By Matt Harding | Vice President, Freight Market Intelligence Consortium | Chainalytics
Why the future holds significant opportunities to integrate market intelligence into your transportation strategy
The world of data is changing fast…
Much has been reported on the advancement of technology into new frontiers: Automated vehicles, robotics, artificial intelligence will all have far-reaching applications and, without question, will change how many businesses evolve and function in the coming years.
But there’s another technological revolution taking place that is capturing our attention within Chainalytics’ Freight Market Intelligence Consortium (FMIC) that has immediate benefits.
In the last 13 years, the FMIC has evolved into the leading provider of transportation market intelligence: We currently collect over $35 billion in annual freight spend for the sole purpose of developing benchmark information for over 170 complex supply chains across the globe.
Our approach has led to significant value for our members and arguably one of few data-driven content services that has mass appeal and direct applicability to pressing business issues in the supply chain.
While our business is growing and our content evolves, there is always the question from our members – where is the market now?
But harvesting lots of data and producing quality insights take time…
With all of the FMIC members submitting data in prescribed formats there is a tremendous amount of data preparation and blending effort required before we can apply analytics to explain or answer questions about market rates. There are nearly 500 queries performed on billions of dollars of economic data that are required to clean data. We then generate thousands of reports indicating customer-specific market intelligence.
So it takes time to process this information. And even if we were to measure billions of dollars transportation market data – instantaneously – how would we make the information useful and available to support members asking the question about current conditions?
Little’s Law and Analytics
LIttle’s Law has many applications in business and most of us in logistics with a background in industrial engineering or Six Sigma have a fundamental understanding of its wide ranging applicability. In short, the law says that the amount of items delivered equals the number of items in the process divided by the time the items spend in the process. For example, if you want a bottle of scotch produced every day and it takes 10 years to produce a single bottle you are going to have 3650 bottles in the process for each single bottle produced daily. It’s a simple and powerful concept – basically the F=ma of industrial engineering.
Based on all of our work using data to produce intelligence that will then ensure better decision making for FMIC members, we’ve found it all boils down to a simple equation:
Intelligence = Number of Insights / Time to produce insights. So in this simple model, there are two ways to increase intelligence:
- Increase the amount of insights for a given period
- Reduce the time to produce them
In the past we have chosen the former (1) as a our primary business strategy. But our customers want speed….
Not so fast…
You may be asking, “What is the benefit of instant or infinite information on the transportation market?” And that is a fair question. The value of an immediate data stream of transportation market information yields an unwieldy Pandora’s box of measurements that have limited actionable qualities or benefits. Solving the question of “what is happening now?” – essentially creates a different problem.
The decision maker’s capacity for data is constrained by the appetite for certain actions that lead to higher probabilities of benefit – and this is why we place such a huge value on experience and judgement to optimize the insight-to-benefits process. More data is not always better and many companies are challenged in a data-rich world precisely because it is data-rich.
The technology needed to get to “now” is finally available…
In response to our customers demands for progress, we at FMIC are redefining the solution. Buyers of transportation services do not need market information now, they need benefits now. The magic is between the measurements and the adaptation of your business to reduce costs, and increase service, as market conditions change – this is the holy grail of transportation management.
In my next blog, I will explain the insight to benefit process further and provide concrete examples of how technology and new data science techniques are enabling innovative market intelligence processes…stay tuned.
Matt Harding is vice president of Chainalytics’ Freight Market Intelligence Consortium.
Read more about how FMIC and Chainalytics help our clients navigate a complex transportation world:
(ARTICLE) Advice for Shippers Facing Rising Freight Rates in 2017