Inventory-based businesses work with massive amounts of raw data, from stock levels to customer information. Left unmanaged, this data can be unhelpful and overwhelming, because it can be difficult to distill any useful insights from such large quantities of raw data. But when businesses use supply chain analytics to tap into the potential of this data and translate it into actionable insights, they can optimize their supply chains, reduce costs, enhance customer satisfaction, and drive overall profitability.
Supply chain analytics involves collecting, analyzing, and interpreting data related to various stages of the supply chain. This approach enables organizations to make informed decisions, understand key takeaways, identify inefficiencies, and optimize their supply chain processes.
Here’s everything you need to know about supply chain analytics, including how businesses can use them to gain valuable insights into their operations and achieve a competitive advantage in their market.
Understanding the Basics of Supply Chain Analytics
Businesses in the supply chain manage and output huge quantities of data. But what does this data really mean? That’s where supply chain analytics comes into play. Supply chain analytics is the process of aggregating raw data figures and distilling useful insights from them, which can then be used to make key decisions.
For example, supply chain analytics can help you answer questions about supply chain efficiency, customer demographics, the timeliness of deliveries, and the profitability of your business.
Supply chain analytics is a multi-step process that involves several key components:
- Data collection: Relevant data is collected from various sources within the supply chain regarding different topics, such as sales orders, inventory levels, transportation data, and supplier information.
- Data analysis: Organizations then apply statistical techniques to the data, or use analytical tools to extract meaningful insights from the data. The global supply chain analytics market is worth more than $8 billion, meaning there are plenty of tools available to help you with supply chain analytics.
- Data visualization: The findings of the data are then presented in a clear and understandable manner, typically through charts, graphs, and dashboards. This helps stakeholders visualize trends, patterns, and anomalies within the supply chain, and make quick, accurate decisions.
Ultimately, supply chain analytics plays an important role in helping inventory-based businesses navigate the uncertainties of today’s business landscape, where disruptions can occur at any time.
Types of Supply Chain Analytics
There are several common types of supply chain analytics:
- Descriptive analytics: This involves summarizing and understanding past data to gain insights into historical trends and patterns. It helps identify key performance indicators (KPIs) and assess overall supply chain performance.
- Diagnostic analytics: This type of analytics delves deeper into the underlying causes of specific issues or problems within the supply chain. It helps identify the root, or the “why” things happen, so decision-makers can develop targeted solutions.
- Predictive analytics: Predictive analytics uses historical data and statistical models to forecast future trends and outcomes. This allows supply chain businesses to anticipate potential disruptions, optimize inventory levels, and improve demand planning.
- Prescriptive analytics: This advanced form of analytics provides recommendations and suggests ideal actions based on insights from the data. It helps decision-makers identify the best course of action for achieving certain goals, such as minimizing costs or maximizing customer satisfaction.
Benefits of Supply Chain Analytics
When used to its full potential, supply chain analytics offers numerous benefits to organizations, including:
- Improved decision-making: With intelligent insights from supply chain analytics, organizations are empowered to make informed business decisions based on facts and evidence. This can lead to things such as more effective resource allocation, optimized processes, and reduced risk, for example.
- Reduced costs: Supply chain analytics can help identify inefficiencies, waste, and cost-saving opportunities. By optimizing processes, improving demand forecasts, and reducing excess inventory levels, organizations can significantly reduce costs throughout their supply chains.
- Enhanced customer satisfaction: A well-managed supply chain is essential for meeting customer expectations. For example, research shows that 69% of shoppers are “much less” or “less likely” to shop with a business in the future if an item is not delivered within two days of the promised delivery date. Supply chain analytics can help organizations improve on-time delivery, reduce stockouts, and ensure product quality, leading to higher customer satisfaction and loyalty.
- Increased efficiency: By identifying issues such as bottlenecks and improving workflows, supply chain analytics can improve the overall efficiency of a business’s supply chain. This can result in faster order fulfillment, reduced lead times, and increased productivity.
- Risk mitigation: Supply chain analytics can help organizations identify and navigate potential risks, such as supply disruptions, shortages, and quality issues. By monitoring key metrics and analyzing trends, businesses can proactively address potential challenges, and make decisions to minimize their impact.
Best Practices for Using Supply Chain Analytics
Collecting and leveraging the insights from supply chain analytics requires several steps, processes, and technologies. Here are some best practices you can deploy to use the data from your inventory-based business to its full potential.
1. Establish clear goals and objectives
Start by clearly defining the specific goals you want to achieve with your supply chain analytics. For example, do you want to reduce excess costs, improve on-time delivery, optimize inventory levels, or enhance customer satisfaction? Having a clear understanding of your goals will help guide your data collection, analysis, and decision-making process.
2. Invest in high-quality data sources
High-quality, accurate data is essential for effective supply chain analytics. If your business is using poor-quality data, it can result in inaccurate insights, misleading results, and errors which are ultimately costly.
3. Leverage advanced supply chain analytics tools
To extract deeper insights from your supply chain data, make highly strategic decisions, and gain a competitive advantage, consider utilizing supply chain analytics tools and technologies. These tools can help you easily uncover hidden patterns, predict future trends, and optimize your supply chain operations. For example, with StockIQs inventory management and analytics tools, you’ll turn tricky data into clear, actionable steps, and will take the guesswork out of things such as safety stock levels and unpredictable demand.
4. Continuously monitor and improve your analytics
To ensure that your supply chain analytics initiatives remain effective and aligned with your business objectives, you can continuously monitor and improve your approach. For example, track KPIs to measure the effectiveness of your initiatives, and to determine if improvements are being made. You can also identify and address any challenges or issues that arise during your analytics initiatives and can refine your data collection process, deploy new analytical tools, and navigate data quality problems.
By using today’s advanced supply chain technologies and constantly monitoring your supply chain analytics efforts, you can use your supply chain data to gain a deeper understanding of your operations and make more informed decisions.
StockIQ: Your Partner in Inventory Supply Chain Planning
Supply chain analytics starts with the right data and supply chain technology. If you’re ready to control inventory, simplify ordering, and improve demand forecasting, then StockIQ’s user-friendly supply chain management software is here to help. StockIQ helps you understand your supply chain with easy-to-adopt tools and easy-to-use interfaces. Plus, with StockIQ’s inventory management and analytics tools, you can experience the power of precision, streamline your operations, and boost productivity.
Find out how StockIQ can enhance the way you approach supply chain analytics by contacting us today or requesting a StockIQ demo.
