Why Lack of Accurate Data is Undermining Profitability and Compliance
Today’s supply chains are more complex than ever, yet many organizations still lack access to accurate, real-time data. Fluctuating tariffs, geopolitical uncertainty, and unpredictable disruptions demand rapid decision-making—but too many businesses are making critical choices based on incomplete or outdated information. The result? Increased financial losses, inefficiencies, and growing compliance risks.
The Financial and Operational Impact of Data Gaps
A lack of reliable supply chain data leads to significant financial strain. Research from the McKinsey Global Institute suggests that over a decade, a single major supply chain disruption can erode nearly half of one year’s profit. Without accurate data, companies struggle to optimize inventory, streamline logistics, and respond quickly to emerging risks. In today’s fast-moving landscape, relying on traditional crisis management strategies is no longer enough—decisions need to be based on predictive insights, not guesswork.
Beyond isolated inefficiencies, data fragmentation extends across supply networks. A 2024 McKinsey survey of 88 senior supply chain executives found that only 30% had clear visibility beyond their first-tier suppliers—down from 37% the previous year and 56% in 2022. Since many supply chain disruptions originate deep in the network, undetected bottlenecks and inefficiencies can persist for weeks or months before they start impacting operations.
Regulatory and Ethical Risks Amplify the Challenge
Beyond financial inefficiencies, incomplete data poses regulatory and ethical risks. Modern supply chains span hundreds or even thousands of suppliers across multiple jurisdictions, each governed by varying environmental and labor regulations. New legislation such as the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), set to take effect in 2026, will require companies to proactively identify and address human rights and sustainability risks across their entire supply chain.
Yet, most companies are unprepared. Only 9% of executives surveyed by McKinsey reported that their supply chains are currently compliant with the CSDDD, while 30% admitted they are behind or significantly behind in their compliance efforts. Non-compliance isn’t just a regulatory issue—it carries reputational and financial consequences that could disrupt business operations and investor confidence.
Building a Data-Driven Supply Chain Strategy
Solving the supply chain data deficit requires more than adopting the latest technology. While AI, predictive analytics, and IoT can transform decision-making, organizations must first define the specific gaps they need to close. Simply investing in new tools without a clear data strategy leads to wasted resources and minimal impact. Instead, businesses should prioritize building a connected, real-time data ecosystem that enables better forecasting, agile risk management, and improved regulatory oversight.
For supply chain leaders, the message is clear: without high-quality, timely data, profitability, compliance, and resilience are at risk. The companies that succeed will be those that close their data gaps, integrate actionable insights, and build smarter, more adaptable supply chains that can withstand the pressures of a volatile global market.
