Why do modern businesses need to build a data warehouse?

  • Articles
  • Sep 16,22
A data warehouse is a system that holds both current and historical data in one place to support an organisation’s data-driven operations. Emily Newton explains the criticality of data warehouse for businesses today.
Why do modern businesses need to build a data warehouse?

Modern supply chains run on data. Frequent disruptions and rising demands for efficiency and resiliency have made collecting and acting on digital data a crucial part of operations. If logistics and supply chain businesses want to make the most of this information, they need to build a data warehouse.

A data warehouse is a system that holds both current and historical data in one place to support an organisation’s data-driven operations. Unlike data lakes, warehouses – like their physical counterparts – are highly organized, storing structured and semi-structured data in neat groups. These platforms are a critical part of business intelligence (BI) and are increasingly crucial for supply chain management. Here’s why.

Informed decision making
One of the most important reasons to build a data warehouse is to improve data-driven decision-making. Data quality is shockingly low across the board, with just 3% of companies meeting acceptable ranges for data accuracy. Data warehouses help by consolidating and organizing this information.

Storing data in a warehouse naturally involves removing redundancies and ensuring all information is complete and standardized. By keeping everything in one place, warehouses also provide crucial context for a supply chain’s data. This organisation and reliability, in turn, make it easier to make informed decisions.

As supply chains aim to become increasingly agile, they need relevant, actionable insights from their data. That’s difficult to achieve without reliable, readily available, and organised data storage. Data warehouses provide that by ensuring organisations can understand past patterns and react to current trends.

Data accessibility
Supply chain and logistics businesses also need data to be quickly accessible by multiple parties. It’s easier to increase efficiency and minimize disruptions when everyone is on the same page. Data warehouses enable that by offering a single source of truth for all stakeholders.

Transportation management systems (TMS) can use data warehouses to provide a single and seamless view of the supply chain for all divisions, units, and third parties. This consolidation, coupled with the accessibility of the cloud, keeps everyone informed of any impactful updates. Everyone will get the same complete picture, which reduces communication burdens and prevents errors from misinformation.

This accessibility will also improve productivity within the supply chain. When people don’t need to switch between various platforms to access all the data they need, they can act on it sooner.

Security and compliance
Another reason businesses need to build a data warehouse is that they’re easier to secure. As companies store more valuable data, cyber-attacks are becoming more common. The supply chain and logistics sector is particularly vulnerable. Cybercriminals know striking these organisations will have a bigger impact, so cyber-security is crucial for the industry.

Data warehouses help by reducing sprawl. If a company must manage multiple data storage platforms across various sites and programs, it’s hard to understand and address all vulnerabilities. With everything in one place, the business has fewer platforms to secure and fewer vulnerabilities to manage.

These security improvements can also help businesses comply with rising security regulations. As supply chain security becomes more prominent, regulations will grow stricter, requiring more transparency and proof of security. Warehouses make that easier.

Data warehouses also provide more scalability than other storage and management systems. Because these platforms are organised by design, they make it easier to understand data needs and how future requirements fit into the current infrastructure. When it comes time to scale, their centralisation will make it easier to adjust.

Scalability is ideal for any business, but it’s particularly important for supply chain and logistics companies. This industry moves fast and is prone to disruption. Consequently, businesses within it must be able to adapt to changing circumstances quickly and with minimal costs.

As supply chain organisations embrace data warehouses, they’ll gain the scalability they need. They’ll then be more resilient in the face of disruption and can expand easily as logistics demands increase.

How to build a data warehouse
The need for data warehouses in supply chain operations is clear. However, businesses must also know how to build a data warehouse properly to capitalize on these systems. Here are a few important steps to remember.

Determine goals and identify data sources
The first step in building a data warehouse is to determine what specifically the company needs it for. Warehouses’ architecture should follow their intended use cases, so businesses must start by defining their goals. That includes working with relevant stakeholders to learn their data needs and targets.

Similarly, businesses must identify their data sources that will feed into the warehouse. That could include IoT sensors, telematics solutions, warehouse management systems, and more. Once they know where their data comes from, it’s easier to design a system to consolidate it.

Standardise and clean data
Supply chain organizations must also institute a process to standardize and clean their data before storing it in the warehouse. Poor-quality data costs businesses $12.9 million annually, so warehouses must only keep verified, properly formatted information.

Given how much data supply chains generate, automated solutions may be necessary. Companies can use automated data-cleansing tools to standardise and clean their information without raising data management costs too high.

Test and secure the warehouse
Once companies build a data warehouse, they must test it. This step is easy to overlook, as much of the work is already done at this point, but it’s essential. Testing to make sure the warehouse works as intended before using it will reduce headaches later on.

In that same vein, organisations must implement proper security before using their warehouses. While this is easier than securing other solutions, it’s important not to overlook it.

Build a data warehouse today
Building a data warehouse is essential if supply chains hope to make the most of their data. When businesses implement these systems carefully, they can become more agile, resilient, efficient, and secure. Without warehousing, it’ll be difficult to meet today’s demands.

About the author:
Emily Newton is a tech and industrial journalist and the Editor-in-Chief of Revolutionized Magazine. Subscribe to the Revolutionized newsletter for more content from Emily.

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