Supply Chain Management is concerned with the flow of goods and services from the point of origin to consumption. The ongoing COVID-19 pandemic has exposed gaps in global supply chains, prompting businesses to revamp their operations. Supply chain analytics is one way to build back better.
This blog will introduce you to the concept and show you why it is crucial for modern-day organizations.
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What is Supply Chain Analytics?
Supply chain analytics involves the investigation of information for procurement, inventory management, order management, transportation, etc. Companies draw data from multiple sources, and analysts work to organize and synthesize insights from it. This way, decisions at every stage are directed towards meeting customer expectations.
Supply chains resemble dominoes, where each constituent and step of the network affects the overall process. Analytics organize and coordinate the disparate pieces, streamlining the work for everyone involved. You can predict the lead time for suppliers, estimate safety stock levels for the warehouse, find out orders fulfilled per hour, and so on.
When integrated via Enterprise Resource Planning (ERP) systems, these capabilities can transform business operations significantly. Shareable dashboards and reports give a comprehensive view of the logistics network disruptions to the employees, allowing them to respond quickly. Some systems can also analyze data in real-time and trigger alerts for potential problems before they become a major issue.
How Does It Work?
It is now clear that supply chain analytics enables data-driven decisions by uncovering patterns, generating summaries, and presenting visualizations for organization-wide process improvements. But how does this translate into action?
According to IBM, it includes four types of analytics:
It is about using a single, trusted repository and increasing its visibility across the supply chain. You can apply it to internal or external systems, describing the occurrences and drawing comparisons with the historical data.
It helps organizations prepare for future scenarios by projecting the most likely outcomes and business implications, thus mitigating potential risks.
It focuses on solving problems, immediate to long-term, and suggesting a course of action for deriving maximum business value.
It employs numerous analytical techniques (for example, artificial intelligence algorithms, machine learning, natural language processing, etc.) to give meaning to unstructured data. Cognitive technologies can answer complex questions and interact like humans, only at a much higher speed and capacity.
Therefore, supply chain analytics can usher in a new era of optimization by automatically sifting through large amounts of data. From identifying inefficiencies, forecasting issues, responding to customer needs, and pursuing breakthrough innovation.
Why is Supply Chain Management Important?
Five key elements lie at the core of supply chain management: planning, sourcing, manufacturing, delivery, and returns. After the initial strategic planning phase, the process emphasizes execution so that products and services reach the consumers faster. With analytics, organizations can speed up the process and close the loop by making better, informed decisions about business operations.
Reports and dashboards can prove immensely useful in estimating risks, optimizing inventory management, and meeting high customer expectations. For instance, analytics software can notice that a specific transportation provider has been regularly late in delivering shipments over the last month. This particular pattern indicates a likelihood of continued delays. Further, the solution can quantify the impact of this anomaly, including the number of potential late deliveries, the cost of chargebacks, returns, etc.
With accurate forecasts, supply chain managers can also carefully plan and integrate all operational pieces to meet the expected volume. Suppose a retailer foresees a steady uptick in sales during the holiday season. It may result in placing larger purchase orders with suppliers and adding more contractors at the warehouse. If any supplier cannot accommodate the surge, the retailer can start looking for alternatives while there is still time.
Inventory management is another area where analytics powers supply chain management. Excess stock leads to high carrying costs. And you lose out on sales if you run out of items. Analytics are crucial for striking a balance and keeping costs in check. The system typically sends out alerts for SKUs along with the lead time for particular suppliers. Sales trends can also assist operation teams in deciding which items should be phased out and which should get additional warehouse space.
Together, all these metrics help a business manage the supply chain without hiccups. The right tools empower organizations to track on-time delivery rates, order accuracy rates, and address the latest trends, meeting customer expectations. On the flip side, a negative experience can equate to losing a customer to a competitor. So, the adoption of supply chain analytics has a direct bearing on the bottom line of businesses.
Why Upskill with upGrad?
Training in supply chain analytics is relevant for anyone looking to enter today’s technology-led business world. Familiarity with the nuts and bolts of the subject matter and appropriate tools can give you an edge in job interviews and entrepreneurial pursuits.
According to a joint report by the Confederation of Indian Industry (CII) and Arthur D. Little, digitizing 80-90% of supply chain operations could reap tremendous results. Additionally, professionals should look at enhancing their skills to deal with the realities of the new landscape.
The Global Master Certificate in Integrated Supply Chain Management from Michigan State University is suitable for fresh graduates and working professionals. It covers the end-to-end supply chain foundation through live lectures, interactive discussion boards, case studies, projects, and quizzes. You also get to choose from two electives: logistics and sourcing. Moreover, upGrad brings multiple functional topics together in a flexible environment without compromising on quality and industry-orientedness. You will learn how to:
- Organize and Integrate procurement, operations, and logistics;
- Implement supply chain design for organizations;
- Accomplish effective logistical operations via strategy development, execution, and management; and
- Leverage competitive advantage with a strategic approach to integrated supply chains.
Also, don’t forget to check out the career assistance and student support features of the course. The offerings are catered to help you drive operational excellence across different levels. What’s more, there are no entry barriers to enrol in the course. So, don’t keep guessing what supply chain analytics entails, begin your learning journey with upGrad today!
What is Supply Chain Analytics?
Supply chain analytics brings efficiency to business operations through data validation, problem detection, and benchmarking. Real-time reporting, forecasts, and optimization, thereby enhancing sourcing, inventory management, and logistics activities. This way, all efforts are directed towards taking customers' products and services to customers faster. Simply put, supply chain analytics infuses the capabilities of business intelligence and data analytics into the supply chain management function, hence improving organizational performance and customer satisfaction.
What are the types of Supply Chain Analytics?
Supply chain analytics can be further divided into Descriptive, Predictive, Prescriptive, and Cognitive analytics. Descriptive analytics deals with explaining occurrences. Predictive analytics forecasts potential scenarios and business implications. Prescriptive analysis suggests strategies and courses of action for handling anomalies. Cognitive analytics is an emerging technology that utilizes AI, ML, and NLP to address advanced supply chain challenges.
Why do modern organizations need to improve their Supply Chain Management?
Supply Chain Management is integral to all business sectors and industries. Since the end goal is to implement a smooth and efficient flow of goods and services from origin to consumption, everything needs to be aligned and connected. With supply chain analytics and ERP systems, organizational leaders, managers, and employees can get a 360-degree view of the ongoing processes and trends. Supply chain management combined with data analytics and reporting functionalities increases the visibility of information and improves decision-making at all levels.