The supply chain is the best place to use analytic to look for competitive advantage because of the vital role the supply chain plays in cost structure and profitability.
FREMONT, CA: Depending on traditional supply chain execution systems is becoming increasingly daunting, with a mix of global operating systems, pricing pressures, and ever-evolving customer expectations. There are also recent economic effects such as rising fuel costs, the recession, supplier bases that have shrunk or moved off-shore, and increased competition from low-cost outsourcers. All of these hurdles potentially create waste in the supply chain. That's where supply chain analytics comes in. Numerous examples exist illustrating how firms can use advanced analytics to further organizational objectives. Here are some typical supply chain analytics examples.
• Capacity Planning
Capacity planning lets firms match procurement and manufacturing capacity to sales demand. Here, developing a thorough understanding of the market, competitors, and that affecting demand is essential. The answer lies in developing a thorough understanding of the market, the competitors, and those that impact demand. This is entirely possible through prescriptive analytics. First, firms should develop a mathematical model of the business using a rigid analytics platform's tools. Then, leveraging powerful solver software to analyze the data, firms can determine the right answers to questions like what type of capacity planning is best for the business.
• Scenario Analysis
One of the vital features of strategic planning is deciding potential business scenarios and devising appropriate strategies. Not all organizations can afford the cost of the multidisciplinary team method; prescriptive analytics modeling enables them to achieve similar results. Leveraging a form of stochastic modeling, where the outcome of each set of decisions can act as inputs, optimization-based scenario planning can perform through several simulations and decide the optimal answers to many what-if supply chain questions.
• Demand Shaping
Demand shaping is what firms apply to change demand for their products rather than fulfill the existing request. To do this, the model requires to be inclusive of sales, manufacturing and procurement, and financials so that solutions are quantified in financial terms. Using what-if scenarios, it's possible to decide the impact of a change in demand as a result of a sales promotion on the organization's potentials to meet the new demand and determine how to optimize supply and demand.