3 Ways to Use Supply Chain Analytics to Drive Profitability

Supply Chain Analytics are not only used for realizing cost savings opportunities. Supply Chain Analytics also offer great untapped potential for increasing operational performance. Three important applications that will drive profitability and growth include: 1. Building supply chain models that provide actionable insight, 2. Connect demand and supply in real-time and 3. Analyze supplier risk.

 

Build Supply Chain Models that Provide Actionable Insight

 

According to Edith Simchi-Levi, Supply Chain Analytics requires a deep understanding of supply chain management and operations—as well as the modeling and mathematical techniques that will provide true, actionable insight into how to improve operations. “This involves first building a model of the current system, what’s called a baseline, and then validating by comparing the model with results, the details of the business. This is actually a pretty complicated process.”

“…sometimes the models are just something new and surprising that you probably wouldn’t have been able to come up with without the model, but sometimes the surprise indicates some sort of a problem with the data or the assumptions, and it would require reviewing any discrepancies to see, to really understand them and make sure that the model is reflecting reality correctly.” Original Source

Check out this video on The Role of Analytics in Supply Chain and Operations Strategy:

Connect Demand and Supply in Real Time

“One of the most important attributes of next-generation supply chain analytics is that they will address issues beyond the supply chain. To optimize operations, companies need to link their supply chains with metrics and analytics on the demand side. For example, at the simplest level, price changes or promotions for products will change demand and hence the required supply of those products. Similarly, changes in the availability of products and components should be reflected in marketing and sales processes.” Original Source

 

Analyze Supplier Risk

“Many companies recognize that the success of their operations is highly dependent upon their suppliers. Yet supplier risk analytics have hardly moved beyond simple metrics and reports in most organizations. The most sophisticated approaches to supplier risk monitoring and management—used by companies that heavily depend on external suppliers and contract manufacturers, such as Cisco Systems—are only somewhat more analytical.” Original Source

 

Conclusion

There are many opportunities for applying supply chain analytics to your business. Facts matter when they are collected from the source and handled close to the reality with the right expertise and tools. Facts can improve efficiency, drive profitability and growth.