Accurately measuring supply chain performance is key to determining the effectiveness of your operations and identifying opportunities for further optimization. But with so many people, processes and systems supporting the activities across your supply chain and vast amounts of data available about each one, getting a clear picture of what’s working well and what needs improvement can be a long and arduous task. Supply chain analytics helps you make sense of the data available and enables you to use it to your advantage.
Supply chain analytics is the analysis of data collected from the multiple systems that support supply chain execution. Each process in the supply chain from sourcing and procurement to logistics and distribution provides a large amount of data that, when brought together in one place and presented in a structured format, provides valuable insight into supply chain performance.
Patterns and trends identified through the analysis of your supply chain allow you to make informed decisions about how to optimize operations. The insight gained from supply chain analytics enables you to better understand the performance of each activity within the supply chain and identify processes that require improvement to create more value for your business and your customers.
- Descriptive analytics
Descriptive analytics are used to report on the previous execution of supply chain activities such as inventory movement and lead times. Supply chain managers can use this data to review past performance of supply chain operations and adjust their strategy according to the results.
- Predictive analytics
Predictive analytics are used to estimate the impact certain factors are likely to have on the supply chain. For example, how will an increase in environmental awareness among consumers affect demand for metal straws? This enables supply chain managers to forecast demand as well as anticipate disruptions and have a plan in place to mitigate risks.
- Prescriptive analytics
Prescriptive analytics combines descriptive and predictive analytics to answer questions about supply chain operations such as how to lower transportation costs. This enables supply chain managers to determine the actions needed now to meet specific future business goals.
- Cognitive analytics
Cognitive analytics uses Artificial Intelligence (AI) and Machine Learning to interpret unstructured data such as customer feedback to review performance and highlight necessary changes.
Through the analysis of past, present and future performance, supply chain analytics can benefit your supply chain in several ways:
- Increase efficiency and facilitate process improvement
Gaining visibility of which of your supply chain activities are performing well and which are underperforming enables you to identify areas for improvement and make the necessary changes to address inefficiencies and bottlenecks.
- Reduce costs
Having a centralized view of all the activities within your supply chain and monitoring their performance allows you to optimize the allocation of resources to achieve cost savings. In addition, the more accurate demand forecasting that can be achieved by analyzing data allows you to mitigate costs associated with overstocking.
- Increase accuracy of forecasting and planning
The insight gained from analyzing your supply chain helps you predict future demand with greater accuracy, allowing you to adjust operations in line with this to reduce waste and improve profitability whilst still ensuring you have the capacity to meet customer needs.
- Improve risk management
Supply chain analytics can help you identify potential risks to your supply chain and the impact they could have on your business. For example, if a supplier hasn’t delivered on time for the past two months, it’s quite possible that this might happen a third time. Identifying and analyzing risks prior to their occurrence enables you to prioritize and respond accordingly to minimize disruptions to your operations.
- Gain a competitive advantage
Using supply chain analytics to inform decisions across supply chain operations allows you to make long-term strategic changes that will give you a competitive advantage in the market and facilitate business growth.
Supply chain analytics can be used to evaluate past and current performance of your supply chain and help predict and plan for changes needed for the future. Analyzing the efficiency of your supply chain can identify improvements that improve customer experience and profit margins.
