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Analytics helps business owners make data-driven decisions. Such decisions are based on a summary of trusted and relevant data, often with the help of visualizations such as charts, graphs, and other visual representations. The supply chain can benefit more from analytics because it generates massive data that can become confusing. Supply chain analytics helps by making such huge data make sense by unearthing some useful patterns that generate insights on the direction the business is taking.
Supply Chain Analytics That Can Help Boost Your Bottom Line Include
Descriptive analytics: Descriptive analytics makes data more visible and is an important source of truth in the supply chain. It involved the use of historical data to understand changes that are taking place in the business. This can help the top management make decisions that drive the business towards profitability.
Predictive analytics: Predictive analytics will help you understand a future scenario or the outcome of an action to be taken. Predictive analytics focuses on the future business implications of the decisions made today. It can help you mitigate risks and disruptions.
Prescriptive analytics: As the name implies, prescriptive analytics helps you prescribe actions that can help solve problems. It works hand in hand with predictive analytics to mitigate disruptions and risks.
Cognitive analytics: Cognitive analytics help the management to answer complex business questions in a simple language. It helps the management to think of ways of solving complex issues or problems affecting the business. For example, the management may ask how they can optimize or improve a factor of production to increase profits.
Here is how supply chain analytics can help boost your profits.
Reduces Inventory Costs
Supply chain analytics will help you maintain a cost-effective operation. Through supply chain analytics, you can easily predict future demands and adjust your inventory accordingly.
Since inventory costs eat into your profits, knowing the exact amount of stock to hold is very important for your business. Holding excess stock means you’ll experience high stock holding costs. On the other hand, holding less stock than necessary can make you lose customers.
Optimizing Your Production Plans
All the supply chain analytics discussed above are important in optimizing production. For example, descriptive analytics can help you decide what level of production can maintain steady sales in a season.
By looking at historical data, you can decide whether to lower or increase production to meet the market demand. For instance, if you’ve been having good sales in the last quarter of the years, you can increase your production from September to December, then lower your production in January.
More Responsive And Optimized Transport Logistics
Both prescriptive and predictive analytics play a big role in your transport logistics. For example, prescriptive analytics can help you analyze your freight and determine the areas that need improvement.
If you expect an increased demand for your products, you can plan transport logistics. If your freight won’t be able to handle the demand, you can start thinking of buying or hiring trucks.
Supply chain analytics makes important data to be available across all departments. This creates a high level of visibility that can enhance collaboration between the various departments.
For example, the IT department will see how their new software is performing in the sales department. Instead of waiting for a report from the sales department, they can use the data to improve the software. This lowers operation costs and boosts profits.
Using supply chain analytics to boost profits requires that logistical controllers and experts work closely together. Most organizations treat supply chain analytics as something that only the top management should be concerned about.
However, as you can see, supply chain analytics touches on all departments. It is only after all your employees embrace supply chain analytics that your company can benefit. This is because decisions are made at all levels of management, from junior supervisors to CEOs.