor both the input data and the data products, looking to
improve products and for the new data and better sources needed to do so.
8. “Qualify” data sources. Companies will continue to employ increasing numbers
of external data suppliers and it is helpful to identify those that consistently
provide high-quality data. Audits of their data quality programs provide the
means “qualify” those that do and identify areas of weakness in those that do
not.

Key Bank, a top 20 U.S. bank in asset size, uses a broad data supply chain concept to
structure its data management initiatives. It breaks its process into the areas of
“capture/organize/consume” and attempts to improve efficiency and effectiveness in
each area. It recently shifted much of its data storage and analytics to the cloud, and
found major improvements in flexibility and speed across the supply chain. Its
consumption activities were historically focused on classic business intelligence
capabilities, but now it also has a strong data science function.
That necessitated a change in the supply chain toward greater data virtualization and
the ability to construct views of data that cut across different data marts and that
incorporate external data as well. The bank has been able to use its data supply chain
to rapidly develop new banking products that rely heavily on data. For example, it was
one of the largest lenders of Payroll Protection Plan loans in the U.S., and also recently
introduced a national digital bank for doctors. Mike Onders, the bank’s chief data
officer, is effectively the data supply chain manager. He and his staff have evaluated
the ability of the bank’s data supply chain to supply a variety of needed data products.

We urge all companies to aggressively manage their most important data supply
chains. Data is as important an asset to businesses as any other type, and data
products are increasingly as important as physical ones. The same thinking that has
improved physical supply chains for decades is proving equally valuable for data.