Supply Chain Analytics drives supply chain performance
What is supply chain analytics?
The traditional supply chain model would rely on an ERP system to drive supply chain performance by using a combination of historical static data and reports to manage sales forecasting, inventory planning, purchasing, production and distribution. With the introduction of diverse technology platforms and cloud based solutions, businesses are starting to realise the importance of capturing clean data for advanced scientific predictive analysis which will drive business decision making towards supply chain improvement. The challenge for a complex supply chain is knowing which tools to use, where and how to apply them to maximise your ROI.
What to measure with Supply Chain Analytics
Sales forecasting - The one certainty with sales forecasting is that it is always wrong, the challenge is to minimise the "How wrong"aspect by applying a scientific approach that provides the ability to minimise the error range to a manageable inventory investment level. There is no silver bullet that will immediately increase sales forecasting performance by implementing a science based methodology alone as many other factors will collectively contribute to higher forecast accuracy. The knowledge of past product performance, the impact of seasonal and non seasonal promotions that drive sales, the undertanding of systems and the use of analytical tools that drive inventory investment are all core factors.
Demand Planning - This would incorporate the use of the sales forecasting data set within an ERP system to formulate a purchase plan by relying on the planning settings within the ERP system to produce a projected inventory position. A high level of knowledge with the use of planning parameters is critical in producing the final state inventory and purchase plan as there are a number of variables that can greatly affect the final result. These being: Item master settings, leadtime settings, order type, safety stock to name but a few. As this data is typically static, historical performance must be measured for each setting as part of a continuous improvement process within the demand planning function.
Vendor Management - Every ERP system has the ability to produce and release vendor plans for discrete, blanket or periodic orders. Applying a level of measurement within a vendor management program is important as it provides a health check or validation against the planned settings within your ERP system. In the real world there are many events that will cause a vendor to delay a delivery, with most of these being beyond the control of the vendor. As the delivery will move through a number of touch points, from site of manufacture to customs clearance, it is important to be able to measure the time intervals for each touch point against the time values within your ERP planning settings.
Warehouse Management - As the scale of each warehouse operation will vary, the functional operations such as inbound recieving, pick/pack and outbound despatch are all similar. These functions will be supported by an ERP system or an integrated ERP system and Warehouse management system. Each system will generate inbound and outbound requirements for the warehouse operation to complete on time and in full. These functional processes can be monitored and measured regularly to drive performance improvement. The establishment and sharing of agreed Key Performance Indicators will provide the departmental and company baseline for performance achievement.
Transportation Management - The final leg of your supply chain is usually the tipping point for the level of customer statisfaction achieved. Due to cost management and control objectives, most businesses tend to use a range of providers that specialise in either metropolitan, regional or interstate transport modes. As each transport provider has their own systems to track and trace your order, the lack of end to end visibility may rely on your destatch function to expedite outstanding deliveries. Service level agreements must be established with each vendor and incorporate performance criteria for order management.
Customer relationship management - The strength of your customer service team is a function of your supply chain's health, responsiveness and level of data integration with internal and external systems. Health is the ability to always manage the flow of information and order volume within a warehouse operation, where responsiveness relates to the ability to scale up and deliver within unplanned or compressed timeframes. The final component is the level of integration that provides the customer service team with order visibility for track and trace. With disconnected processes, customer statisfaction can be measured by the level of noise generated and the purchasing power of your customer. Supply chain analytics helps to provide a viewing platform that will minimise noise and improve a customers experience.
Supply Chain Analytics Health Check
Scope of works
- Review and understand how data is used to improve forecast accuracy.
- Review and understand how data is used to improve demand planning.
- Review and understand how data is used to improve vendor management performance.
- Review and understand how data is used to monitor, measure and improve warehouse performance.
- Review and understand how data is used to improve delivery performance in transportation.
- Review and understand how data is used to monitor, measure and improve customer satisfaction.
- Identify the new analytics tools or enhancements to the existing analytics tool set.
- Develop a standardised protocol for improving data integrity and timing.
- Standardised performance metrics for each functional area.
- Develop high level processes to capture, operate and maintain supply chain analytics.