Applied Research

Algorithm Council: the missing piece for today’s companies

Not too long ago the only people who used the word “algorithm” were data geeks, programmers or scientists. Things have changed. Today, most companies recognize that moving to a more data-driven, an analytical approach is a prerequisite for success. And the word “algorithm” is now being used by business executives to describe formulas that allow their company to operate smarter and meet customer needs. Most recognize that the convergence of Artificial Intelligence (AI)/Machine Learning (ML) technologies, the explosion of data from sensors and IoT devices and new information from social media and other sources make it the right time to invest in developing a cohesive way of collecting, creating and managing algorithms. In fact, the importance of algorithms and the urgency of action around them is the consensus view of the 83 companies with whom we have been working in the Digital Supply Chain Institute. Furthermore, it is our view that markets will be won by companies that effectively create and deploy algorithms for everything from customer demand sensing to data cleansing to inventory management! Companies that are faster and smarter at developing and managing proprietary algorithms are going to win in industry after industry.

What we discovered in our research is that the most powerful algorithms are cross-functional. For example, many algorithms require data from Sales/Marketing, Operations, Supply Chain and Finance. It is difficult to gather that the data, develop an algorithm that works and use it to improve the business. There is a missing piece; a piece that must be found and developed if the company is to truly excel using algorithms to drive success. We call this piece the “Algorithm Council” and it is a cross-functional group of leaders from Sales & Marketing, Supply Chain, Human Resources, IT, Risk Management, and Finance. We will define why this is needed, what its role is and how it should be implemented in our latest whitepaper – soon to be published.

Here is the definition of Algorithm Council:

“A cross-functional team that identifies and defines specific business problems that span supply chain and other functional areas creatively identifies the data needed to solve the problem, identifies good decision-making criteria and coordinates with the data science team to select and modify the appropriate algorithms to solve the problem. The Council then monitors the resulting performance and adjusts as needed in a continuous improvement cycle.”

Please reach out to us at [email protected] to learn more about this project or if you are interested in a pilot.