Supply chain Analytics

• Supply chain analytics has the power to completely transform your

business, especially if you’re in the manufacturing, automotive, retail,
fast moving consumer goods (FMCG), and information technology
sectors
• Supply chain analytics lets you make sense of the data in your supply
chain, so you can make better decisions.
• the supply chains have grown and evolved over many years. Each one is
a potentially data-creating monster — and data can be in all sorts of
places and in all sorts of formats.
• The global nature of today’s business has led modern supply chains to
become more intricate and diverse than anyone could’ve dreamed of
only a few decades ago. Many companies have a network of supply
chains connecting various suppliers and partners
• In addition, the growth of partner-to-partner relationships means that
companies are frequently also a part of other organizations’ supply
chains.
• This complex supply chain environment presents a number
of critical challenges for a business, including
• Lack of synchronization between business strategy and execution
• Lack of real-time visibility across supply chain operations
• Inability to properly schedule production, leading to costly asset
underutilization
• Poor forecast accuracy, resulting in frequent stock-outs or excess
inventory and safety stock levels
• Lack of flexibility in the manufacturing, distribution, and logistics
footprints
• Inability to properly assess and prepare for supply chain risks
The Three Core Components
of Supply Chain Analytics
• Analytics helps companies learn lessons from the past (not the
dim and distant past, but the recent, relevant past) so they can
make better decisions in the future. Ford, for instance, isn’t going
to glean many useful insights from studying data from the Model
T production line. The information has to be up-to-date and
presented in a way that makes it easy for users to extract the key
information.

• To deliver actionable insights (that is, insights that might result in

taking action), supply chain analytics requires three core
components,
• Data analytics: The process of examining datasets using specialized
systems and software to draw conclusions about the information
they contain. Within the supply chain, this requires collating and
analyzing data from a series of complementary systems.

• Data visualization: The process of helping people understand the

significance of data by placing it in a visual context. Patterns, trends
and correlations that might go undetected in text-based data can be
exposed and recognized more easily with data visualization.

• Technology platform: The underlying infrastructure — often

including an analytics engine — that allows for the capture, storage,
retrieval, aggregation, analysis, and reporting of all transactions
taking place within the supply chain and with trading partners
How Supply Chain Analytics Work
• Supply chain analytics makes two main business processes 
- order-to-cash (OTC) and
- procure-to-pay (P2P) 

OTC is the downstream or sell-side process and includes all the steps required
to receive and process a customer’s order, from the customer placing the order
to the order being delivered to the final bill being settled.
How Supply Chain Analytics Work
• P2P is the upstream or buy-side process of the business. It represents
the relationships and transactions that an organization has with its
suppliers. It includes quotations, purchase orders, receipt of
materials, and paying supplier invoices
How Supply Chain Analytics Work
• Both OTC and P2P have a lot of moving parts. Many stages, sub
stages, and interconnected systems are involved. At each stage, many
people, including managers and staff, need to know exactly what’s
going on.
• Having the right data at the fingertips of those who need it is key to
optimizing these processes.
• Supply chain analytics consists of the three stages shown in figure
below
• Stage 1: Obtain the Right Data. What data do you have? What format is it
in? Where is it stored? Is it up-to-date and relevant for the type of
analysis you want to undertake?
• Stage 2: Define the data for analysis. What do you want to measure? How
many datasets do you want to include? How often are you going to
refresh or update this data? How are you going to display the results?
What type of reports do you need to create?
• Stage 3: Discover the insights. How are you going to visualize the data?
How much drilling down will be required? How will executives need to be
able to interrogate the data? Are you able to predict outcomes and
trends?
What Makes for Good Analytics?
• To gain maximum insight, analytics systems must have access to all the
data, from all stages in the process, and from all the systems involved in
making the process work.
• An organization can get some valuable information from looking at data in
a single system, but the real power of analytics comes when you combine
data from multiple systems, in a process called data blending
• Not all transactions in the supply chain will be in a digital format. Many
companies still use telephone, email, and fax to place orders. When data
blending, an organization must remember the data that’s held on paper,
and then work out how to include it within the analysis. For instance,
faxed orders might be scanned and imported into an ERP system.
Data quality is an important concern. The information from an analytics
solution must be
• Timely: The decision-making process is accelerating. Companies can’t wait days,
weeks, or months for the numbers to be crunched. The information must be
presented in as close to real time as possible.
• Accurate: People will make poor decisions if the original data is poor. The data
that populates the analytics engine must be error free; otherwise, garbage in
equals garbage out
• Relevant: There is a temptation with analytics to measure everything just
because you can, but this leads to data overload. A good analytics solution
should be able to zoom in on the relevant facts needed to address specific
business issues.
• Integrated: Looking at one data set in isolation is unlikely to derive the insight of
combining multiple datasets. Analytics must present as complete a picture as
possible.
• Digestible: Raw data is hard to digest. Even text-based reports are better
displayed visually. The easier the analytics results are to digest, the more widely
they’ll be put to use.
Big Data in the Supply Chain
• The volume of data in every supply chain is exploding from different
data sources, business processes, and IT systems. It’s not going to
stop any time soon. As more and more companies have digitized their
business processes, it’s created a virtual tsunami of data worldwide.
• As the volume and complexity of data increases, so does the
complexity and time taken to analyze that data and derive insights
from it. We call that the time to insight.
• The time to insight using traditional data gathering methods is
typically measured in months. The process goes like this:
Big Data in the Supply Chain
• An organization sets a “drop-dead” date on which to freeze the data.
• It spends 30 days or so collating and processing the information to put it into
a usable format.
• Take another 30 days for an army of analysts to make sense of the
information, and perhaps a few more months putting it in some semi-
digestible format.
• At last the data is presented to the board and key executives, who put
together next year’s plan based on data that’s, by this point, six to nine
months old.
The entire life cycle of some consumer electronics products is shorter than
that!
Big Data in the Supply Chain
The power of modern supply chain analytics lies in two areas:
• It enables a company to fine-tune its supply chain by analyzing data
and visually presenting results at a pace and in ways that haven’t
been possible in the past.
• It enables a company to take an enterprise-wide holistic approach
that relates all relevant information — wherever it is and whatever
format it’s in — to specific business processes or corporate objectives.
Looking at the Benefits of Analytics
The use of intelligent, embedded analytics can benefit every
part of a supply chain operation.
• Planning and scheduling: Planning and scheduling is one of the most important parts of any
supply chain. Get this wrong, and you’re going to lose a lot of money. Supply chain analytics
provides better insights into inventory levels across different locations. You also gain high-
quality decision support through near real-time information, which can be vital if something
goes wrong.
• Improved responsiveness: Supply chain analytics helps you determine what stock you need
in your supply chain. You can predict what’s likely to happen, so you can determine what
items to buy, what items to discard, and what items you’ll need more of. Armed with this
information, you can be much more responsive to trends and events.
Looking at the Benefits of Analytics
• Improved demand planning: With supply chain analytics, you can examine past trends to
predict what stock — and in what amount — your customers will require in the future. For
each customer, you can see what items are selling well and what items didn’t sell well. This
increases customer satisfaction and can inform product development.
• Order optimization: Supply chain analytics lets you optimize both the items you’re ordering
and the overall ordering process. You can increase the number of on-time orders, decrease
the cost of acquiring items, and make sure you get what you order. Order optimization
brings upstream benefits as well. For example, production is more efficient when assembly
lines aren’t waiting for parts.
• Real-time supply chain execution: You can see your orders and supply chain in real time and
be alerted as soon as an issue arises. You don’t have to worry about where orders are,
what’s happening with them, or whether you need to make changes. Taking this one step
further, prescriptive based analytics wouldn’t just see what’s happened; it shows you the
options you have to do something about it right then — for example, what other suppliers
are ready to source from immediately.
Looking at the Benefits of Analytics
• Inventory management: With supply chain analytics, you can plan, forecast, and fully
optimize your inventory so you don’t waste space or waste money with stock that may or
may not be working the way it should. You can look across networks to consider
consumption rates, inventory levels, and other aspects of your supply chain. You can create
the right balance of inventory to keep the supply chain properly stocked while releasing
cash for other activities
• Replenishment planning: With supply chain analytics, you can keep a close eye on inventory
levels, noting where more stock will be needed and on what schedule. Further, you can see
across your network of trading partners to discover who has the stock that you need and
how you can avoid overstocking when it’s not required.
• Improved partner performance: Supply chain analytics gives you much greater visibility into
your trading partners’ activities and performance. You can see quickly which ones are
delivering the most profitable business for you. You can determine which suppliers are good
to work with and are reliable when an order is placed. Armed with this information, you’re
well positioned for contract and price negotiations.
Looking at the Benefits of Analytics
• Improved cash management: By helping to focus on elements like delivering perfect orders
and controlling inventory levels, supply chain analytics helps with cash management. As
you’re able to deliver more orders on time and in full, you can reduce the errors and
exceptions that drain profitability and damage customer relationships. You shorten the
order-to-cash and cash-to-cash cycles and grow revenue by reducing waste.
Case Studies
Case Study
• Identify a company which uses analytics in its supply chain process
• Explain the business of operations
• Explain the analytical approach
• Explain the results (improvements over the previous process)