Data Economics

Enabling chief data officers and investors to tie the financial value of data to enterprise value

Data Monetization Index for Materials

January 13, 2022

Summary

Materials companies have a Data Monetization Index (DMI) in the range of 8.43% to 11.70% with an average of 10.63%. The DMI calculation is based exclusively on the impact of improved supply chain visibility on company revenues. 

A higher DMI is generally preferable across companies and industries. By way of reference, internet companies have a higher DMI because most of their enterprise value is derived from data. For example, Google’s DMI is 93 percent as we will discuss in a later blog.

Definitions

  • Data Monetization Index (DMI) = Data Valuation / Enterprise Value
  • Data Valuation = Supply Chain Data Valuation + Equipment Data Valuation + Product Data Valuation + Employee Data Valuation + Real Estate Data Valuation + Other Asset Valuation 
  • Enterprise Value =  Equity Value + Long Term Debt – Cash, a key metric used in the investment community

Methodology

The YDC team recently published a DMI for major Materials companies in the United States. Here is an example for Avery Dennison along with a benchmark that includes other materials companies.

The data valuation is based on research that indicates that better supply chain visibility can improve revenues by 11.7%. The total value of data will likely be higher once additional datasets relating to equipment, product, employees and real estate are included. Going forward, we will be working to make the data valuation more real-time.

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