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Betting on Analytics as Supply Chain’s Next Big Thing

Now that we're all connected and responding 24×7 via any number of devices, of course there would be a loud corresponding call to have a “real-time supply chain,” too.

A complex world, running on follow-the-sun supply chains, requires a hyper-connected and super responsive operation that goes beyond best-guess demand planning and forecasting, right?

Some industry experts claim that the day for real-time supply chain practices has come — and is on the verge of being more mainstream, thanks to a multitude of cloud data management tools and increased corporate adoption of new supply chain software platforms coming to market. However, there's also acknowledgement that a necessary foundation for moving efficiently at real-time speed — supply chain analytics — is still very much at the beginning stages of development at many companies, and will take time to build out.

Some claim that the day for real-time supply chain practices has come -- and is on  the verge of being more mainstream thanks to a multitude of cloud data-management tools.

Some claim that the day for real-time supply chain practices has come — and is on
the verge of being more mainstream thanks to a multitude of cloud data-management tools.

A real-time push
On one hand, there's evidence of increased interest in real-time supply chain support tools to address things like supply chain traceability, multi-level inventory optimization, demand signal repository, sales and operations planning, and leveraging point of sale data, officials from Bloomberg Businessweek Research Services and SAP said during an April webinar, “Supply Chain Innovation: The Quest Towards the Real-Time Supply Chain” (you can listen to the archive here).

And, yes, webinar panelists highlighting recent survey results noted that, not surprisingly, forecasting improvement remains top of mind for a sweeping majority of the 318 executives polled. Seventy-seven percent of respondents said demand and supply forecasting and planning tools were very important in achieving their company's 2012 objectives; and 80 percent said forecasting will be important in 2014.

On the other hand, upgrades and new tool implementation take time; webinar panelists said they expect to see software tool upgrades and replacement cycles pick up steam in the next couple years. Larry Marion, a consultant for Bloomberg Businessweek Research, said:

One interesting observation in all this is the interest in real-time [supply chain management]. We hear this all the time and see this in many surveys we manage. It's clear that it's not going to be easy to move these batch systems into a real-time environment. But there is a real interest and momentum in this area.

Building the analytics base
What's more curious, though, as we peel back the layers of this survey, is how much attention supply chain analytics appears to be getting.

According to the survey, 73 percent of the executives indicated that supply chain analytics tools are important to meeting their company goals. And with 71 percent of respondents noting that current analytics tools need to be more predictive and go beyond providing information about prior performance, there's an equal amount of respondents — 73 percent — who are planning to upgrade or replace their analytics tools within two years to gain these more predictive features, Marion added. Much of the interest in using analytics stems from being able to better manage the supplier base, figure out where the best-practices are, and determine who's delivering material supplies in the shortest amount of time with the highest quality and reasonable prices, he said.

Maybe I'm making a leap here and connecting dots that aren't meant to be connected, but isn't it interesting that in a broad discussion about real-time supply chain management, survey executives appear to want more predictive analytics capabilities to help them make faster decisions and be more responsive to uncertain supply and demand needs?

Here's the rub. Analytics — or more specifically, analytics software — won't be a quick fix in closing existing supply chain gaps. To do this right, companies have to invest a considerable amount of money and resources in developing an analytics foundation before they can even run the nifty algorithms embedded in the software.

The underlying data that companies want analyzed actually has to be accurate first, and not many companies can say that's true about their existing data. And, with the volume of data that is consistently being generated everywhere, how do companies find and implement ways to manage and do something meaningful with all these inputs?

Bill Roberts, a consultant for Bloomberg Businessweek Research Services, Triangle Publishing Services, had this to say, adding insight from a survey-related interview he had with a semiconductor executive:

You need to get the underlining systems right before you can build analytics capabilities on top of them. I'm going to quote him [the semiconductor executive] at length here because it's interesting: 'Analytics is the culmination of years of investment in the basic tools. You need the underlying databases; they need to be maintained and structured in a methodical and rigorous way. You need technology that allows basic reporting. These are all key to get value from analytical tools.' He added that he and his staff for the last year, year and a half, have spent fully half of their time building analytics capabilities on top of their existing supply chain tools. I thought that was an interesting way of [noting] his priorities.

With that in mind, analytics (and, importantly, analytics done well) could be a big leap forward in terms of supply chain innovation. The question, then, is how much is that innovation worth to your company, and what kind of bet are you ponying up to make it reality?

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20 comments on “Betting on Analytics as Supply Chain’s Next Big Thing

  1. elctrnx_lyf
    May 4, 2013

    I do not believe the supply chain can completely upon real time processing as long as there is various dynamic conditions such as customer demand, global economic and enviromental fluctuations. But once setup these software can learn themselves to make better decisions after long time usage. But in the end we stll need humans with right experience to understand these reports.

  2. SP
    May 4, 2013

    agreed. Analytics is the next big and important thing for supply chain industry.

  3. ahdand
    May 5, 2013

    @SP: You can do wonders if you get the correct analysis done with correct tools. For that to happen you need hands on experience on those tools. 

  4. Anand
    May 5, 2013

    with 71 percent of respondents noting that current analytics tools need to be more predictive and go beyond providing information about prior performance,

    @Jennifer, thanks for the post. The survey clearly shows that companies expect more power analytical tools which can help them predict the trend. But its also imporant for the companies to train people with analytical skills so that they can make sense of huge amount of data that is being generated.

  5. Anand
    May 5, 2013

    But in the end we stll need humans with right experience to understand these reports.

    @elctrnx_lyf, I totally agree with your opinion. We still need humans with right experience to understand these reports. If we can't properly interpret the data that is being generated by such tools then implementation of such analytics will add zero value to the company. So its very important to have right tool and right people to take advantage of Analytics.

  6. SP
    May 5, 2013

    like in sports they develop software how the opponent team plays…to be particular how a strong player from the opponent player will play. at the end you need someone to analyze the software and make his own game plan.

  7. Taimoor Zubar
    May 5, 2013

    @anandvy: I think apart from better tools, corporate users are also looking for more convenience when it comes to data related to supply chain. For instance, the trend towards analytical tools in the form of smartphone apps is getting quite common and more and more companies are looking to facilitate the users through these.

  8. Taimoor Zubar
    May 5, 2013

    do not believe the supply chain can completely upon real time processing as long as there is various dynamic conditions such as customer demand, global economic and enviromental fluctuations.”

    @electrnx_lyf: I agree. The tools can help the users in obtaining data in larger quantities and with more frequency but the decision-making cannot be completely autonomous. The human element will always be there because of the dynamic nature of the supply chain.

  9. Anand
    May 5, 2013

    For instance, the trend towards analytical tools in the form of smartphone apps is getting quite common and more and more companies are looking to facilitate the users through these.

    @TaimoorZ, I agree with you. Such initiatives will really help the companies to collect  opinion  from large section and thus the end result generated by the analytics will be more realistic. 

  10. Ariella
    May 6, 2013

    @nimantha.do yes, you need the right tools, the right data, and the right questions to ask.

  11. Greg Riemer
    May 6, 2013

    Nice blog, I think there are some really great points throughout the post, people want to have real time analytics to help them make better decisions. The key is to have accurate information from everyone and to make sure all your systems are integrated. Global suppliers and global expansion has many advantages but one challenge certainly is system integration. Without taking the prober steps it doesn't matter how much you want to have supply chain analytic tools you can't get it if you aren't connected.

  12. Ariella
    May 6, 2013

    @TaimoorZ you say, “The human element will always be there because of the dynamic nature of the supply chain,” which is, undoubtedly, true. Do you imply from this that there are unpredictable aspects which make analytics not altogether accurate at predicting directions for the supply chain?

  13. ahdand
    May 7, 2013

    @Ariella: Plus the right person who has  sound knowledge on it to operate and get the right output out of the tool.     

  14. Colman
    May 10, 2013

    Analytics is only as good as the data it examines.  That data must be timely, accurate and objective in nature – local subjectivity based on cultural, language or other differences can radically change perspectives.   For anyone with an extendedsupply chain, that means getting the data that you want from the earliest part of the supply chain – before it enters a container in any part of the globe.  

    For lots of reasons, its not practical to extend ERPs into suppliers (or into their suppliers).  New tablet-based, cloud-based tools help both companies and their suppliers reduce total costs by having relevant, accurate and timely data, and the analytics to go with it.  

  15. Taimoor Zubar
    May 22, 2013

    Do you imply from this that there are unpredictable aspects which make analytics not altogether accurate at predicting directions for the supply chain?”

    @Ariella: The analytics tool will give you predictions for future based on its capabilities but there has to be some level of human involvement to give the predictions a sanity check. You cannot blindly trust the predictions no matter how sophisticated the analytics tool is.

  16. Ariella
    May 22, 2013

    @TaimoorZ I wouldn't argue with that. It makes perfect sense. The question is how can one apply a sanity check that would hold up as objective?

  17. Ashu001
    May 22, 2013

    Taimoor,

    Very,Very well said!

    Any Company which relies blindly on Analytics Software without having someone Human at the Back-end to understand and appreciate the Output it generates deserves to lose its Shirt(in Business).

    Beyond Silly Decision that would be for sure!

    You can't discount the Human Influence factor here.

    Not at all!

  18. Taimoor Zubar
    May 22, 2013

    The question is how can one apply a sanity check that would hold up as objective?”

    @Ariella: There are no clear-cut rules for it and that's why the logic for this can't be built into the software. I think the ability comes partly from experience and partly from intuition.

  19. Ashu001
    May 22, 2013

    Electric,

    Yes that would be reasonably accurate.

    However,Don't you feel that even those self-learning Tools need lot of Guided Instructions(from Humans) even today?

    Its not like you can just teach them stuff once and then leave them alone.

    I am speaking from my Experience in the Financial markets where these Tools have found widespread acceptance  with often destructive consequences.

    You can very easily put me in the Sceptics Category here!

    Regards

    Ashish.

  20. Tholdis
    July 1, 2019

    There are many ways to rush into betting, you know. And a separate stage includes itself analytics, which I test for https://bettingsiteskenya.co.ke/betpawa/. For me, this is a whole science and I would advise all beginners to gradually analyze and train.

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