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Why Is Supply Chain Analytics Important?
Why Is Supply Chain Analytics Important?
Supply chains typically generate massive amounts of data. Supply chain analytics
helps to make sense of all this data — uncovering patterns and generating
insights.
Descriptive analytics
Provides visibility and a single source of truth across the supply chain, for both
internal and external systems and data.
Predictive analytics
Helps an organization understand the most likely outcome or future scenario and
its business implications. For example, by using predictive analytics, you can
project and mitigate disruptions and risks.
Prescriptive analytics
Helps organizations solve problems and collaborate for maximum business value.
Helps businesses collaborate with logistic partners to reduce time and effort in
mitigating disruptions.
Cognitive analytics
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Supply chain analytics is also the foundation for applying cognitive technologies,
such as artificial intelligence (AI), to the supply chain process. Cognitive
technologies understand, reason, learn and interact like a human, but at enormous
capacity and speed.
This advanced form of supply chain analytics is ushering in a new era of supply
chain optimization. It can automatically sift through large amounts of data to help
an organization improve forecasting, identify inefficiencies, respond better to
customer needs, drive innovation and pursue breakthrough ideas.
Supply chain analytics can help an organization make smarter, quicker and more
efficient decisions. Benefits include the ability to:
A recent Gartner survey revealed that 29% of surveyed organizations said they
have achieved high levels of ROI by using analytics, compared with only 4% that
achieved no ROI.¹
Supply chain analytics can identify known risks and help to predict future risks by
spotting patterns and trends throughout the supply chain.
By analyzing customer data, supply chain analytics can help a business better
predict future demand. It helps an organization decide what products can be
minimized when they become less profitable or understand what customer needs
will be after the initial order.
Companies are now offering advanced analytics for supply chain management.
Advanced analytics can process both structured and unstructured data, to give
organizations an edge by making sure alerts arrive on time, so they can make
optimal decisions. Advanced analytics can also build correlation and patterns
among different sources to provide alerts that minimize risks at little costs and
less sustainability impact.
processed because of the limitations of analyzing natural language data can now
be analyzed in real time. AI can rapidly and comprehensively read, understand
and correlate data from disparate sources, silos and systems.
By the 1990s, companies were adopting Electronic Data Interchange (EDI) and
Enterprise Resource Planning (ERP) systems to connect and exchange
information among supply chain partners. These systems provided easier access
to data for analysis, along with assisting businesses in their designing, planning
and forecasting.
The challenge today concerns how companies can best use the huge amounts of
data generated in their supply chain networks. As recently as 2017, a typical
supply chain accessed 50 times more data than just five years earlier.² However,
less than a quarter of this data was being analyzed. Further, while approximately
20% of all supply chain data is structured and can be easily analyzed, 80% of
supply chain data is unstructured or dark data.³ Today’s organizations are looking
for ways to best analyze this dark data.
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IDC estimates that by 2020, 50% of all business software will incorporate some
cognitive computing functions.⁴ AI not only provides a platform for powerfully
correlating and interpreting data from across systems and sources — it also allows
organizations to analyze supply chain data and intelligence in real time. Coupled
with emerging blockchain technologies, companies in the future will be able to
proactively forecast and predict events.
In The Thinking Supply Chain, IDC’s Simon Ellis identifies the five “Cs” of the
effective supply chain analytics of the future:
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Connected
Being able to access unstructured data from social media, structured data from the
Internet of Things (IoT) and more traditional data sets available through
traditional ERP and B2B integration tools.
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Collaborative
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Cyber-aware
The supply chain must harden its systems from cyber-intrusions and hacks, which
should be an enterprise-wide concern.
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Cognitively enabled
The AI platform becomes the modern supply chain’s control tower by collating,
coordinating and conducting decisions and actions across the chain. Most of the
supply chain is automated and self-learning.
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Comprehensive
Analytics capabilities must be scaled with data in real time. Insights will be
comprehensive and fast. Latency is unacceptable in the supply chain of the future.
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cover the gamut — from supplying timely and accurate supply chain information
to monitoring sales.
For example, IBM has developed many software products to increase the
effectiveness of supply chain analytics, with some of the software even using AI
technologies. With AI capabilities, supply chain software can actually learn an
ever-fluctuating production flow and can even anticipate the need for changes.
How can you apply data analytics to improve your operations and outcomes?
In this blog post, learn the types, benefits and advantages of a modern control
tower.
Learn why smarter control towers are now the performance nerve center for
supply chains.
IDC shares how supply chain control towers have become critical to provide the
speed and agility necessary for true resiliency.
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IBM solutions
IBM Sterling Supply Chain Insights with Watson
Uses AI capabilities to help a business cut through data noise and get the insights
to confidently act faster.
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Get intelligent insights to see, manage and more effectively act on inventory to
meet actual demand.
Sources
¹ “Why Supply Chain Analytics is a Must Have,” (link resides outside ibm.com)
Christy Pettey, Gartner, 14 May 2015.
² “The Path to a Thinking Supply Chain,” Simon Ellis, John Santagate, IDC
Technology Spotlight, Aug 2018.
³ “The AI journey: Artificial intelligence and the supply chain,” IBM Watson
Supply Chain.
⁴ “Creating a thinking supply chain for the cognitive era,” Matt McGovern,
Watson Customer Engagement, 27 Mar 2017.
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