A supply chain leader is responsible for enhancing organizational productivity and operational efficiency through sourcing, manufacturing, delivery and aftermarket services. This requires continuous visibility. Not just at every stage in the supply chain, but real-time visibility every instant. This real time supply chain visibility can only be achieved through integration of the various entities, technology and communication platforms in the supply chain network. And such an all-round integration can materialize only with constant collaboration, co-ordination and communication – the 3Cs of Supply Chain Management, so to say. The quality and speed of the 3C process determines the competitiveness of the supply chain. Now, the enormously large number of product, process, performance, technology and market variants guiding supply chain management, needs a common layer to standardize the 3C process. Analysis is that layer.
Supply Chain Analytics is the application of scientific data modelling techniques to derive patterns in the various aspects of and activities constituting the supply chain of an organization. These patterns are then used for analysis and decisions to improve performance. The main aspects and activities include demand forecasting, ordering, inventory movements, consumption, distribution and returns. There are mainly four types of analytics – descriptive, diagnostic, predictive and prescriptive. Descriptive is ex post facto or retroactive analysis of data on past events. Diagnostic is causal and comparative analysis to determine dependencies and identify patterns. Predictive is proactive analysis to predetermine trends and remediate risks and Prescriptive is analysis combined by internal data, information from external environment and business rules to ascertain the further plan of action. Supply Chain Analytics helps not just make better business decisions but also scientifically disprove and discard existing models.
A typical supply chain begins at sourcing of inputs and ends at delighting the customer. While there is a wide variety of different products or services which may need even wider variety of diverse inputs from far-flung locations, analytics has the capability to facilitate managing this heterogeneity through a system of metrics and standardization. At every stage in the supply chain viz. plan, source, make, deliver and return, analytics can set and steer the direction of execution and progress, through reference benchmarks, performance measurement and variance control. By providing complete visibility, analytics help overcome and eliminate dependencies through informed decision-making and proactive actions.
Analytics in itself is an effective communication tool as it has the capability to align perspectives differing due to different functions and roles. It can help bridge the most common and often, the most natural gaps in understanding and prevent miscommunication due to these differences in functional perspectives. Consumption patterns, demand trajectory, procurement profile, inventory movement, on time delivery, vehicle utilization, cost increases, fuel price rise impact, wastage norms, wait times and customer satisfaction index can all lead to practical and prudent decision-making through analytics.
Software and automation systems enable capturing, storing and instantly processing tiniest bits of information that affects supply chain efficiency and performance. These are fundamental to designing and developing analytics. Furthermore, they also provide features and functions which can empower supply chain managers and leaders to independently design and extract reports suited to their roles and also enable integration between suppliers and customers. However, inaccuracy of data, Information overload and analysis paralysis are the three major impediments in realizing the benefits of analytics.
While Supply Chain Analytics may mean huge investments in Cloud Computing, AI, IoT, RPA and Blockchain for big companies, it may also mean deploying some user-friendly thin client software systems or even some customized database management system using simple, linked and lightly automated worksheets and documents for small businesses. A comprehensive programme for evaluating various options of Supply Chain Analytics, selecting the most applicable among them and implementing it to realize the intended objectives of an organization’s supply chain is a progressively propitious initiative organizations need to embark on. For organizations who view this as an operational overhead due to the challenges they may have experienced in searching and being able to retain the highly demanding skills such initiatives may call for, collaborative contracts with external consultants is a time-tested strategy.