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Why Supply Chain Needs Better Analytics Tools

Two recent reports that gauge supply chain executives' plans in the near-term show that high-tech companies are getting ready to add new technology to their supply chain networks.

Revived interest in implementing supply chain management software comes at a time when the worldwide economy is showing signs of improvement, there is renewed growth in North American manufacturing, and many electronics companies are expanding their supply chains in Asia.

ARC Advisory Group study
One study published by the ARC Advisory Group, “Supply Chain Planning for Asia Market Research Study,” reveals that the supply chain planning (SCP) market in Asia is expected to exhibit a compound annual growth rate of 10 percent from 2011 to 2016. One of the drivers of this anticipated rise in the SCP market is the above average growth in semiconductor and other high-tech industries, the report says.

Neelam Singh, senior analyst at ARC Advisory Group India, and co-author of this study, said, “ARC expects Asia to be the highest growth region mainly due to lower current market penetration, higher economic growth rates, and the increasing adoption of information technology and planning functions.”

Sophisticated technology that can improve collaboration among suppliers and partners, provide greater transparency, and drive greater efficiency across the supply network are being offered by several companies that include Arkieva Inc., IBM Corp., JDA Software Group Inc., and Oracle Corp.

These companies provide complex analytics tools and optimization techniques to monitor supply and demand data, inventory management information, and other key performance indicators across the supply chain. ARC defines supply chain planning to include four key application areas: extended SCP, manufacturing planning, inventory/distribution planning, and demand management.

Keys to the Kingdom

More and better analytics tools are what supply chain leaders expect will boost their efficiency and improve business in the coming years.

More and better analytics tools are what supply chain leaders expect
will boost their efficiency and improve business in the coming years.

More evidence that supply chain needs analytics tools
Another study recently published by Bloomberg Businessweek Research Services (BBRS) in collaboration with SAP is titled “Supply Chain Innovation Driving Operational Improvements.” This report, which relied on a poll of 318 vice presidents, directors, and C-level executives who represent companies in several sectors, including the electronics industry, indicates that the next two years will see an increase in the adoption of supply chain tools to better manage business processes.

Seventy-three percent of survey participants said supply chain analytics tools are important to their companies' goals, and 71 percent said analytics tools need to be more predictive. To enhance the ability to forecast supply chain performance, 73 percent of respondents said that by 2014 they plan to upgrade their software with supply chain analytics tools, and 71 percent said they will install supply chain traceability tools.

Other key findings in the report are:

  • Demand-driven supply forecasting/planning leads all supply chain tools in level of importance and level of adoption. Clearly, getting this task right is seen as key to supply chain management.
  • Although deployment of supply chain management tools lags the expressed level of importance, adoption and upgrading will grow over the next two years across the board for these tools.
  • Newer supply chain tools that support the creation of real-time supply chains, such as multilevel inventory optimization, demand signal repository, sales and operations planning, and leveraging point-of-sale data, are not widely adopted yet. However, they are recognized as highly important and are on track to be adopted more quickly over the next two years than most other tools.
  • Mobile access to supply chain tools and data is gradually happening. For example, 51 percent of respondents expect employees to have mobile device access to demand and supply forecasting/planning data by 2014, up from today's 28 percent, who say it is available now.

As high-tech manufacturers shift some of their production to North America, implement measures to reduce costs in China, and expand into countries like Vietnam and Indonesia, executives are looking to supply chain management tools to better leverage their data and gain insights into their business processes.

Tighter collaboration
Supply chain managers hope these tools will increase collaboration across suppliers and customers, enhance inventory management, and improve demand and supply planning across the supply chain.

If you are one of those executives seeking to implement SCP, it's a good time to examine the state of your operational performance and think about how the purchase of SCP tools can help you improve your business operations.

Supply chain executives should also consider how the adoption of sophisticated analytics software can help their companies improve key performance indicators such as demand and supply forecasting, collaboration with customers and suppliers, and sales and operations planning.

Hopefully, as supply chains become more complex, executives at high-tech companies will be able to rely on SCP software to drive efficiency and predictability into the supply network, while reducing costs and enhancing collaboration.

As high-tech companies strive to meet their corporate goals, I'm sure that in another three to four years these companies will want to prove that their investments in these tools were worthwhile, and that they did see significant cost reductions, greater efficiency, and overall improvements in their business operations.

4 comments on “Why Supply Chain Needs Better Analytics Tools

  1. HM
    March 27, 2013

    agreed supply chain needs better analytics tools. But how does one justify the cost of these tools?

  2. Houngbo_Hospice
    March 27, 2013

    @HM,

    “But how does one justify the cost of these tools?”

    Before investing in a tool, a company should first study its usefulness in its operational processes. If the use of the tool will add value to the company, then the investment can be justified. 

  3. Houngbo_Hospice
    March 27, 2013

    @Nicole,

    “I'm sure that in another three to four years these companies will want to prove that their investments in these tools were worthwhile”

    The final outcome will depend on how the SCP software is used to perform the right tasks by the right people. If in 3 to 4 years it happen that there is no improvement in these companies' business oeprations, will they blame the tools?

  4. The Source
    April 4, 2013

     

    Hospice_Houngbo,

    So many companies have adopted technology for the purpose of improving workflow, but because there is inadequate training workers don't always benefit from the technology in the way they should.  Let's hope that those companies that do adopt tools to help them better manage their supply chain are successful in using these tools.

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