How Businesses are Growing Lean with Supply Chain Analytics
Business + ManagementManufacturingPredictive AnalyticsSupply Chain Analyticsposted by ODSC Community October 29, 2020 ODSC Community
From airlines to bread-manufacturers, businesses are utilizing supply chain analytics to become lean and turn profitable. Leading retailer Walmart has taken the business to the next level with analytics. Read this blog to find out how these businesses are doing it, and where supply chain analytics is headed.
The Walmart Success
Do you know how many footfalls does Walmart draws each week? It’s about 265 million a week. To cater to such scales, it employs over 2.2 million people across 11,500 global stores. This huge employment isn’t the only reason that underpins the massive Walmart success. That’s just the half-truth, the other half lies in the supply chain.
Walmart is a subject of study due to its powerful supply chain management principles (sales per square foot, operating profits, cost structures, inventory turnover, and more). The company has poured billions of dollars in innovative supply chain technology for better tracking, forecasting, manage suppliers, etc. to meet customer demand at the right time, right place.
The State of Supply Chain Analytics
Data analytics is the central piece of the supply chain today – not just for retail, but almost every industry that aims to improve process efficiencies and bottom lines.
In 2016 (according to an Accenture survey), it was reported that despite acknowledging the benefits of analytics in the supply chain, only 17% of the companies invested in analytics implementation. However, this scenario has shifted as there are more takers of this technology today. The supply chain analytics market alone is set to hit the $10 billion-mark by 2025, which is a 16% CAGR (as reported by GlobeNewswire).
One of the recent Deloitte research findings claimed that supply chain managers are investing in this technology to ‘cut down costs’ (the primary reason behind investment). Other reasons include better customer experience, real-time collaboration with suppliers, manufacturing equipment optimization, customer engagement, and connectivity.
With businesses investing in predictive analytics, let’s uncover this sub-technology.
How Businesses are Utilizing Predictive Supply Chain Analytics
Predictive data analytics in the supply chain is applying statistical models to predict the likely sales demand, exchange rates, and such vital metrics. Higher the quality of the data, accurate the forecast derived. Businesses finetune their supply chains from insights gathered from predictive analytics.
Demand depends on too many organization variables (internal and external), businesses use predictive analytic models to forecast demand more accurately by using past data, historical trends, market intelligence, economic conditions, etc.
Predictive models can be used to dynamically change pricing by adjusting it as per the real-time market demand and scenario. Most airlines leverage predictive analytics to affix prices. Similar techniques are used by cab service-providers like Uber.
Companies make the best use of supply chain analytics to optimize the inventory levels that meet the demand every time. Walmart uses an automated re-ordering system (which uses predictive techniques) to maintain inventory levels by connecting stores and manufacturing units.
Shipping and Logistics
Businesses can optimize costs that are attributed to logistics and shipping. This allows businesses to plan shipping routes better by determining the fastest routes, distance, vehicle state, tire pressure, traffic, weather updates, fuel consumption, and more.
Not just predictive, but even prescriptive supply chain analytics helps businesses evaluate outcomes of different actions and their impact. Maximum business value can be derived by cutting down risks in supply chain operations.
The Airline, E-commerce Company, and Bread Manufacturer
Not just for pricing, but airlines also use predictive analytics to anticipate maintenance needs and monitor component health to avoid sudden downtimes. In 2018, US-based Delta Airlines started using Skywise (platform by Airbus) for tracking operations data and predicting maintenance.
E-commerce giants like Amazon are truly benefitting from advanced supply chain analytics. Amazon has a cutting-edge patent on the anticipatory shipping method that will allow the company to package orders even before customers have placed an order.
The practice isn’t just confined to retailers or e-commerce companies. A UK-based bread-maker Warburtons used data analytics to enhance the forecast accuracy from 79% to 86%. The bread-manufacturer has been able to drive revenues, control quality, and serve fresh products to its customers. Warburtons also uses a ‘forecast portfolio’ and makes strategic decisions related to new products five years ahead of time with this advanced analytics platform.
Another UK-based foodservice provider used supply chain analytics coupled with Power BI dashboards that helped the company to achieve real-time visibility on customer data, inventory, fleet, order management, and route-planning.
The Road Ahead
Gartner identifies analytics amongst its top eight trends in 2020 for the supply chain. Businesses are slowly moving towards newer platforms and data analytics solutions in the supply chain to reap benefits.
The benefits of using supply chain analytics are evident from the above examples. A special report published by Thomson Reuters states that three major advantages of supply chain analytics are relationship management, traceability, and forecasting capabilities. Other benefits include data validation, anomaly detection, operation benchmarking, etc.
If you’re looking to invest in supply chain analytics, areas that you could consider are sales, operations, inventory, planning, sourcing, warehousing, transportation, and point of sales.
Dheeraj Rawal is a technology enthusiast who creates impactful content to help businesses make decisions. His content is loaded with powerful stories (that stick) that help readers understand the technology impact better. He’s currently associated with a business technology consulting company – Saviant Consulting. Dheeraj creates high-quality content in all shapes and sizes – blogs, whitepapers, e-books, product pages, and more. Feel free to reach him out on LinkedIn.