There is little doubt that using analytics for supply chain decision-making helps businesses improve operational, strategic, and tactical efficiency. And supply chain professionals receive massive volumes of internal and external data streams.
However, for someone working 60 hours a week and making sure paper goods are on grocery store shelves while putting out numerous “fires” along the way, the last thing they need is another task or process that is overly complicated.
This blog will look at ways to approach analysis that drive meaningful results. Here are a few fundamentals.
- Understand the type of analysis you have
- Unify data in a central location
- Determine if you are measuring the most impactful metrics
There are three common types of analysis: descriptive, predictive, and prescriptive.
Descriptive analytics is a snapshot/dashboard view
Descriptive analysis provides a snapshot of the status of the item you are measuring, whether it is the on-time arrival of carriers for appointments or the rates you are paying for freight in specific lanes.
Predictive analytics can indicate likely outcomes of actions or inaction
Understanding what descriptive analytics are telling you can lead to predictive analytics. For example, if your transportation management system (TMS) shows a shipment is delayed and unlikely to reach its destination on time, you can take action to avoid the service issue before it occurs.
Also, in freight sourcing, you can use solutions to do “scenario” planning. With AI aggregating the data, you can quickly learn the likely outcome of different freight sourcing strategies – what is the impact of using only contract carriers? Can you maintain service levels with only your top-tier carriers?
Prescriptive analytics help you make data-driven decisions
Once you understand your position and the potential risk/reward of different actions, you can move into prescriptive analytics. For example, if your rate for specific lanes is above the market, but other data indicates carrier rate increases are likely, should you rebid for a lower rate or lock in the one you have now to safeguard against potential rate increases?
To make the most of your data, ensure that your data sources are integrated and that the “single source of truth” data is in a unified location. Suppose you operate a company with five different distribution centers, and each only has visibility to its data. In that case, the distribution centers are operating at a disadvantage, and it may be difficult to make strategic changes that truly impact your entire business.
Do you measure what matters?
Perhaps one of the most challenging aspects of using analytics in supply chain management is the sheer volume of data you can access at any time. That is why it is critical to determine the 3 to 5 metrics that will significantly impact your supply chain. Trying to manage 20 different KPIs may be interesting, but it will not help you improve your operation.
Only you can determine if you measure what matters to your business. Still, alignment across functions, departments, and divisions around a few core indicators will make your supply chain more consistent in its performance and more agile if changes are needed.
Analytics can profoundly impact supply chains if practitioners understand what the data is telling them and how to use it to improve, prevent problems, or implement strategies that will yield positive results.
Focus is critical to maximizing your effective use of analytics
Technology can help in your quest for analytics to meet your business objectives, whatever they are. However, with so much data, it is easy for analysis to become overly complex – as a result, you have some interesting information but not a compass to navigate stormy waters. Focus on what you want to achieve and use analytics as a tool to chart the path forward.
Debra N. Phillips is Manager of Marketing for Emerge. She began her career in transportation in 1989 as Manager of Public Relations for Carolina Freight Carriers. Throughout her career, she has held leadership positions in companies including FedEx Freight, Penske, and MercuryGate. She has a solid track record of competitively positioning products, services, and technologies to enhance reputation and brand, and accelerate revenue growth.