More data doesn’t always equal better decisions

There is currently a lot of interest in Big Data. We can now capture and store immense amounts of information about almost any process, include how humans behave. Buying and browsing habits drive internet advertising at a personal level. Face-recognition software allows companies and authorities to track people’s movements and activities. GPS tracking on cell phones shows where we have been, and when we were there.

In the supply chain world more data has often been seen as an advantage. The thinking is that the more we know, the better our decisions will be, since we have more facts to use as the basis for our choices. In general this is true. However there are at least 3 factors that can reduce the value of the data.

First, in many cases we have reached the point where there is more data than we can effectively analyze. Time constraints often require that decisions be made before all the data is available. So rigorous analysis has become a luxury. And standardized reporting has replaced ad hoc reporting.

Second, more data can hide valuable data. It’s not more facts but the right facts properly interpreted that allow for good business decisions. This is where experience can trump data: the numbers may look good, but if your gut says the decisions being made are not right, it’s worth taking another look at the numbers.

Finally, data is subject to interpretation. An instock figure of 99% may be good for a commodity item, but not for a seasonal item that is approaching the end of its annual cycle. And the way data is presented can skew how it is interpreted. If a presentation looks too good to be true, ask to see the raw data and have the presenter to walk you through the process used to arrive at the final data. It may not be as objective as is appears. And too often politics rather than data drives decisions.

In short, more data will not automatically lead to better decisions. Sound decisions require data, clear thinking and time. And in many cases these are shortchanged. It’s no wonder then, that people are often disappointed in the results of decisions made only on the volume of data available.

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