How Supply Chain Analytics Can Increase Company Revenue

Managing supply and meeting consumer demand can be costly in today's fast-paced and competitive business world. Many companies need timely data and the ability to apply advanced analytics to manage business operations, preventing them from maximizing the balance between supply and demand.

One strategy that has gained significant traction in recent years is?supply chain analytics.

By using the power of data and analytics, companies can gain valuable insights into their supply chain operations, identify areas of inefficiency and waste, and make data-driven decisions that can significantly increase their revenue.

What is Supply Chain Analytics?

Supply chain analytics is the application of big data to improve supply chain procedures. It entails evaluating data acquired during the?Supply chain management ?(SCM) process using various technologies and generating real-time insights from such data to improve the SCM environment.?

Ultimately, companies can gain valuable insights into their supply chain operations, optimize processes, reduce costs, and improve customer satisfaction.

But, companies looking to leverage supply chain analytics to achieve greater visibility, efficiency, and cost savings need these data types:

1.?Internal data?from within the company. For example, information on sales, production schedules, inventory levels, supplier performance, transportation costs, and other operational metrics.?

2.?External data?from sources outside the company. These include data on market trends, economic indicators, customer behavior, and competitor performance.

3.?Real-time data?from sensors and other IoT devices. It gives real-time visibility into the supply chain. This data can include information on shipment tracking, temperature, and humidity levels, inventory levels, and other vital metrics.

4.?Predictive data.?They provide the company with forecasts for future trends and anticipate potential problems before they occur. This data type can include historical sales data, weather forecasts, and other predictive models that help supply chain managers make informed decisions.

How supply chain analytics is critical to business revenue

In today's highly competitive business environment, optimizing the supply chain is critical to maximizing revenue and profitability.

One real-world example of the positive results of supply chain analytics is the case of UPS.?

Before now, the shipping company depended on historical data and the expertise of professional planners to track package progress.?

But now, it employs a business intelligence platform to record and analyze customer, operational, and planning data to follow the real-time status of every shipment as it goes across the company's shipping network.

That helped the company optimize its delivery routes and reduce fuel consumption. In 2019 the logistics company announced a13.4% increase in revenue. Earnings increased from $1.69 billion to $2.03 per share in the same period in 2019.

Supply chain analytics approaches enable firms to zero in on existing patterns and collect data from operations in real-time like in the case of UPS. They can use this data to identify market trends, measure demand, and decide precise pricing plans.?

Here are some ways in which supply chain analytics can improve business revenue growth:

1. Enhance planning

Supply chain analytics can estimate future demand with relative accuracy by quantifying and analyzing customer data, enabling proper planning. The company can then decide which operations to reduce as demand falls or becomes less profitable.

Furthermore, supply chain analytics can help your company better identify specific consumer needs following an initial order.

2. Recognize trends or dangers in the supply chain

Identifying patterns and trends throughout the supply chain is the most straightforward way to avoid large exposure and better understand the risks your firm confronts regularly. Supply chain analytics may notify a supply chain manager of a big imminent issue days before it occurs, saving your company money and valuable time.

3. Reduced Inventory Costs Through Smarter Demand Sensing

In the past, most businesses had to rely on prior orders as their only guideposts for projecting future demand levels, often resulting in judgments that needed to account for expected future changes.

Modern supply chain analytics can generate value by providing a clearer, more efficient picture of their operation.?

One of the most significant ways it does so is through predictive analytics for projecting future demand. For example, real-time market analytics may merge with previous order data to offer dynamic demand predictions that surpass the forecasting abilities of human supply chain planners in anticipating changes in the demand environment.

4. Increased Efficiency

When a company's supply chain activities, including resource procurement, shipping, and delivery, are strategically planned and implemented, organizations may better predict and cater to demand. It improves a company's ability to respond to upheavals, ever-changing markets, and shifting industry trends.

Supply chain leaders that invest in making real-time data available and automating supply chain processes can avoid unnecessary delays in manufacturing and shipping.?

5. Better customer insights

Supply chain analytics can give businesses valuable insights into customer behavior and preferences, allowing you to tailor your products and meet customer needs. It also improves the ability of a system to respond to client needs. It not only attracts new customers but also influences your brand loyalty.?

How to Implement Supply Chain Analytics in Your Business

Integrating supply chain analytics in your company can be a difficult task that necessitates careful planning, investment in technology and expertise, and collaboration among different departments and stakeholders

?Here are some actionable steps to follow:

1. Define your goals and objectives.

Start by identifying the key areas of your supply chain that you want to optimize using analytics. It includes reducing lead times, improving inventory management, or enhancing supplier performance. Be specific about your goals and objectives, and ensure they align with your overall business strategy.

2. Set KPIs.

The next logical step is to define the criteria that will allow you to track your progress and measure your performance. Certainly, you monitor various indicators to gain insight into your company's performance. Still, KPIs are required to demonstrate how you achieve your unique business goals.

For example, if you are concerned about the quality of your items, you can track the scrap rate and the number of returns. If you need help with your suppliers, pay attention to order correctness, the number/percentage of on-time delivery, the number/percentage of damaged products, and so on.

3. Define data sources.

After determining which KPIs to focus on, you need to collect the necessary data for analysis. These may include internal sources like ERP systems, inventory management systems, and logistics software and external sources like market research and social media data.

You may discover that you must include vital information or underutilize certain resources.?

4. Collect and integrate the data.

To effectively manage data, it is necessary to collect and integrate the data from the identified data sources into a central repository, which could involve developing an enterprise data warehouse or lake that integrates data from multiple sources and formats.

5. Apply analytics algorithms.

By applying analytics algorithms to the integrated data, you can derive insights and optimize your supply chain, which may involve using predictive analytics to forecast demand or employing prescriptive analytics to optimize inventory levels.

6. Work on the culture.

Building a data-driven culture entails fostering data exchange and data-driven decision-making at all company levels. Such initiatives must be initiated from the top and supported by the management team to train others and demonstrate benefits to other employees.?

Your firm must ensure that it makes everyone understand how analytics tools work and their value. It is also critical to enable data access, simplify the organization, and empower people to make operational decisions.

7. Continuously monitor and refine.

Finally, continuously monitor the performance of your supply chain and refine your analytics approach to achieve better results over time. It involves adding new data sources, refining the algorithms, or adjusting the visualization and reporting approach.

How prepared is your business to implement supply chain analytics?

Companies that want to achieve significant cost savings and revenue growth can do so by identifying inefficiencies and bottlenecks in the supply chain, reducing lead time and inventory levels, and improving customer satisfaction. That's where supply chain analytics come in.?

But, implementing supply chain analytics requires careful planning and consideration. So, carefully assess your current supply chain processes and identify areas where supply chain analytics can provide insights into improving efficiency, reducing costs, and enhancing customer satisfaction.

A comprehensive assessment of your supply chain and a clear roadmap for implementation can help ensure a successful and effective implementation of supply chain analytics.

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