5 Tips for Achieving the Most Out of Your Supply Chain Analytics

by Fronetics | Nov 2, 2017 | Blog, Data/Analytics, Logistics, Strategy, Supply Chain

In a recent study, MIT found that companies that focus on 5 key initiatives to improve their supply chain analytics can have a big impact on their bottom line.

Some supply chain companies are leaning on the power of analytics to help streamline their processes and get ahead of their competitors. But many companies have struggled to embrace the relationship between using analytics and implementing changes that can improve business performance.

The study, published by the MIT Sloan Management Review, asked 353 participants to discuss their understanding of their companies’ analytics systems. The results showed that though most companies have an analytics system in place, very few are using the results to implement necessary changes.

Obstacles to fully utilizing analytics included inaccurate data, cost, and lack of timely data. But the benefits far outweigh the challenges. Hanesbrand Inc., for example, used predictive analytics to make changes in their inventory processes and have since seen an increase in their production and purchase orders.

So how can your company start to incorporate supply chain analytics into your company culture?

Here are 5 tips to help kick-start your analytics implementation:

1. Supply chain analytics initiatives need a top-down mandate

In order to achieve analytical success that has an influence over organizational process, it’s imperative that upper-level management use the analytical systems. Executives need to promote and utilize the systems. Buy-in from managers and team members will be seamless when it’s coming from the top. David Dittmann, director of business intelligence and analytics services at Procter & Gamble Co., stresses that “it is impossible to win over thousands of people one small analytics victory at a time. Analytics must be a top-down mandate to succeed from an organizational perspective.”

2. The simpler the model, the more likely the use

If you want your company to embrace an analytics system, it’s important that the model is simple and easy to grasp. If employees don’t understand how to use the analytics or apply the results, they won’t take the time to implement the system. The more complex a system is, the greater the potential for team members to dismiss it. The Cleo Integration Suite (CIS), for example, promotes itself as an easy-to-use platform that can integrate seamlessly into your pre-existing software. CIS understands that supply chain companies need systems that are elementary to incorporate to achieve results.

3. Business knowledge is essential

Executives in the survey noted that an in-depth understanding of business processes and their effect on the bottom line is critical to supply chain analytics success. To develop the most effective model, companies need to have insight into all of the processes that make their company successful and be able to incorporate the results into these processes. Without this foundational information, the analytics are just “fun facts.”

4. Trust in the numbers

Time is a key factor in successful analytics implementation. In order to achieve timely results, organizations have to trust in the numbers the analytics provides them. “Trust can be built through a closed-loop change management effort that is centered on performance metrics that accurately reflect the current state of the supply chain system.” writes Melissa R. Bowers, Adam G. Petrie, and Mary C. Holcomb. Once these metrics are in place, it is easy to gauge the results against past processes.

Coca-Cola Global implemented a check-and-balances system to cultivate trust in their analytics. Anytime an employee chose to override the analytics system, it gave them feedback to see if their manual adjustments resulted in an improvement or a setback, creating trust in the employees and their dependence on the data.

5. Implement mechanisms to help develop analytics professionals gain business knowledge

Many supply chain companies are hiring analytics professionals to help implement these systems into their organizations. Though experts in their field, it’s important for these trained analytics professionals to learn about all aspects of your business. This business knowledge creates an open relationship between the business and the analytics, creating more opportunities for the numbers to aid in the processes.

Out are the days of order tracking and point of sales data, and in are the days of big data and analytics. Supply chain companies are quickly realizing the need to understand and implement these analytics systems into their day-to-day processes. Creating efficiency and savings using these systems is easier than you think.

Related posts:

Data Overload: The Challenge of Managing Supply Chain Analytics

by Elizabeth Hines | Jul 13, 2015 | Big Data, Blog, Data/Analytics, Strategy, Supply Chain

Analytics is good for business — as long as you can make sense of it.

Does your business suffer from a case of data overload? Or do you steer clear of new investments in supply chain analytics because you are afraid they could yield more data than your business can handle? You are in good company.

Several recent surveys indicate companies either are wary of advanced analytics tools or say they have failed to leverage the technology. The issue does not seem to be a lack of knowledge of its existence or potential impact — end users are generally well informed — but how to absorb the data effectively and apply it across the entire organization.

According to a Telematics Update, for example, vendors would be wise to spend less time on their sales pitch and more time presenting the data in a digestible format, ensuring compatibility with the end user’s legacy systems, and aligning the solution with the end-user’s key performance indicators.

The challenge is also captured in an Accenture survey in which only one in five companies said they are “very satisfied” with the returns they have received from analytics. And it’s not for lack of trying. Two-thirds of companies have appointed a chief data officer in the last 18 months to oversee data management and analytics, while 71 percent of those who have not created such a position plan to do so in the near future.

This passage from Accenture’s survey report hits the nail on the head:

Companies wanting to compete more aggressively with analytics will move rapidly to industrialize the discipline on an enterprise-wide scale, redesigning how fact-based insights get embedded into key processes, leading to smarter decisions and better business outcomes.

Most organizations measure too many things that don’t matter, and don’t put sufficient focus on those things that do, establishing a large set of metrics, but often lacking a causal mapping of the key drivers of their business.

As the survey suggests, the move away from an isolated approach to an integrated cross-functional model may be the key to squeezing the most out of supply chain analytics. According to Deloitte, the key to delivering strategic insights is creating asingle authoritative data set from which all business units can draw information.

However, only 33% of the Accenture survey respondents said they are “aggressively using analytics across the entire enterprise.” Instead, highly customized data is often collected for units within the organization. A spending forecast by procurement may look nothing like its counterpart coming out of logistics. The inconsistency in reporting makes it hard to share the knowledge, and that takes us back to square one: lots of data and little useful information.

Jerry O’Dwyer, a principal with Deloitte Consulting, summed it up this way in a 2012 post:

If you are performing analytics in different areas of the supply chain — for example, spend analytics or demand planning — you may be missing opportunities that an expansive approach can yield. For companies of all kinds, in-depth supply chain analysis offers an opportunity to create increased value throughout their operations.

Let’s hear it: What do you think companies need to do to put analytics to effective use?

Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.

Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.

We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.

We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.