Communications of the ACM
Digital Synergy
Imagine for a moment a company I will call ACRONYM that maintains warehouses around the world from which customer orders for a variety of products are made. Imagine further that some of the inventory is in digital form (think movies, music, ebooks) in addition to being physical in nature. ACRONYM's access to information in digital form turns out to be enormously enabling. The data is readily processed by sophisticated algorithms. This column is pure speculation on my part but inventing the imaginary ACRONYM Company helped me imagine how powerful it can be to have data available that permits fact-based analysis of business performance, projections for future business operations, and understanding of the marketplace the business serves.
ACRONYM gets its orders online, so they are already in digital form, with information ACRONYM needs to fulfill the order. Customers provide all the information requested since, without it, ACRONYM can't or won't place the order. The fact that the data is already in machinable form means ACRONYM can (in no particular order or priority):
- Track the geocentric demand for specific products, which will inform them of where to place inventory and in what quantity in its many warehouses to reduce delivery time;
- Track seasonal variations in demand to create powerful forecasting tools so that long-lead items can be ordered for inventory in a timely way;
- Associate demographics with product orders to further analyze and anticipate demand and inform potential advertising campaigns;
- Use reinforcement and other machine learning tools to prioritize stock keeping levels in warehouses;
- For perishables, keep track of expiration dates to know automatically when to pull stock from inventory;
- For potential contamination, automatically identify inventory to be removed and also to make notifications since order information typically includes email and mobile telephone information associated with particular customer orders;
- Track delivery success rates, timelines, to detect performance variations that might require attention;
- Keep track of long-tail ordering behaviors that might lead to concentration of long-tail inventory in central locations to be transferred either directly to customers or to distribution warehouses at need, reminding me of Inter-Library Loan systems;
- Keep track of suppliers and to cope with supply chain disruption by deliberately exercising multiple sources where possible. Brands and brand-substitution come to mind; and
- Place digital inventory appropriately in distribution networks to reduce data transfer requirements and latency for customer demand.
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