Shipments arrive late for dozens of reasons. Production errors, warehouse inefficiencies, natural disasters — anything could halt a supply chain.
But customers expect timely deliveries. You need to make sure your operation is resilient enough to withstand any disruptions thrown at it.
That’s where supply chain analytics come in. Using data and advanced analytic techniques, you can boost efficiency, reduce costs, and improve decision-making processes for your business. Here’s how.
What are supply chain analytics?
Supply chain management generally covers five steps: planning, sourcing, producing, delivering, and returning. Each of these categories contains dozens of smaller processes, meaning there are many areas to monitor. But that also means you can collect data across every stage to find ways to improve efficiency and gain a competitive advantage in the market.
By analyzing this data, you can reap several benefits, including (but not limited to):
- Identifying production bottlenecks before they occur
- Predicting and preventing stockouts
- Optimizing delivery routes
- Automating reorder points
- Finding ways to reduce production costs
- Finding ways to increase production speed
- Eliminating unnecessary steps
- Understanding customer purchasing trends
- Streamlining warehouse organization for better picking and packing
- Tracking KPIs like inventory ratios, quality control, and more
- Adapting to supply chain disruptions to keep inventory moving
To use these analytics to their fullest potential, collect and analyze data from multiple sources — including manufacturers, suppliers, carriers, and customers. Many tools can help aggregate this information, like ERP (Enterprise Resource Planning) systems, TMS (Transportation Management Systems), WMS (Warehouse Management Systems), and more.
The 5 main types of supply chain analytics
There are several types of analytics, depending on what you’re trying to achieve:
- Descriptive analytics: This data describes trends at a company, offering a picture of what has happened, such as graphs showing historical trends of customer demand.
- Diagnostic analytics: These patterns reveal why something happened, taking the data a step further than descriptive analytics. Instead of just showing trends, it examines data to pinpoint why something happened.
- Predictive analytics: Forecasts use predictive analytics to show likely outcomes for a business, like potential sales patterns or disruptions to the supply chain.
- Prescriptive analysis: Level up your predictive analysis with prescriptive analysis, which makes recommendations on what to do based on the data.
- Cognitive analytics: AI and machine learning process data on any subject to provide an accurate answer, simulating a human thought process to interpret a metric.
The importance of supply chain analytics
By interpreting this data effectively, businesses can transform their supply chains from reactive to proactive and make decisions based on insights rather than guesswork. Here are five key benefits of implementing analytical tools:
- Enhanced decision-making: Supply chain data offers real-time visibility into operations, from new orders to delivery delays. Access to accurate, current information helps you identify bottlenecks, predict demand, and maintain inventory levels.
- Cost reduction: Analyzing data throughout the supply chain uncovers inefficiencies to reveal cost-saving opportunities, like reducing excess inventory or cutting transportation expenses.
- Increased efficiency: Using analytics to achieve streamlined supply chain processes leads to shorter lead times. Faster deliveries, increased customer satisfaction, and a stronger market position are just some of the benefits.
- Risk management: Analytics allow businesses to anticipate and manage risks by predicting potential disruptions and devising contingency plans. This proactive approach ensures a smooth and resilient supply chain.
- Improved collaboration: Greater transparency through analytics fosters better communication and teamwork among both supply chain partners and teams across every department.
Essential features of supply chain analytic tools
For a supply chain analytics system to be effective, it needs a few key features:
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Security: Keeping data secure protects sensitive information. A good analytics system should have strong security measures to prevent unauthorized access and cyber threats.
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Collaboration with suppliers: Effective analytics tools should make it easy to work with suppliers by providing real-time visibility into inventory levels, order status, and production schedules. By sharing these insights, suppliers can better align their operations with the company’s needs, ensuring timely deliveries and reducing the risk of stockouts or overstock.
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Data integration: Aggregating data from various sources is essential for a full picture of the supply chain. Your analytics system should be able to integrate data from ERP systems, Internet of Things (IoT) devices, and more.
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Data visualizations: Visualization tools are important for turning data into easy-to-understand charts, graphs, and dashboards. This helps stakeholders quickly understand insights and make informed decisions.
Real-life applications of supply chain analytics
Here are some key areas where analytics are making a big impact.
Optimizing inventory levels
Many businesses find it tough to keep their inventory levels just right. Having too much stock results in high carrying costs and risks dead stock, which can affect customers by driving up prices. But too little stock can lead to lost sales and dissatisfied customers who can’t buy what they need.
Supply chain and logistics analytics break down past sales data and buying patterns to forecast demand more accurately. Knowing what customers want to buy lets you plan inventory levels accordingly.
Enhancing order accuracy and quality
Order mistakes lead to returns and higher operational costs as the product moves through reverse logistics channels.
Cognitive analytics can examine data sources such as customer reviews, social media posts, and support tickets to identify patterns and root causes of common errors. And a prescriptive analytic program could tell you how to correct them.
Maybe the wrong product keeps getting sent out and you need to reorganize the warehouse layout to optimize picking and packing. Or, products might be arriving on customers’ doorsteps damaged, meaning you need to rethink your dunnage strategy. Each improvement leads to better order accuracy, resulting in fewer returns and savings on operational costs.
Mitigating supply chain risks
Supply chain disruptions can seriously affect business operations, but tracking common roadblocks lets you create contingency plans to make sure shipments arrive safely. You might need to diversify suppliers to avoid relying on one international option or find several freight partners to distribute goods in times of crisis.
Cognitive analytics help by analyzing data sources like news articles, social media posts, and market reports to predict potential problems and disruptions. By proactively addressing potential disruptions, companies can maintain high on-time delivery rates during challenging times.
Leveraging supply chain analytics to enhance business operations
Here are just a few places where supply chain data will impact your efficiency.
Inventory levels
Supply chain analytics help businesses maintain the right amount of stock by analyzing historical sales and demand patterns. Use this data to automate reorder points and calculate how much safety stock to hold so you meet customer demand without overstocking or understocking.
Order management
Analytics improve order accuracy and fulfillment by analyzing order patterns and customer preferences. With these insights, you can make changes like putting the highest demand products in accessible locations to improve fulfillment speed, delivery times, and order accuracy.
Cost management
Supply chain analytics reduce operational costs by identifying inefficiencies and areas for savings, like optimizing transportation routes, reducing excess inventory, or changing to better-performing suppliers.
Expanding the applications of supply chain analytics
Collecting data isn’t just about improving current operations — it’s a key tool for preparing your business for the future. As markets become more competitive and customer expectations rise, having a solid supply chain analytics system gives you the agility and responsiveness you need to stay ahead.
Here are some emerging trends and advanced applications where this data can help your business grow.
Sustainable supply chain management
With growing concerns about environmental impact, supply chain analytics can make operations more sustainable. Data analytics in supply chains helps businesses track and reduce their carbon footprint, optimize resources, and implement sustainable practices. By identifying areas to minimize waste and improve efficiency, companies cut costs and enhance environmental performance.
Real-time supply chain monitoring
Monitoring supply chain activities in real time is becoming more and more important — and that’s increasingly available with advanced supply chain management analytics and IoT devices and sensors. Businesses can detect issues as they arise and make informed decisions on how to proceed based on the data in front of them.
Enhancing supplier relationships
Strong supplier relationships are integral to a reliable supply chain. Analytics give businesses valuable insights into supplier performance. By monitoring key performance indicators (KPIs) and regularly evaluating supplier efficiency, companies can ensure they’re working with partners who meet their quality and delivery standards.
Improving customer experience
Use supply chain analytics to boost the customer experience by making sure deliveries are on time, orders are accurate, and product quality is high. And by analyzing customer feedback, businesses can constantly fine-tune their supply chain processes to meet and even exceed customer expectations.
Embrace data-driven decisions with Fishbowl
Fishbowl is leading the way in supply chain analytics, offering comprehensive solutions that help businesses stay ahead in a competitive market.
Whether you want to manage your inventory more effectively, improve order accuracy, reduce risks, or promote sustainability, Fishbowl can help. Plus, Fishbowl integrates with QuickBooks seamlessly, with real-time tracking and clear visual tools, turning raw data into useful insights that drive business success.
Ready to boost efficiency and drive business growth? Start a demo with Fishbowl today to take the first step toward a smarter supply chain.
