09/03/2021 Why is supply chain analytics important?

Why is supply chain analytics

important?
How does supply chain analytics work?
Analytics represent the ability to make data-driven decisions, based on a summary
of relevant, trusted data, often using visualization in the form of graphs, charts
and other means.

Supply chains typically generate massive amounts of data. Supply chain analytics
helps to make sense of all this data — uncovering patterns and generating
insights.

What are the types of AI?

Different types of supply chain analytics include:

Descriptive analytics

Provides visibility and a single source of truth across the supply chain, for both
internal and external systems and data.

Predictive analytics

Helps an organization understand the most likely outcome or future scenario and
its business implications. For example, by using predictive analytics, you can
project and mitigate disruptions and risks.

Prescriptive analytics

Helps organizations solve problems and collaborate for maximum business value.
Helps businesses collaborate with logistic partners to reduce time and effort in
mitigating disruptions.

Cognitive analytics

Helps an organization answer complex questions in natural language — in the

way a person or team of people might respond to a question. It assists companies
to think through a complex problem or issue, such as “How might we improve or
optimize X?”

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Supply chain analytics is also the foundation for applying cognitive technologies,
such as artificial intelligence (AI), to the supply chain process. Cognitive
technologies understand, reason, learn and interact like a human, but at enormous
capacity and speed.

This advanced form of supply chain analytics is ushering in a new era of supply
chain optimization. It can automatically sift through large amounts of data to help
an organization improve forecasting, identify inefficiencies, respond better to
customer needs, drive innovation and pursue breakthrough ideas.

Supply chain analytics can help an organization make smarter, quicker and more
efficient decisions. Benefits include the ability to:

Gain a significant return on investment

A recent Gartner survey revealed that 29% of surveyed organizations said they
have achieved high levels of ROI by using analytics, compared with only 4% that
achieved no ROI.¹

Better understand risks

Supply chain analytics can identify known risks and help to predict future risks by
spotting patterns and trends throughout the supply chain.

Increase accuracy in planning

By analyzing customer data, supply chain analytics can help a business better
predict future demand. It helps an organization decide what products can be
minimized when they become less profitable or understand what customer needs
will be after the initial order.

Achieve the lean supply chain

Companies can use supply chain analytics to monitor warehouse, partner

responses and customer needs for better-informed decisions.

Prepare for the future

Companies are now offering advanced analytics for supply chain management.
Advanced analytics can process both structured and unstructured data, to give
organizations an edge by making sure alerts arrive on time, so they can make
optimal decisions. Advanced analytics can also build correlation and patterns
among different sources to provide alerts that minimize risks at little costs and
less sustainability impact.

As technologies such as AI become more commonplace in supply chain analytics,

companies may see an explosion of further benefits. Information not previously
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processed because of the limitations of analyzing natural language data can now
be analyzed in real time. AI can rapidly and comprehensively read, understand
and correlate data from disparate sources, silos and systems.

It can then provide real-time analysis based on interpretation of the data.

Companies will have far broader supply chain intelligence. They can become
more efficient and avoid disruptions — while supporting new business models.

Do you have the visibility you need to act quickly?

Evolution of supply chain analytics

In the past, supply chain analytics was limited mostly to statistical analysis and
quantifiable performance indicators for demand planning and forecasting. Data
was stored in spreadsheets that came from different participants within the supply
chain.

By the 1990s, companies were adopting Electronic Data Interchange (EDI) and
Enterprise Resource Planning (ERP) systems to connect and exchange
information among supply chain partners. These systems provided easier access
to data for analysis, along with assisting businesses in their designing, planning
and forecasting.

In the 2000s, businesses began turning to business intelligence and predictive

analytic software solutions. These solutions helped companies gain a more in-
depth knowledge of how their supply chain networks were performing, how to
make better decisions and how to optimize their networks.

The challenge today concerns how companies can best use the huge amounts of
data generated in their supply chain networks. As recently as 2017, a typical
supply chain accessed 50 times more data than just five years earlier.² However,
less than a quarter of this data was being analyzed. Further, while approximately
20% of all supply chain data is structured and can be easily analyzed, 80% of
supply chain data is unstructured or dark data.³ Today’s organizations are looking
for ways to best analyze this dark data.

Studies are pointing to cognitive technologies or artificial intelligence as the next

frontier in supply chain analytics. AI solutions go beyond information retention
and process automation. AI software can think, reason and learn in a human-like
manner. AI can also process tremendous amounts of data and information — both
structured and unstructured data — and provide summaries and analyses of that
information in an instant.

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IDC estimates that by 2020, 50% of all business software will incorporate some
cognitive computing functions.⁴ AI not only provides a platform for powerfully
correlating and interpreting data from across systems and sources — it also allows
organizations to analyze supply chain data and intelligence in real time. Coupled
with emerging blockchain technologies, companies in the future will be able to
proactively forecast and predict events.

Act faster with AI-enabled insights

Key features of effective supply chain

analytics
The supply chain is the most obvious face of the business for customers and
consumers. The better a company can perform supply chain analytics, the better it
protects its business reputation and long-term sustainability.

In The Thinking Supply Chain, IDC’s Simon Ellis identifies the five “Cs” of the
effective supply chain analytics of the future:

Key features of effective supply chain optimization include:

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Connected

Being able to access unstructured data from social media, structured data from the
Internet of Things (IoT) and more traditional data sets available through
traditional ERP and B2B integration tools.

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Collaborative

Improving collaboration with suppliers increasingly means the use of cloud-based

commerce networks to enable multi-enterprise collaboration and engagement.

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Cyber-aware

The supply chain must harden its systems from cyber-intrusions and hacks, which
should be an enterprise-wide concern.

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Cognitively enabled

The AI platform becomes the modern supply chain’s control tower by collating,
coordinating and conducting decisions and actions across the chain. Most of the
supply chain is automated and self-learning.

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Comprehensive

Analytics capabilities must be scaled with data in real time. Insights will be
comprehensive and fast. Latency is unacceptable in the supply chain of the future.

In today’s supply chain networks, effective analytics requires the ability to

become more customer-centric — responding quickly while maintaining accuracy
and integrity. Businesses are looking for supply chain analytical solutions that can
quickly analyze huge amounts of data from disparate data sources, including
unstructured and natural language-based data. Finally, supply chain analytics are
being asked to predict an increasing number of supply chain variables —
including external forces such as weather, war, workers and regulations.

Read the IDC report: The Path to a Thinking Supply Chain

Using software for supply chain analytics

With supply chain analytics becoming so complicated, many types of software
have been developed to optimize supply chain performance. Software products

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cover the gamut — from supplying timely and accurate supply chain information
to monitoring sales.

For example, IBM has developed many software products to increase the
effectiveness of supply chain analytics, with some of the software even using AI
technologies. With AI capabilities, supply chain software can actually learn an
ever-fluctuating production flow and can even anticipate the need for changes.

Data analytics for a smarter supply chain

How can you apply data analytics to improve your operations and outcomes?

Read the blog post

Explore supply chain control towers

What is a supply chain control tower?
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09/03/2021 Why is supply chain analytics important?

In this blog post, learn the types, benefits and advantages of a modern control
tower.

Read the blog post

Control towers take center stage

Learn why smarter control towers are now the performance nerve center for
supply chains.

Read the IBM POV

IDC Technology Spotlight

IDC shares how supply chain control towers have become critical to provide the
speed and agility necessary for true resiliency.

Read the IDC paper

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09/03/2021 Why is supply chain analytics important?

IBM solutions
IBM Sterling Supply Chain Insights with Watson

Uses AI capabilities to help a business cut through data noise and get the insights
to confidently act faster.

Explore supply chain insights with Watson

IBM Sterling Supply Chain Fast Start

Serves as an agile workshop engagement to accelerate a company’s journey

toward a supply chain powered by AI.

Explore IBM Sterling Supply Chain Fast Start

IBM Sterling Supply Chain Business Network

Provides a view of all relevant transactions from a single dashboard — the

software can quickly pinpoint and assess issues without IT involvement.

Explore IBM Sterling Supply Chain Business Network

IBM Planning Analytics

Helps companies to automate planning, budgeting, forecasting and analysis

processes to drive efficiency and create timely, reliable plans.

Explore planning analytics

IBM Sterling Inventory Control Tower

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Get intelligent insights to see, manage and more effectively act on inventory to
meet actual demand.

Explore inventory control towers

Sources
¹ “Why Supply Chain Analytics is a Must Have,” (link resides outside ibm.com)
Christy Pettey, Gartner, 14 May 2015.

² “The Path to a Thinking Supply Chain,” Simon Ellis, John Santagate, IDC
Technology Spotlight, Aug 2018.

³ “The AI journey: Artificial intelligence and the supply chain,” IBM Watson
Supply Chain.

⁴ “Creating a thinking supply chain for the cognitive era,” Matt McGovern,
Watson Customer Engagement, 27 Mar 2017.

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