Role of Data Analytics in Supply Chain Management
Before we get to the relationship between Supply Chain Management and Data analytics lets understand Supply Chain Management in a more detailed manner.
Supply Chain Management is the organized flow of goods and services. For example, the toothpaste you used today morning took an incredible amount of coordination to reach you. Right from sourcing and storing the raw materials involved in manufacturing the product it is checked, packed (which involves further raw materials of paper and design) moved, stored, shipped multiple times. We take for granted all these logistical intricacies as we easily choose and pick up the product at the store or just have it delivered home!
Drawing a likeness to our internal organs interconnected with each other in fulfilling multiple functions towards one specific goal- this connected network of individuals, organizations, resources, and technologies attempt to work effectively at a sustainable cost in delivering the best version of the product to the consumer.
Today, we have the luxury to choose from multiple brands from all over the world but even a few years ago we were quite content with local products. Complete development in all the links of the chain – trucking, storage, manufacturing, efficient computerization, has led to the natural progress in transforming to the globalization of products whereby the consumer is truly the king. There still seems a long way to go, challenges in forecasting economy, natural calamities, demand, and technological strategies are constantly evolving in perfecting a smooth process. One rotten apple ruins the entire bushel, and so is the same with the chain of events, if one efficiently performed error which can cost millions. Companies often look for cost-effective solutions to the management of inventories, for example like how Wal-Mart cut the middlemen it led to direct purchase from the producer itself way back in the beginning of the decade. Amazon, on the other hand, outsources most of its inventory management which ensures one day or one hour delivery of the product.
‘Big data’ is the sheer volume of diverse data created by people, tools and machinery. Through analyzing this data companies better comprehend customer market trends, and therefore proactively strategize on supply chain-related activities. Data analytics aid the company by analyzing its own data to monitor their functioning and failures within their system at a much faster time span. GPS tracking of the product keeping in mind the possible calamities or quickly preventing that.
With today’s complex supply chain generating big volumes of data, there is a need for the supply chain managers to strengthen their data management skills and tools to effectively take better decisions and mitigate risk. Analytics with the data science techniques can effectively be used to collect internal and external data, model data, recognize patterns and go on to predict and prescribe the best way to tackle future predictions. Further, an organization will also benefit from supply chain analytics in managing it’s inventory, help in cash-flow management by having a detailed demand planning. So to answer the question of the title – yes, data analytics is transforming the supply chain management to maximize productivity and reducing losses concerned with logistics. With supply chain analytics, the organization can look at exponential growth in sales and improve profitability along with better cash flow management. This is mainly driven by the fact that all data is consolidated into valuable information and provided in a consistent manner to the right decision-makers in a manner that is easy for them to consume.
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Author: Mariyam Ghaley, Co-author: Krithika