Emily Newton is the Editor-in-Chief of Revolutionized, an online magazine exploring innovations in the industrial sector.

Accelerating economic change and shifting patterns of consumer demand mean that, while the underlying principles of supply chain management remain the same, new strategies are necessary to stay agile and adapt to the changing needs of modern markets. Functional silos between teams are likely one of the most significant barriers for businesses wanting to adapt.

Knowing how to break down these silos is essential for businesses wanting to streamline their supply chain operations or provide more effective services to clients.

How Data Silos Emerge in the Transportation Industry
According to a recent report from Accenture, three-quarters of multinational executives feel their teams compete, rather than collaborate, on digitization — increasing redundant costs and limiting a business’s growth potential.

The same report cited above also found that, in businesses with silos, digital transformation often increased, rather than decreased, operating costs. These businesses also weren’t seeing the returns or revenue growth they had anticipated as a result of digitizing their systems.

Other data — like an European Union report on barriers to the ongoing digital transformation of European businesses, or statistics on American data silos — suggest the existence of data silos is a global and increasingly common phenomenon.

In the transportation industry, silos are typically organizational or technological. They are the result of decisions made about business structure or technology that may prevent the free exchange of information beyond certain arbitrary boundaries, leading to redundant investments, communication breakdown, or an inability to leverage available data.

For example, a silo in one business may prevent data from moving from one department of the business to another. Another business may silo different business processes, like sourcing and shipping, thereby preventing data from one process from being used to optimize another.

A lack of interoperability between systems or business-wide data standards may also mean these silos can be deeply embedded into day-to-day work and the technology these departments use. Even if a business has identified that these silos exist, they may be hard to work around in practice.

Business structure and certain performance incentives may also cause silos. Highly regimented or stratified structures can unintentionally discourage communication between departments, making it more difficult for department heads to coordinate technology investments and maintain good communication.

The Long-Term Impact of Data Silos
These silos have a range of negative effects. And as a business grows, these effects tend to have a greater impact on day-to-day business.

A silo can mean that some workers may never have easy access to key information, like from where the raw materials used in a certain product were sourced. The silo may also mean those workers perform a significant amount of redundant work. Analysis carried out in one department or segment of a business may need to be replicated. Best practices may need to be developed for multiple solutions. The cost of technology and digital transformation may also be higher due to these silos, as multiple platforms may be used where one could have sufficed.

Operational knowledge may also become siloed — workers in one department may learn best practices that only apply to a particular solution, preventing knowledge about data gathering and analysis from being shared among workers in different departments.

This doubling up of data gathering and analysis processes can also cause trouble for management, who may find they regularly have multiple sets of overlapping or contradictory data from different departments.

These information sets can tell significantly different stories about business operations, making it much more difficult to make informed business decisions, even when management appears to have complete information on business operations.

Over time, these silos can present new problems. Multiple solutions can mean more work for the business’s IT team or contractors, who will have to learn best practices and troubleshooting techniques for different and often non-interoperable systems.

Leveraging Digital Transformation to Break Down Silos
Businesses wanting to reduce silos should begin by reviewing existing data management technology. An audit can often help businesses identify where redundant or non-integrated solutions may be leading to data silos.

For example, a business that performs last-mile delivery may use telematics to gather essential data on vehicle fleet performance and driver behavior. During an audit, that business may discover that information from vehicle telematics is only available to fleet managers and drivers in most situations.

Modern, cloud-ready telematics solutions can be configured to automatically deliver information to both fleet management and an enterprise resource management platform on the cloud.

With this kind of technology, all departments can have access to vehicle telematics information — allowing, for example, customer service representatives to provide advanced notice on service delays without needing to first contact fleet management. Information from vehicle telematics could be provided instantly to business partners and clients as needed.

Best Practices for Internal Business Communication
Structural change can also help a business to break down silos.

Businesses sometimes have incentive structures that encourage departments to view each other as competition, rather than different units working together to achieve the same business goals. Incentives awarded based on the performance of individual departments, for example, may encourage department heads to turn inward, focusing on their own team at the cost of communication with other departments.

Rewarding communication and cross-department collaboration may help break down these barriers and prevent new silos from forming.

Fully removing silos may also require breaking down psychological silos within the business. These silos emerge when employees develop a fear of innovation, change, and the use of new solutions enabled by the industry’s digital transformation.

Changes to company culture can help break down these silos. Providing employees with clear direction, rewarding innovation, and offering opportunities to experiment without consequences can help ensure psychological silos aren’t holding workers back.
Using Technology and Business Structure to Minimize Data Silos
Silos can pose a major challenge for any organization. Businesses in the logistics industry can both remove and mitigate the formation of silos with the right combination of tactics.

Business-wide standards and interoperability guidelines can help ensure technological silos do not exist or prevent the flow of data between business divisions. Incentive structures that encourage division leaders to prioritize cooperation between divisions may also help.

Company culture can also have a significant impact on the siloing of data. Psychological silos can be mitigated with a culture that encourages innovation, the sharing of information, and controlled experimentation.