4 Thoughts on Maximizing ROI of Supply Chain Analytics

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What does analytics mean?  To you, that is.  According to Google Trends, the popularity of “analytics” as a topic peaked sometime between December 2011 and April 2012.  

Is “analytics” just a buzzword for business reporting?  Or, perhaps, we’ve forgotten the purpose of analytics: to make informed decisions faster and more accurately.

In April 2022, Profit Point met with like-minded people at the INFORMS Business Analytics conference in Houston and re-affirmed that business analytics is alive and well and can have a significant impact on business profitability. We loved every minute of it.  Here are four thoughts on making the most of analytics in your supply chain.

 

Be a life-long learner

We are an organization of lifelong learners. That characteristic was reinforced by our President, Alan Kosansky, when he was presenting on Analytics Leadership at the most recent INFORMS Business Analytics Conference. Alan began the session with this quote from John C. Maxwell, 

“The successful person finds the right place for themselves. A successful leader finds the right place for others.” 

Before we begin any project or study, Alan always wants to know, “what questions are we trying to answer?” In other words, what are we and our client trying to learn from the analytics?

When embarking on a supply chain initiative in today’s environment, organizations are faced with the challenge of providing resilience in a constantly changing market. This dynamic business environment is not going away, so establishing the analytics to enable growth within it is a strategic imperative. How often should the supply chain infrastructure be analyzed? What should companies be curious about?

Please see Alan’s blog on Designing Supply Chain Network.

 

Make decisions faster

Nelson Mandela once said, “I never lose. I either win or I learn.”

Our most successful projects have involved leaders that understanood the value of making decisions quickly. In 2006 the Harvard Business Review published an article on The Seasoned Executive’s Decision-Making Style. The article was the result of research across “a database of 120,000 people to identify the decision-making qualities and behaviors associated with executive success.” This research identified four decision-making styles. Two of the styles involved making decisions with speed, and the other two styles focused on having the highest possible amount of input or data. They were mutually exclusive. With today’s technology, you can have both.

 “It’s 90% about the data and 10% about the algorithm.” Our clients are utilizing technology to exploit data and answer strategic questions about their Supply Chain. They are also informing their operational and tactical decisions through more frequent analysis of their infrastructure. Identify the questions to be answered and that will advise as to the data required. It starts with the right people and what they want to learn, then a process that will organize the analysis effectively, followed by technology that makes for efficient execution.

Zahir Balaporia, who moderated the Analytics Leadership Panel at the INFORMS Conference, offered this blog on managing change by leveraging technology.

 

Articulating the objective(s)

Clearly articulating the objective can be hard. In working with one of the major sports leagues and their head of game scheduling, we would come back with optimized schedules multiple times, and this leader would always have problems with the schedule. It usually had to do with the number of constituencies she had to satisfy, and their siloed objectives. Trying to get an objective from executives, management, players, and fans, not to mention the various advertisers and networks can be an unenviable task. This was a learning experience.

When beginning a supply chain initiative, the competing objectives can also be daunting. This is the key reason that the right people need to be involved in the process. The analysis must have a specific objective, or at least a ranked list of objectives. There are both operational and commercial concerns, and all must be considered. These seemingly competing objectives lead some of our clients to analyze their Total Delivered Cost (download our TDC eBook).

For more on understanding the objectives, see the blog on Supply Chain Network Optimization

Improved customer service levels and increased margin will help the bottom line, but how will the competition react?

 

Focus on your competitive advantage

“We are the surgeon, not the manufacturer of the pacemaker”

A key client of ours once documented all 78 business processes in their supply chain. They found that only three of them provided competitive advantage. Those processes were automated with an optimized solution that allowed them to maintain their market differentiation. The remaining 75 processes were standard and could be addressed utilizing ‘off-the-shelf’ solutions. They thoughtfully decided not to let the organization who designed and produced the solutions for their commoditized processes be the ones who would deploy the technology that would provide them with competitive differentiation in their supply chain.

Whether it is to automate and optimize supply chain processes, analyze an infrastructure plan, or design your supply chain network for competitive advantage, the first thing you need to do is decide what questions you want to answer, and is there anything that is being overlooked?

So, there you have it.  I’m not certain our blog will make analytics popular again.  In fact, popularity is probably not a valid factor in anyone’s decision to make analytics an important tool in their supply chain.  At the end of the day, Profit Point believes in the power of analytics.  And, if Googling “analytics” is the beginning of your journey to reacquaint with that power, then we wish you a fantastic eye-opening journey.  (Otherwise, give me a call, and save yourself a few hours of screen time.)

About Eric Deahl

Educated as an Industrial Engineer, Eric has been providing planning and scheduling solutions throughout his career to numerous industries, with a particular focus on the value chains in manufacturing and distribution. He came to us from the optimization team at FICO, and prior to that was the leader of the Optimization and Supply Chain Solutions team in North America for IBM. Eric has a particular interest in understanding how organizations differentiate themselves in a marketplace and then applying technology to enhance that differentiation through operational effectiveness.

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