Globalization makes wonders for businesses.

Operating across multiple locations, working with different partners, and getting the products your company needs has never been this simple.

And yet nothing good comes without a pinch of challenges. 

Supply chains nowadays are surrounded by risks so keeping an eye on what's happening from the moment you place your order from a supplier to the second it arrives at your or your client's destination is 100% critical.

But how can you be sure that what you are seeing is really accurate?

How can you know that you are getting the right insights from your processes?

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That's what supply chain analytics works for. 

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Supply Chain Analytics 

In simple terms, you can understand supply chain analytics as the use of data-driven methods to analyze, interpret, and finally improve what's going on in your supply chain processes. 

Sounds good?

Because it's 

Done right it can help you to monitor operations across your company, identify any relevant patterns, and make better decisions.

You already know that a supply chain is formed by multiple factors, from sourcing raw materials to creating and delivering the final product so counting with solid strategies based on precise analysis gives you full control over procurement, inventory management logistics, and distribution 

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Key Terms 

• Big data: Large sets of structured and unstructured data that provides you with insights into your company's supply chain activities. 
• Machine learning: Ever wondered how automated solutions seem to know everything? Well, it begins with these algorithms that improve decision-making by learning from past data mistakes. 
• Forecasting: Predicting future trends based on historical data.
• Optimization: Using data to find the most efficient ways to manage your supply chain processes. 

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Types of Supply Chain Analytics 

Okay now that we've a basic idea of what supply chain analytics is, let's move on to the most important categories.

Descriptive 

Descriptive analytics is going to be your best choice if you want to obtain a summary of your past data so you get a clear picture of what happened at a certain point in your operations. You can pretty much analyze everything from historical sales to supplier performance. Doing this will allow you to identify trends and areas of improvement.

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Diagnostic 

When you face a problem, isn't it important to know the root cause? 

Well, this type of analysis does exactly that. For example, if you notice an increase in shipping delay, diagnostic analytics helps you uncover the “why behind the problem”  like supplier issues or transportation bottlenecks.

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Predictive 

This is the exciting part 

Using predictive analytics, you can actually predict the future at least for your business. 

Jokes aside, this sort of analysis comes in handy to anticipate potential challenges and opportunities.

But how?

Relying on historical data, statistical models, and machine learning, predictive analytics helps you forecast demand fluctuations, and potential sources of disruption, and understand what your customers want. 

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Prescriptive 

Alright, so you know what will happen next, can you also know what to do about it?

Yes 

If, for example, predictive analytics suggests a future supply shortage, prescriptive analytics offers you concrete solutions, like diversifying your supplier network or optimizing your inventory levels.

The benefit? You can develop a proactive approach to keep your operations running.

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Cognitive

AI is here to help you make better decisions. 

Cognitive analytics relies on the power of artificial intelligence to interpret complex datasets, so it's simpler for you and your team to make favorable decisions. This type of analytics enables you to automate problem-solving and optimize supply chain strategies with minimal manual intervention.

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Why Supply Chain Analytics is Important?

Better cost management

Here's a fact, the best way to optimize your costs is working with insights based on data. This is how you can learn about possible inefficiencies in your procurement, production, and logistics. Once you are capable of minimizing waste, reducing transportation expenses, and improving operational workflows, you can significantly increase the profitability of your company. 

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Improves your risk management approach

Remember how we started this conversation? 

There are many challenges surrounding supply chains. 

So no matter the size of your business or your industry, there’s a high chance you’ll face some risks including shortage of materials, transportation disruptions, and change in the behavior of your customers.  Analytics are useful to let you know what problems could be potentially dangerous for your company in advance so you can develop contingency plans. This ensures stability and minimizes financial losses.

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Optimizes inventory control

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Maintaining the right inventory levels is one of the things that keeps business leaders awake. Too much inventory leads to high holding costs, while too little results in stockouts with the consequence of losing your clients’ trust. So yes, working with data helps you balance inventory by forecasting demand accurately and optimizing warehouse management.

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Improves supplier relationships

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Do you want to truly improve your procurement processes? 

Start with developing a positive relationship with your suppliers. 

Strong supplier relationships are essential for supply chain success. If you analyze supplier performance data, you can identify reliable partners, negotiate better contracts, and enhance collaboration. This leads to better pricing, higher-quality materials, and improved service levels.

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Does it Help to Build Resilience?

Short answer: Yes, of course 

Think about it 

Working with a solid analytical strategy is how you keep your business prepared for any issue that could harm the stability of your business. So next time, a natural disaster hits one of your main suppliers or something changes in your customer's behavior, you don't only know what to do but you're also fully prepared to adapt. 

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Best Practices for Implementing Supply Chain Analytics

To successfully implement supply chain analytics, follow these best practices:

• Start with clear objectives: Define what you want to achieve with analytics.
• Invest in high-quality data: Ensure data accuracy and consistency.
• Choose the right tools: Select analytics solutions, i.e: procurement software, that meet your needs.
• Train your team: Educate staff on how to use analytics effectively.
• Continuously improve: Regularly update and refine analytics processes.

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