Supply chain analytics have evolved greatly over the past 20 years with the shift toward IoT and cloud base solutions. Understand what is important and how you can provide meaningful insights for your clients.
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What Is Supply Chain Analytics?
A business must have one crucial piece of the puzzle, a supply chain, to be successful. The supply chain affects a company's ability to provide a positive experience for its customers while considering the expenses that affect its overall profitability.
It's a network created between suppliers, the business, and the end customers. The supply chain covers all areas, from sourcing raw materials to customer delivery.
More businesses understand the importance of a supply chain and are now stepping up their efforts by looking for different opportunities that will speed up the process. They're also looking for a cheaper raw material supplier, which will make the process more manageable in the future.
Many different activities, organizations, and people are involved in the supply chain, which produces a lot of data. The supply chain analytics comes in and turns this data into reports that are easily understood.
These reports help influence decisions made by companies which enables them to get better results. Being able to access this analysis is crucial, especially in a growing economy with many competitors.
Modern Supply Chain Analytics
Not so long ago, there was only statistical analytics. Companies used these statistics to help them forecast their demands. Only a handful of these analytics could measure the success of the company.
However, in early 2000 things started to change following the adoption of the Enterprise Resource Planning System that centralized information and featured business intelligence which enables companies to learn and understand how their supply chain work.
Businesses were now able to lower their expenses and anticipate problems that may arise. They did all this while satisfying the customer's high demands.
Since then, there have been continued advances in technology, especially with the implementation of cloud-based platforms. These platforms now enable companies to organize all their supply chains to one central location.
Supply Chain Analytics
A supply chain analytics is where companies analyze data from applications connected to their supply chain. These include managing inventory, supplying chain execution systems for acquirement, managing warehouse and fulfillment, and transportation management, which includes shipping.
A supply chain is constructed like dominoes; each arm affects the other, and if there are any issues along any of these arms, it will affect the outcome to customers. Each section of the components, as mentioned above, generates big data.
Big data supply chain sheds light on the specific steps involved in the supply chain, such as the lead time for suppliers, stock levels in the warehouse, and or the number of orders they're able to fill per hour. However, when they integrated all these components, the supply chain analytics can be even more powerful.
The Enterprise Resource Planning System can then showcase the information through its global supply chain; this will allow employees to understand the logistics analytics.
They must teach employees the importance of the upstream and downstream effects if there's a specific disturbance. Doing this will ensure the employees know how to mitigate an issue before it's too late.
Drive Informed Decisions
Supply chain analytics assist companies with making decisions that are faster and more informed. In the future, these decisions will be more beneficial to the company.
The reports analyzed will understand and identify potential risks, optimize managing inventory and improve planning. These will help a company meet the high expectations of its customers. One example of this is the analytics software can identify a truck driver who keeps delivering late shipments for the last month. The software can identify the drivers who are delivering late and flag them.
It can also analyze the cost of the late shipment and the number of potential late deliveries. Companies can also make better business decisions because the analyzed data was accurate.
If retailers see that sales are picking up, they may place a more significant order than they would initially, especially if it's coming up to a holiday season.
Unfortunately, many businesses end up with too little or too much inventory, which isn't ideal. If there's too much inventory, then the company may have to pay high shipping costs. On the other hand, having a low inventory means a loss of sales.
Using the software, you'll be alerted when your stock is running low and when you should restock from a specific supplier.
By checking the sales trend, the marketing team can determine which item they should buy enough of and which ones to take off the shelf.
When all of these metrics are combined, the outcome will help the business meet customer's expectations. Any issue that arises in the supply chain can hurt a customer's experience, which will lead them to competitors.
A company can also track its customer's experience by checking their on-time delivery or order accuracy rate; this allows them to identify the issue and correct it before it causes damage.
Considerations for Implementing Supply Chain Analytics
Leaders may be wondering what they should be looking for as supply chain analytics takes on a higher profile. A research group came up with five features of supply chain analytics that are crucial to consider:
The cost-effectiveness of a supply chain can make or break a company; therefore, it has become the main focus in the leading industries today. Supply chain analytics already has impressive capabilities, and so with enhancements in the future, it will continue to change the game across the industry.
If you're providing supply chain solutions for your clients, it's important to give them the right data and insights to ensure smooth operations. That's where Explo can help. Learn more about how companies have used Explo to supercharge their customer reporting here. We've also covered similar topics such as Inventory Analytics and Segmentation.