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Pros And Cons Of Big Data And Its Dark Side

Orders, inquiries, complaints, deliveries, campaigns – the daily flood of data in distribution is immense. Anyone who can use this data efficiently has a significant competitive advantage. Or? The most significant advantage of big data is transparency. Thanks to new technologies, relevant information can be pulled from the mass of customer data, deliveries, orders, transactions, product details and manufacturer information in the shortest possible time.

This finally ends the search for a needle in a haystack. Distributors can raise their logistics and sales chains to a new organizational level and optimize their procurement management in B2B business. If, for example, the purchasing department succeeds in placing the quantities of individual products with the suppliers close to the actual state, profits increase.

Big Data Creates Competitive Advantages

The pricing works just as quickly: Complex demand elasticity models examine millions of sales and transaction data and then show in detail which prices need to be adjusted at the item level. In addition, retailers can quickly and easily analyze promotions, causes of sales increases or cost drivers of a campaign. Big data thus offers a tangible competitive advantage in decision-making processes.

Evaluating IT-supported data helps make faster and, above all, better decisions in day-to-day business. The range of information is extensive: Master, transaction and log data can be used, sensor and CRM data, web content, and social media. The information obtained forms the basis for new corporate strategies and creates advantages in negotiations with suppliers and manufacturers.

Big Data As A Prognosis And Early Warning System

Big data also sounds promising for developing forecasting and early warning systems. A system that reliably predicts economic cycles and volatilities in the market would finally have been found and makes global supply chains more transparent. In plain language, companies could react faster and more flexibly to market changes and, thanks to higher market intelligence, minimize their risks and maximize their competitive advantage. Extensive data transparency is urgently needed for product reporting according to REACh, RoHS or ELV. 

Because the requirements for data management through material data, traceability and compliance have exploded in recent years. With search and analysis tools based on big data, distributors can quickly and easily find important information – for example, on the RoHS conformity of specific components. This saves time, effort and money, especially in small and medium-sized companies in the middle of the supply chain. Big data is a must for marketing because detailed information is key to customers’ wants. 

To understand the factors that determine the purchase, providers must follow their customers through the web, evaluate click rates and conduct online surveys. This is the only way to identify target groups in detail and offer tailor-made products and services. The exact address reduces wastage in marketing and sales campaigns and saves costs. In addition, a better understanding of customers can serve as a springboard for innovation, identifying undiscovered trends and new business opportunities.

The Dark Side Of Big Data

Let’s be honest: Collecting more and more data doesn’t automatically explain the world better. And just accumulating information doesn’t create great ideas. Big data is, therefore, not only overrated. For many companies, the evaluation of masses of data is not relevant. In particular, small and highly specialized companies can only do little with the promises of salvation from the data collectors. They know their customers, products and markets too well for that.

Big Data Requires Significant Investments

In addition, the benefits of big data are often disproportionate to the high costs involved. Before new market and sales strategies make a profit, the TCO increases first – and enormously. The integration of big data requires expensive and complex IT infrastructures to be able to manage, validate and analyze billions of bytes.

Conventional analysis instruments are no longer sufficient here. IT specialists are also required to maintain the database. Big data is always synonymous with significant investments – in qualified employees, hardware and software systems, new frameworks, storage capacities and data warehousing concepts.

Unresolved Legal Questions Regarding Exploitation Options

Such an investment in hardware and software is not feasible for small and medium-sized companies. Although they can buy data processing as a service from external experts, they quickly face the following problem: Who guarantees data security and protection? Because when dealing with the personal data of customers and suppliers, sensitivity is required. The distrust of the systematic evaluation of mass data is growing. 

Users react cautiously when it comes to storing their traces on the Internet. There are still many legal questions about the possibility of analyzing and using big data. Personalized investigations, for example, are only permitted with the customer’s consent or are anonymous. In addition, customer data must be protected against fraud and manipulation by third parties. Here, too, high costs are incurred for backing up the data. When using Big Data, companies are walking on thin ice and risk losing the trust of customers and partners with every step.

Big Data Does Not Replace Personal Contact

Close and long-term customer relationships are crucial for distribution. No computer, algorithm or data pool can absorb this personal contact in customer service. Especially in consulting and design-in, users are still looking for a personal touch who conducts conversations with more psychological sensitivity and emotional closeness than a digital assistance system on the website.

Extensive data-supported cognitive systems can help here – but never replace the direct line to the customer. So without people, it doesn’t work. Because data alone makes no sense without the interpretation and judgment of the individual, nor do they explain any causal relationships. On the other hand, emotions play a central role by controlling attention, reducing the mass of information to the essentials and distinguishing what is important from what is unimportant.

Facts and data play a purely supportive role here. It still applies: For the right business idea and a successful sales strategy, you need decision-makers and doers with entrepreneurial flair, creativity and the courage to make critical decisions. They ultimately determine success in the battle for customers and market share.


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