We rely on supply chains in almost every industry, to some extent, and supply chain management helps us build and maintain those supply chains efficiently. It’s important to analyze and understand the supply chain if you’re going to improve it over time—and the only effective way to do that is with supply chain management analytics.
But what exactly is supply chain analytics, and how can you make the most of it for your organization?
A High-Level Overview: Types of Supply Chain Analytics
Let’s start with the high-level view of supply chain analytics. “Analytics” is any process that allows you to scrutinize, process, and draw conclusions from data to make better decisions in the future. And of course, any supply chain will generate tons of data, including shipping times, costs, and sources of waste. With supply chain analytics, you can use sophisticated tools and data visuals (like charts and graphs) to draw better conclusions.
There are a few important types of supply chain analytics, including:
- Descriptive analytics. Descriptive analytics are all about painting a picture. How is your supply chain currently operating? What does the flow look like?
- Predictive analytics. Predictive analytics, as the name suggests, are about making intelligent predictions about the future; in other words, if things continue this way, how will that affect your organization? If you change something, how will that impact your outcomes?
- Prescriptive analytics. Prescriptive analytics give you the ability to collaborate with external partners, thereby improving your collaborative efficiency.
- Cognitive analytics. Cognitive analytics are more subtle, and typically prioritize natural language queries. For example, you might ask, “how can we improve this step of the supply chain?”
Why Use Supply Chain Analytics?
Why would a company invest in software that provides them with supply chain analytics capabilities?
There are a few key motivations to consider:
- Efficiency and profitability. Every supply chain has weak points and inefficiencies. It might be a supplier who doesn’t quite work well within your established system, or a workforce that’s stymied by inferior technology. Whatever it is, the right analytics software can help you identify and eliminate the problem. This leads to a leaner supply chain, with higher efficiency and profitability.
- Intelligent risk assessment. Risk management is a crucial element of any supply chain strategy. If you’re able to accurately estimate and account for risks, you’ll be much less vulnerable to common problems and you’ll achieve greater value for less effort.
- Higher accuracy. All your estimates will be more accurate with the right supply chain analytics software. You’ll be able to forecast costs, needs, and even demand with much higher accuracy—especially if you’re using a sufficiently advanced platform.
- Idea generation. A good analytics platform will also provide you with an open door, directing you to new opportunities for development. You’ll be led to possible areas of improvement, and walk away with ideas you can integrate to make your supply chain better.
Getting Started With Supply Chain Analytics
The question is, how can you get started with supply chain analytics if you’ve never used it before?
The best answer to this question is to find the right software, and the right people to make good use of it. As long as your supply chain manager has at least some experience with data analytics, they should be able to handle making reports and drawing analyses from those reports—that is, assuming the platform has intuitive UI and automated integrations.
Consider the following when choosing a supply chain analytics platform:
- Integrations. How is your supply chain analytics platform drawing data? Does it connect to other platforms that you’re currently using? Is the data stream automated in some way, to reduce the possibility of error?
- Accessibility. Can you access this platform with any device? Is it cloud-hosted?
- Visuals. What kind of data visuals are offered by this platform? Are you able to generate new charts and graphs on the fly, and adjust variables to see differences?
- Reporting. How easy is it to create a report, and what kinds of reports are available? Can you generate documents that are interpretable for a lay audience?
- UI and learnability. What kind of UI is available in this platform? Does it seem easy to learn and use? Are there technical limitations that could make it difficult to employ?
- Cost. Finally, how much is this going to cost? While to some extent, you get what you pay for, you also don’t want to spend your entire budget on a platform that may or may not provide you what you need.
With a bright supply chain manager (preferably with a background in data analytics), and a good analytics platform to assist, you’ll be able to learn much more about the logistics of your supply chain. From there, you can draw intelligent conclusions and gradually make changes to your supply chain for the better.