Supply Chain Analytics: What is it and Why is it so Important?

The Lean Supply Chain

by in The Lean Supply Chain

 Relying on traditional supply chain execution systems is becoming increasingly more difficult, with a mix of global operating systems, pricing pressures and ever increasing customer expectations. There are also recent economic impacts such as rising fuel costs, the global recession, supplier bases that have shrunk or moved off-shore, as well as increased competition from low-cost outsourcers. All of these challenges potentially create waste in your supply chain. That’s where data analytics comes in.

Data analytics is the science of examining raw data to help draw conclusions about information. It is used in many industries to allow companies and organization to make better business decisions and in the sciences to verify (or disprove) existing models or theories.

In the past few years, we’re hearing more and more about the use of data analytics in the supply chain & logistics function.

According to an article on EBN online (Betting on Analytics as Supply Chain’s Next Big Thing), “Some industry experts claim that the day for real-time supply chain practices has come — and is on the verge of being more mainstream, thanks to a multitude of cloud data management tools and increased corporate adoption of new supply chain software platforms coming to market. However, there’s also acknowledgement that a necessary foundation for moving efficiently at real-time speed — supply chain analytics — is still very much at the beginning stages of development at many companies, and will take time to build out.”

The article points out that there’s definitely an increased interest in the subject, especially in the areas of improved forecasting and S&OP (Sales and Operations Planning), but that “upgrades and tool implementation take time” and that the data has to be both accurate and accessible in order to perform data analytics with its complex algorithms.

All businesses with a supply chain devote a fair amount of time to making sure it adds value, but these new advanced analytic tools and disciplines make it possible to dig deeper into supply chain data in search of savings and efficiencies.

The supply chain is a great place to use analytic tools to look for a competitive advantage, because of its complexity and also because of the prominent role supply chain plays in a company’s cost structure and profitability. Supply chains can appear simple compared to other parts of a business, even though they are not. If we keep an open mind, we can always do better by digging deeper into data as well as by thinking about a predictive instead of reactive view of the data.

So while advanced supply chain analytics is promising in terms of making our supply chain leaner, it may not be “ready for prime time,” at least not for the masses for awhile.