A strong supply chain is one of the biggest assets that a company can possess. Today, companies have come a long way in terms of improving supply chain efficiency and enhancing the speed of operations. However, global operating systems, pricing pressures, and ever-increasing customer expectations are putting extreme pressure on supply chain operations. This also demands businesses to move out of their traditional supply chain execution systems and change over to techniques that can better accommodate the dynamic market conditions and customer demands.
But how can businesses identify the gaps in their supply chain? The answer is to leverage supply chain analytics. Supply chain analytics assesses supply chain performance and identifies the shortcomings and inefficiencies in the supply chain configurations. The ultimate aim of using this technique is to improve the end-to-end performance of the supply chain in terms of operational, financial, as well as managerial aspects. Supply chain analytics enable companies to dig deeper into the supply chain data and examine savings and efficiency gaps. The importance of supply chain analytics doesn’t end there, some of the key benefits it offers to companies include:
The main aim of any business is to produce products/offer services that will eventually attract customers and result in a sale. All the materials in the supply chain ranging from inventories, raw materials, and work-in-progress are there to serve this purpose. What companies need to do is to identify whether they possess the right inventories, raw materials, and work-in-progress, and supply chain analytics is the key to help them do this. Supply chain analytics highlights a redundant or slow-moving stock that has occurred due to wrong forecasts and inaccurate estimates. It can also help identify instances where there was the potential to sell more products, to meet the demand that was there but left unmet.
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Speed-up Material Movement
When the supply chain moves quickly, it facilitates the reduction of inventory levels and frees-up cash. But the catch here is to know how to make it move quickly. This is where supply chain analytics comes in handy. Using this technique, it is easier to identify factors such as the impact of order size rules and policies, or stock-keeping rules and policies, and demand variability. For instance, the impact of production batch sizes on finished goods, raw material levels, and work-in-progress.
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Not just the internal decisions and factors, but several external factors also have an impact on the supply chain. Take the case of poor-performing suppliers for instance. This can have a major impact on other supply chain factors such as customer service levels, on-time delivery performance, and inventory holding. Supply chain analytics can help by taking an ERP system’s raw data and transform it into detailed performance metrics, supplier by supplier. These companies can easily identify gaps in supplier performance and quickly act to rectify it.
Efficient utilization of data
Modern supply chains produce unprecedented amounts of digital information. Such data from transactions and events were once recorded on paper. Now the data is being digitally captured and stored. By using advanced capabilities like supply chain analytics, companies can easily identify their shortcomings and optimally improve performance.