The supply chain is an important piece of the business puzzle because it directly impacts a company’s capability to include a good customer experience also while accounting for many of the expenses that affect overall profitability. The supply chain is a system that connects suppliers, businesses, and end users, and it includes everything from raw resources responsibly sourced to distributed to the end user.
Given the supply chain’s critical importance to business owners, many have increased their supply chain management (SCM) efforts. They’re looking for ways to make processes faster, cost – effective, and simpler along the long path from raw materials supplier to end user. This is extremely crucial because supply chains have become increasingly complex and dynamic work with an increasing number of international partners and face increasing pressure to produce their goods as rapidly as feasible.
What is Supply Chain Analytics?
One question you might ask before knowing the importance of supply chain analytics is;
What is supply chain analytics?
Supply chain analytics is the analysis of data drawn from a variety of supply chain applications, such as supply chain execution systems for procurement, inventory management, order management, warehouse management and fulfilment, and transportation management (including shipping). A supply chain is like a domino effect: each step in the look bigger the one after it, and any problems at any phase can have an effect on the capacity to meet or exceed customer expectations. There are several inventory management, procurement and order management courses that can help you along the way.
Each of the above-mentioned pieces of software may have its own reporting capabilities that shed light on that specific step in the supply chain, such as predicted lead times for suppliers, current safety stock levels at the warehouse, or orders fulfilled per hour, for example. However, supply chain analytics are most effective when all of these systems are linked together, typically through an Enterprise Resource Planning (ERP) system. Through dashboards or reports, the ERP or a separate application can then display and demonstrate data from all over your globalized economy.
There are tons of supply chain management courses that can help you with implementing this in your work.
Role of Supply Chain Analytics
Companies can use supply chain analytics to collect, analyze, and act on data generated by their supply chains. It enables them to make not only short-term adjustments, but also long-term adjustments that will give the organizations a competitive advantage. It’s nearly impossible to manage supply chains manually or via excel spreadsheet because they often span the globe and also include lots of different organizations. It is, at the very least, highly inefficient.
Demand planning (predicting what customers will order using historical data and other factors); marketing and sales planning (production and/or buying the goods an organization needs to meet forecasted demand); and inventory management are just a few descriptions of supply chain analytics (tracking sell-through of items and which SKUs it needs to replenish). All of these activities have the potential to improve the overall efficiency of business operations, resulting in significant cost savings. For example, better demand going to plan prevents excessive spending on purchasing while also preventing stock outs and excess inventory.
Importance of Supply Chain Analytics
Supply chain analytics enables businesses of all sizes to make better, faster, and more rational decisions about their operations. As a result, it provides real and long-term value to the businesses that use it. Here are some advantages of supply chain analytics. Read on.
Identifying Potential Risks
These findings and dashboards assist businesses in identifying and understanding potential risks, improving planning, optimizing inventory management, and better meeting the high customers’ expectations. For instance, analytics software could detect risks by noting that a particular transportation company has consistently delivered shipments late in the previous month. It can not only detect this pattern, but also predict the likelihood of further delays. Supply chain analytics training can help in identifying these risks more effectively.
With more precise predictions, analytics can help you plan better, allowing you to put all of the operational pieces in place to meet the required volume. If a retailer notices a steady increase in sales as the holidays approach, it may place larger purchase requisitions with suppliers and hire more contractors to staff its warehouse in preparation for a surge in orders during the critical holiday period. If any suppliers are unable to adapt these big orders, the retailer can seek out sources of supply while there is still time.
Helps in Finding the Right Inventory Level
Many companies have either too many or too few inventory, neither of which is ideal. Excess inventory results in higher-than-necessary inventory carrying costs, whereas trying to run out of items results in sales being lost. Analytics can assist in finding the right inventory level to keep the costs down while avoiding stock outs. Predicated on the typical lead time for that provider, the system may issue an alert for SKUs that are running low. Sales patterns can also aid the technical team in determining which items require more warehouse space and which can be kept in small quantities or phased out.
A supply chain’s resiliency and expense can make or break a company. Supply chain analytics can help your company in both of these areas, which is why it’s become more important for today’s industry leaders. Supply chain analytics worth solving already have remarkable functionality, and future advancements will only make them more of a game-changer for business owners in all industries.