Using Prescriptive Analytics to Decrease Supply Chain Disruptions

Editor’s Note: Nari Viswanathan, is Vice President of Product Management for River Logic

According to Deloitte, 79 percent of companies with high-performing supply chains achieve above average revenue growth. Yet, very few companies include supply chain managers in their boardrooms.

While other areas of operation like marketing or manufacturing have relied on advanced analytics for years, supply chain management has been slower to adopt. However, businesses that have applied big data analytics to their supply chain functions have seen a reduction in costs, improved risk management, shorter cycle times, more accurate forecasting, and an overall improvement when it comes to making informed decisions.

Still, supply chain managers are apprehensive when it comes to replacing existing tools. Many wonder if this is just another round of software evolution. Does it require product investment? Can this really help improve the quality of the supply chain? Many feel wary of adopting new technology due to their experience in massive endeavors, such as implementing enterprise resource planning and warehouse management tools.

Implementing prescriptive analytics technology is not a major endeavor supply chain leaders should fear. It's actually a crucial analytics approach that can help supply chains decrease disruptions, improve efficiency, and drive profitability for the business as a whole —which, together, could land supply chain managers that well-deserved seat in the boardroom. Below are four areas where prescriptive analytics can and has helped truly transform supply chains.

Connect the Dots Between Supply Chain and Finance

Correlating supply chain output to the financials of the business is one of the most impactful methods supply chain managers can employ. The problem with existing tools and infrastructure is that they don't allow visibility between the supply chain and the finance department, making it difficult to accurately depict the supply chain's impact on the bottom line.

Adding advanced analytics to supply chain reporting is the only analytics method that allows management to consider different financial factors, such as the variable rate of return for cash flow. Once these aspects are considered and identified, you will be better equipped to develop a solid supply chain management plan that is also financially valuable.

Become More Agile and Accurate When Making Decisions

The dynamic environment of business requires a lot of decision-making done, more often than not, in a short time frame. Each decision has implications in terms of how customer demands are met, how factories are run, how employees get paid, and so on. While legacy supply chain systems have their place and are essential to running the company, they don't really give managers the ability to make better, more informed decisions. Most of these tools focus on the operational aspects of the supply chain, rather than the value and impact of the operation.

In order to make informed decisions, supply chain managers need to account for constraints that reflect reality. Advanced capabilities like prescriptive analytics provide a platform to make decisions more fact-based. Supply chain managers will better understand the implications of decisions by running different scenarios, ultimately settling on the outcome that best impacts the entire company. This process is extremely hard to do unless you have an integrated model and an advanced platform that allows for certain constraints and scenarios.

Improve End-to-End Visibility

End-to-end supply chain visibility solutions continue to increase as companies adopt more robust advanced analytics platforms. As a natural progression of implementing prescriptive analytics and considering the impact of decisions, integration and collaboration increase, silos are eliminated, and supply chain managers start to adopt an outside-in way of thinking. Enhanced end-to-end visibility leads to reduced costs, fewer risks, more accurate forecasting, and the agility to face changing market demands and unexpected disruptions.

Improve Your Supply Chain—and the Lives of Those Who Run It

Not only does advanced analytics benefit the entire company, but it also betters the career of supply chain staff. Employees become more empowered as they make decisions that are of global impact to the company. They become more efficient as they rely on a digital assistant of sorts to help them make more informed decisions. Supply chain managers play a more strategic role as they collaborate across the organization.

While many companies are making great strides in implementing prescriptive analytics in their supply chain operations, there is still a long way to go. The market is ripe for the next round of supply chain technologies, and businesses will only continue to improve efficiency, increase savings, and improve the lives of their supply chain staff as they take a more strategic approach to their data.

SC
MR