What is Supply Chain Analytics?

Use data analytics to improve operational efficiency by enabling data-driven diagnostics and decisions at strategic and operational levels

What is Supply Chain Analytics?

Article originally published on: Medium.

Use data analytics to improve operational efficiency by enabling data-driven diagnostics and decisions at strategic and operational levels

A Supply Chain can be defined as several parties exchanging flows of material, information or money resources with the ultimate goal of fulfilling a customer request.

Supply Chain Network — Flows of information and goods (Samir Saci)
Flows of information and goods — (Image by Author)

As information plays an important role, Supply chain Analytics has emerged as the methodologies and tools organizations use to get insights from data associated with all processes included in the value chain.

In this article, we will introduce the different types of Supply Chain Analytics and understand their impact on the efficiency of your end-to-end operations.

💡
SUMMARY
I. Scenario
Example of a Supply Chain for a Fashion Retailer
II. What are the different types of Supply Chain Analytics?
1. Descriptive analytics
2. Diagnostic analytics
3. Predictive analytics
4. Prescriptive analytics
III. Why is it so important?
IV. What skills do you need?

If you prefer watching, have a look a the Youtube tutorial,

Network

Let us take the example of an international clothing group that has stores all around the world.

The company is producing garments, bags and accessories in factories located in Asia.

Examples of SKUs sold — (Image by Author)

Stores are delivered from local warehouses that are directly replenished by factories.

Supply Chain Network— (Image by Author)

Flow of goods

  • Warehouses are replenished with bulks from the factories
  • Stores orders are picked, packed and shipped from local warehouses

Flows of information

  • Sales and merchandising teams collect sales data from the stores
  • Planning teams provide demand forecasts and support the production schedule
  • Supply planners send orders to the factories for warehouse replenishment
  • Distribution planners create store replenishment orders for the local warehouses

Let us now explore what kind of tools can be used to optimize the flow of goods using the information available.

Different types of Supply Chain Analytics?

Supply Chain Analytics can be represented as a set of tools that will use the flow of information to answer questions and support the decision-making process.

Different Types of Supply Chain Analytics — Samir Saci
Four Types of Supply Chain Analytics — (Image by Author)

For each type, you’ll need specific methodology, mathematical concepts and analytics tools to answer the question.

Descriptive Analytics

A set of tools to provide visibility and a single source of truth across the supply chain to track your shipments, detect incidents and measure the performance of your operations.

Exemple of Supply Chain Descriptivie Analytics Projects — Samir Saci
Examples — (Image by Author)

The final deliverable is usually a set of dashboards that can be put on the cloud using PowerBI/Tableau, such as a

  • Warehouse Workload Report reporting the key indicators to measure a warehouse activity (orders prepared, productivity, logistic ratios)
  • Supply Chain Control Tower to track your shipments along your distribution networks
  • Transportation Route Analysis to visualize the routing of your pasts deliveries

👨‍💼 POSITIONS INVOLVED
Supply Chain Engineers, Data Analysts, Data Architects, Data Engineers, Product Managers and Business Intelligence Experts

🧰 TOOLS
Cloud computing, Python processing libraries (Pandas, Spark), BI Visualisation tools (Tableau, PowerBI, Google Studio)

Diagnostic Analytics

This can be summarized as incident root cause analysis. Let us take the example of the supply chain control tower.

Time Stamps — (Image by Author)

Thanks to your data architecture, you can track your shipments at each step of the logistic chain.

Cut-off Time Analysis — (Image by Author)

For instance, in the chart above you can see long clearance lead times directly lead to late deliveries.

👨‍💼 POSITIONS INVOLVED
Supply Chain Engineers, Data Analysts, Data Engineers, Product Managers

🧰 TOOLS
Cloud computing, Python processing libraries (Pandas, Spark), BI Visualisation tools (Tableau, PowerBI, Google Studio)

If a shipment is delivered late, the root cause analysis consists in checking each time stamp to see where your shipment missed a cut-off time.

The process of analysis is designed by the operational teams and implemented by data engineers for complete automation.

Predictive Analytics

Support the operations to understand the most likely outcome or future scenario and its business implications.

Example of predictive Analysis — (Image by Author)

For example, by using predictive analytics, you can estimate the impact of future promotions on the sales volumes in stores to support inventory management.

👨‍💼 POSITIONS INVOLVED
Supply Chain Engineers, Data Scientists, Business Experts

🧰 TOOLS
Cloud computing, Python processing libraries (Pandas, Spark), BI
Machine Learning, Statistics

In the example above, data scientists will work with business experts to understand which features can help to improve the accuracy of sales forecasts.

Prescriptive Analytics

Assist the operations to solve problems and optimize the resources to reach the best efficiency.

Example of Supply Chain Prescriptive Analytics — Samir Saci
Examples of Prescriptive Analytics — (Image by Author)

Most of the time, prescriptive analytics are linked to optimization problems where you need to maximize (or minimize) objective functions considering several constraints.

👨‍💼 POSITIONS INVOLVED
Supply Chain Engineers, Data Scientists

🧰 TOOLS
Cloud computing, Python processing libraries (Pandas, Spark), BI
Machine Learning, Statistics, Linear Programming, Operations Research tools

Usually, the operational issue is linked to a well-known problem with solutions that can be found in the literature.

For instance, the travelling salesman or the job-shop problems are used in the examples shown above.

Why is it important?

As a supply chain manager, your scope of responsibilities includes

  1. Understand and minimize the risks
  2. Optimize operations to reduce costs
  3. Provide visibility for resources planning
  4. Prepare for future scenarios
Analytics for Supply Chain Optimization — (Image by Author)

Therefore you need descriptive and diagnostic analytics to understand the current situation.

Predictive analytics will give you visibility into the future while prescriptive analytics will support your decision-making.

What skills do you need?

Descriptive Analytics

This will depend on the type of analytics your position is involved in.

In any case, you will need basic programming skills to work with unstructured data using Python or VBA.

Most of the time, data will be unstructured (in excel files, pdf reports) or coming from heterogeneous systems.

Supply Chain Analytics Workflow — (Image by Author)
Supply Chain Analytics Workflow — (Image by Author)

The first mandatory step is the processing and harmonization of information across these different sources and building descriptive capabilities.

Therefore, even if from a mathematical point of view it is the easiest part, descriptive analytics will take a large part of your energy (and budget).

Go beyond

After you’ve created a clean source of reliable data you can start building models for diagnostic, prediction or prescription.

If you want to go into more details, you can find examples of case studies in the articles listed below

Descriptive Analytics

Diagnostic Analytics

Predictive Analytics

Prescriptive Analytics