Almost every organization is dependent on the supply chain for its operations. Manufacturing companies rely on it to get goods to their consumers. Retailers depend on the effectiveness of the supply chain to meet their customers’ demands. The coordination in the supply chain ensures a smooth flow of data and the needs of all stakeholders are met.
Thus, supply chain management has become critical as it is through it that organizations can reduce operating costs, meet customer satisfaction, and meet their financial goals. This makes supply chain analytics a vital part of supply chain management.
Supply chain analytics helps identify patterns, risks, and opportunities and supports planning to ensure operational efficiency. Through supply chain analytics, businesses leverage data to improve productivity and effectiveness and strategic decision-making for the organization’s good. Analytics covers the entire value chain ranging from sourcing to logistics. They can also help businesses address common challenges in the supply chain.
Common supply chain challenges
There are several challenges that can affect the effectiveness of supply chain management.
1. Increased costs
Cost and profitability are among the significant pain points in the global supply chain. Increased costs in the supply chain network hurt the profit margins of the business in the industry. The costs could arise from errors, lack of visibility of the value chain, increased fuel price, high labor costs, and an increase in the price of commodities.
2. Increased complexity
Times are changing, and as technology continues to be a critical part of our lives, consumers will continue to use different channels to get goods. The supply chain has thus become complicated, and businesses are required to adjust to the changing times.
For instance, they are required to have eCommerce stores, consider third-party marketplace and other retail approaches. They all need a deep understanding and some level of investment to get them running.
Something new emerges every day, and businesses are required to adjust just as fast, which has proved to be challenging. Supply chain analytics most certainly can help with this.
3. Shift in demand cycles
This is yet another challenge that the global supply chain has been facing. As customer demand for products change, businesses must align their production planning or else this will attract risks such as losses and dissatisfaction from customers.
4. Lack of data and insights
Data has become critical in all sectors and has been contributing significantly to decision-making and planning. Lack of data and insights exposes businesses to risks.
How Supply Chain Analytics Impact the Future of Supply Chain Management
While multiple challenges face the supply chain industry, the good news is that supply chain analytics is the answer to most of the issues. Here is what analytics holds for the future of supply chain management.
1. Analytics for predictive maintenance
Manufacturing downtime impedes the ability to meet demand needs within a given period. The average cost of downtime is $260,000, which means lost sales and inability to meet demands which can also affect your competitiveness.
The good news is that businesses can avoid downtime caused by the breakdown of machinery. Through predictive supply chain analytics, companies can anticipate the replacement of parts in their machines and their maintenance.
This strategy will help businesses ensure the efficient use of maintenance resources and prevent downtime caused by unanticipated machine failure, resulting in effective planning and improved bottom-line. This also helps in maintaining the production capacity, which in turn sees to it that the market demands are met at any given time.
2. Demand forecasts
Demand forecasting is a type of supply chain analytics that can inform demand planning which will result in better supply chain management. Using historical data, businesses can predict future sales. By forecasting, the businesses can effectively allocate resources both in the form of time and money in their operations.
Through analytics, supply chain managers can make informed decisions during inventory and demand planning. For instance, they can tell how the individual products in their portfolio affect others’ sales. The forecasts go a long way in helping businesses avoid losing out on revenue and retaining their customers. It also helps in preventing understocking and overstocking, which have negative impacts on the entire supply chain.
3. Predictive pricing
One of the major pain point for the supply chain is issues related to costs. Market shifts caused by the shortage of labor, weather, fluctuation of fuel prices, and the increase in commodities cab cost hurt the bottom line.
Businesses, therefore, need to be smart about their pricing decisions to ensure that they remain competitive and at the same time protect their bottom line. Companies that use analytics are able to optimize their pricing, which consumers are comfortable with. The result is an increase in their sales growth.
Through supply chain analytics, businesses adjust their prices with their customers’ interests in mind and ensure that they don’t incur losses. Analytics will be the answer to future supply chain challenges related to costs.
Data analytics will help businesses achieve agility. As aforementioned, there is a lot of volatility in the supply chain. There is volatility caused by shifting customer demands, fluctuations in the upstream supply, global issues, and technological advancements, to mention a few.
Learn more about QuickBox’s Supply Chain Tecnhology.
Agility is essential to the supply chain. While there is volatility, the businesses are expected to meet the demands. They are therefore needed to move with speed if issues emerge. The ability to adjust to the fast-changing environment is what puts businesses ahead of their competition.
Data analytics helps businesses spot trends and patterns and predict events that would require them to be agile. This allows them time to prepare to face oncoming issues and adjust efficiently.
Data is valuable, and especially in the supply chain. Businesses are doing away with blind decision-making strategies and are leaning on data. Informed decision-making ensures effective planning.
Data analytics prepares businesses for oncoming opportunities and challenges. By using analytics in the supply chain, managers can optimize their operations and significantly enhance their activities’ efficiency and profitability. Businesses will reduce risks, agility will be achieved, and companies will maintain customer satisfaction.
QuickBox Fulfillment has become an industry expert in supply chain management. With a dedicated team of over 150 years of experience we can help optimize your supply chain and save your business money and hassle. Reach out today to learn more!