Understanding the Basics of Supply Chain

Analytics

 Mark MorleyFebruary 9, 2016

 6 minute read

Today’s supply chains move millions of shipments around the world each year, but just think for a
moment about the information required to ensure these shipments get from A to B safely and on
time. The information flows, primarily based on EDI/B2B transactions, to support today’s global
supply chains are growing in volume year-on-year.

What benefits could a business obtain by being able to monitor these information flows and obtain
deeper insights into what makes supply chains ‘tick’? Say hello to supply chain analytics. Monitoring
the day-by-day, hour-by-hour, or minute-by-minute ‘pulse’ of a supply chain could potentially bring
significant operational and business benefits to a company. From a supply chain point of view,
companies are looking for answers to questions such as:
  Who are my top suppliers and how many B2B transactions have I exchanged with them?

 Who are my top (and bottom) performing suppliers based on specific key performance
indicators such as complete orders, accurate shipments, on-time deliveries and processing
of payments?

 For which suppliers/customers has the order/payment volume increased or decreased by

more than 30% over the last 12 months?

 Which of my customers sent me the most orders during the end of year holiday period and
which ones sent many changes?

Here at OpenText we are processing over 16 billion transactions per year across our Trading
Grid B2B network. These transactions are feeding global supply chains with rich information to help
ensure that orders are processed in time, deliveries are shipped to the correct destinations and
invoices not only get paid on time but comply with the ever increasing number of compliance
regulations.

Now what if you could apply Big Data analytics to supply chain operations in order to obtain deeper
insights into how your digital information flows are supporting your physical shipment flows around
the world?
According to many leading analysts, Business Intelligence and Analytics are the most important
focus areas for the CIO in 2016. Big Data analytics has been around for a few years now, really
emerging in 2010 with mobile and cloud based technologies, but it is really only over the last two
years that companies have started to embrace Big Data across the enterprise. You only have to look
at recruitment websites to see that one of the hottest jobs in the market at the moment are for Big
Data Scientists, those that can understand rich data sets, analyse and then report on them.

There are many EDI document standards supporting today’s global supply chains, with ANSI and
EDIFACT formats being the most prevalent. But if you go to the EDI document level there are really
just two types of information that are useful from a supply chain analytics point of view.
Firstly,operational-based information and secondly, business specific information, so what does this
information actually look like?
Operational information could be considered as the type of documents flowing between trading
partners across a supply chain, so this would include Purchase Orders, Invoices, Advanced Ship
Notices (ASNs) and Order Acknowledgements. The volume of these transactions could run into
thousands, or for a large global company, millions per year. What if you could use this information to
determine the volume of transactions by document type and volume of transactions by trading
partner?

Applying analytics, let’s call it operational in nature, could help to determine the top trading partners
that a company deals with on an annual basis and also provide insights into the most popular
document types being exchanged. Chances are, companies doing business only in North America
will be exchanging more ANSI-based documents while companies doing business on a global basis
will be using EDIFACT. So, Operational Analytics could be defined as delivering transactional data
intelligence and volume trends needed to improve operational efficiencies and drive company
profitability.

Business information could be considered as the data from within each document type. So for
example for an ASN, it would contain information such as delivery address, shipment details,
quantity, sender details etc. What if you could actually perform deep introspection on each business
transaction as it flows across a B2B network and then use this information to produce a series of
business-related trends that could be reviewed, and if necessary, acted upon?

Applying analytics, in this case business analytics, could potentially help a business to determine
ASN timeliness, Invoice Accuracy, Price Variance and so on. If there are any exceptions or errors
then the business can take corrective action and resolve any problems much sooner. So, Business
Analytics could be defined as delivering business process visibility required to make better decisions
faster, spot and pursue market opportunities, mitigate risk and gain business agility.
Applying operational and business analytics to a pool of billions of transactions flowing across a
business network could transform the day to day work activities of supply chain, logistics and
procurement professionals around the world.

Let me briefly highlight two use cases for supply chain analytics.

The retail industry is highly consumer driven and seasonal in nature which introduces significant
fluctuations in the procurement process. Being able to monitor the volume of documents, by type,
across a business network can potentially provide retailers with some interesting indirect insights into
consumer demand in different markets around the world.

Applying operational analytics, especially when applied to a few years of historical data could help
to forecast potential order volumes and therefore allow retailers to be better prepared for seasonal
fluctuations. Operational analytics, based on B2B transactions could potentially transform the retail
industry, making it more responsive to consumer demands and ensure that inventory levels are
aligned more accurately with expected demand levels.

In the automotive industry, ‘ASN Timeliness’ is one of the most important variables measured to
ensure that Just-in-Time production lines are running smoothly. ASN timeliness can be defined as the
number of ASNs sent on time divided by the total number of shipments within a specified time
period. Many automotive companies use ASN timeliness as the basis of monitoring the performance
of their trading partner community. Applying business analytics in this case allows a car
manufacturer to not only monitor supplier performance from an ASN delivery point of view, but also
compare suppliers against each other to create a top ten ranking of delivery.
What if you could monitor the ‘live’ transactions flowing across a business network and apply
business analytics to monitor trends and exceptions before they impact the business? As shown by
the ASN timeliness chart above you can use analytics to very quickly assess and compare the
performance of your trading partners. Some car manufacturers use ASN timeliness as the basis of
determining whether penalties or even contract termination should be applied.

So in summary, applying analytics across trading partner information flowing across a business
network could:

 Provide a complete 360 degree view of supply chain activities

 Offer deeper insights into transaction based trading partner activities

 Provide earlier identification of exceptions, allowing corrective action to be taken sooner

and prevent supply chain disruptions

 Allow more informed business decisions to be made

The  two examples above are based on company specific transactions flowing across a business
network, but what about looking at a community as a whole? Applying analytics to an entire
community of companies connected to a business network could provide some interesting insights
into business/industry activity as a whole.

Every month the manufacturing industry, one of the main contributors towards a country’s GDP,
waits to hear from global economists as to how each country around the world has performed. The
Purchasers Managers Index (PMI) measures eight key metrics each month, for example number of
new orders, stock levels, production output and changes in employment levels.

A PMI number above 50 signifies that a country is in growth and a number below 50 signifies
contraction. Three periods of contraction will normally signify that a country is going into recession.
The numbers below relate to the January 2016 manufacturing PMI numbers for the G8 member
countries. You can quickly see here that Japan and Italy tied in January as the fastest growing
economies in relation to manufacturing PMI.
 Janua
ry 2016 Purchasing Managers Index (PMI)

OpenText™ Trading Grid connects over 600,000 companies, and processes over 16 billion

transactions with a commerce value of over $6.5 trillion. Applying analytics to this scale of
transaction volumes could provide deep and very rich insights at both industry and country level as to
what is happening from a business growth or contraction perspective. If you were to apply analytics
to a community of trading partners on this scale then in theory our results should be broadly in line
with the PMI trends, especially as many of the order volumes for example being measured as part of
the PMI process are actually moving across our Trading Grid infrastructure as EDI transactions.
I have only scratched the surface in this blog about how analytics can be used to provide operational,
business, customer and community-related insights to supply chain operations and further blogs over
the next few months will take a closer look at each of these areas. If you would like to see how
analytics can be used in a different situation, in this case to monitor the US elections coverage, take a
look at our Election Tracker. Also take a look at Trading Grid Analytics, a new breed of embedded
analytics that provide insights across entire business flows.
 History of Big Data

Big data refers to data that is so large, fast or complex that it’s difficult or impossible to
process using traditional methods. The act of accessing and storing large amounts of
information for analytics has been around for a long time. But the concept of big data
gained momentum in the early 2000s when industry analyst Doug Laney articulated the
now-mainstream definition of big data as the three V’s:

Volume. Organizations collect data from a variety of sources, including transactions,

smart (IoT) devices, industrial equipment, videos, images, audio, social media and
more. In the past, storing all that data would have been too costly – but cheaper storage
using data lakes, Hadoop and the cloud have eased the burden.

Velocity. With the growth in the Internet of Things, data streams into businesses at an

unprecedented speed and must be handled in a timely manner. RFID tags, sensors and
smart meters are driving the need to deal with these torrents of data in near-real time.

Variety. Data comes in all types of formats – from structured, numeric data in traditional
databases to unstructured text documents, emails, videos, audios, stock ticker data and
financial transactions.

At SAS, we consider two additional dimensions when it comes to big data:

Variability

In addition to the increasing velocities and varieties of data, data flows are unpredictable
– changing often and varying greatly. It’s challenging, but businesses need to know
when something is trending in social media, and how to manage daily, seasonal and
event-triggered peak data loads.

Veracity

Veracity refers to the quality of data. Because data comes from so many different
sources, it’s difficult to link, match, cleanse and transform data across systems.
Businesses need to connect and correlate relationships, hierarchies and multiple data
linkages. Otherwise, their data can quickly spiral out of control.
 Big Data in Today’s World

Big data – and the way organizations manage and derive insight from it – is changing
the way the world uses business information. Learn more about big data’s impact.

Be a data-driven organization

Big data is generated from many sources – vehicles, wearables, appliances and more.
Learn the three foundations of becoming data-driven, read about big data solutions, and
discover best practices other organizations follow to overcome hurdles.

Read e-book

What's a data hero to do?

Who are data heroes? A data scientist analyzes and looks for insights in data. Data
engineers build pipelines focused on DataOps. Data officers ensure data is reliable and
managed responsibly. Synergy among roles drives analytics success.

Watch webinar

Data lake vs. data warehouse

Is the term "data lake" just marketing hype? Or a new name for a data warehouse? Phil
Simon sets the record straight about data lake versus data warehouse, explaining what
it is, how it works and when you might need one.

Read article

Big data and cloud

Big data projects demand intense resources for data processing and storage. Working
together, big data technologies and cloud computing provide a cost-effective way to
handle all types of data – for a winning combination of agility and elasticity.
 Read blog post

How Big Data Works

Before businesses can put big data to work for them, they should consider how it flows
among a multitude of locations, sources, systems, owners and users. There are five key
steps to taking charge of this "big data fabric" that includes traditional, structured data
along with unstructured and semistructured data:

 Set a big data strategy.

 Identify big data sources.

 Access, manage and store the data.

 Analyze the data.

 Make intelligent, data-driven decisions.

What is financial analytics?

Current, accurate financial statements and reports are crucial components to accessing the
financial health of your business and staying competitive.

Understanding financial analytics

Financial analytics is the field that provides high- and granular-level views of a
company’s financial data, helping to improve its business performance. Predictive, data-
driven insights help your team from beginning to end by understanding and analyzing
past performances, predicting strategies for successful future performances, and steps
to take to make smarter and more confident decisions.

As the role of technology has expanded, the functions of financial managers and their
approach to financial analysis has changed. Acting as a strategist to executives means
they’ll need to embody constant awareness of the business’s financial standing at all
times.

The importance of financial analytics

Whether you’re a small business or a large corporation, optimizing data from your
financial management processes is important. You’ll need to create a methodology with
a high probability of success using the least amount of resources—all while improving
financial controls and overseeing a steady cash flow. Financial analytics affects several
parts of your business as:

 Every company needs judicious financial planning and future forecasting to be

able to prepare for ever changing market needs.
 Housing all of your critical financial data in one place for visibility and usability is
essential.
 Financial analytics offers in-depth insights into your financial status that’ll
improve financial visibility, profitability, and the value for the business and
stakeholders.
 Being able to measure and manage assets like cash and equipment will be crucial
in financial management and accounting efforts.

Having this information ready whenever you need it will provide quick answers for all
pressing business-related questions and fiscal estimates.

The benefits of financial analytics

To build your business, you need to make informed decisions with the data-driven
insights that financial analytics can provide. Some of the benefits of financial analytics
are that it:

 Uses real-time data, both external and internal, so you’re able to filter and
analyze data sets quickly and easily.
 Organizes data so it’s digestible, easy-to-understand, and provides a greater
impact to your bottom line, ensuring data workflows are optimized and
productivity is improved.
 Improves productivity, offering a better way for teams to make confident
decisions and mitigate complexity and risks.
 Provides forward-facing strategies and insights for clear concise financial
reporting.
 Serves as your single source of truth, so you’ll never have to implement
another financial management software tool to keep track of information.

It’s not enough to just add “financial analytics” to your process. You need to decide
which types of analytics will be the most beneficial to your business.
6 key financial data analytics you’ll
need
No matter the size of your company, there are six types of analytics you should
implement into your processes to help you stay competitive.

1. Cash flow: Real-time indicators to determine how much cash is coming in and

going out on a day-to-day basis, as well as how much you need to keep your
business running smoothly.
2. Customer profitability: Data that ensures you have enough customer sales by
breaking down your customer segments and analyzing each customer’s
cumulative value.
3. Predictive sales: These analytics plan the success of your sales forecast and
possible ways to improve predictions for the future.
4. Product profitability: Data that uncovers which products are profitable, while
making sure to appropriate the right costs across various products that may
share production processes or cost bases.
5. Shareholder value: Once your business is large enough to have shareholders,
you’ll want to make sure they always see a return on their investments. These
analytics are a calculation of a company’s value made through the returns you’ll
provide to your shareholders.
6. Value driver: These key indicators ensure your business is on the right track to
meet all your short- and long-term goals.

Taking all of these financial data analytics into consideration will provide all the
information you need to build profitability strategies and accurately predict the future of
your business.
Analytics Application Risk Management is the process of identifying, assessing, and mitigating
risks associated with the use of analytics applications, such as data breaches, data integrity
issues, or compliance violations. This process includes implementing security controls,
monitoring for potential risks, and developing a plan to respond to any incidents that may
occur. It also includes conducting regular risk assessments to identify and address new or
evolving risks, and ensuring that all stakeholders understand and comply with relevant
regulations and policies.

Analytics Application Fraud Management is the process of identifying, assessing, and preventing
fraudulent activities that may occur through the use of analytics applications. This process
includes implementing fraud detection algorithms, monitoring for suspicious patterns and
anomalies, and developing a plan to respond to any incidents of fraud that may occur. It also
includes conducting regular assessments to identify and address new or evolving fraud risks,
and ensuring that all stakeholders understand and comply with relevant regulations and policies.
Additionally, it includes developing a robust fraud management strategy that includes
continuous monitoring, real-time alerting, and investigation capabilities to detect, investigate,
and prevent fraudulent activities.
Internal controls in analytics refer to the policies, procedures, and processes that
organizations put in place to ensure the accuracy, integrity, and reliability of their data
and analytics systems. These controls are designed to prevent errors, fraud, and misuse
of data, and to ensure that data is used in compliance with laws, regulations, and
company policies. Some examples of internal controls in analytics include:

 Access controls: Restricting access to sensitive data and analytics systems to

authorized personnel only.
 Data validation: Verifying the accuracy and completeness of data inputs and
outputs.
 Segregation of duties: Assigning different roles and responsibilities to different
employees to prevent fraud or misuse of data.
 Change management: Tracking and documenting changes to data and analytics
systems to ensure that they are authorized, accurate, and appropriate.
 Auditing and monitoring: Regularly reviewing and monitoring data and analytics
systems for compliance with internal controls and company policies.

These internal controls are designed to provide assurance that the data and analytics
systems are operating effectively and efficiently, and that the integrity, availability and
confidentiality of the data is maintained.
Best Practices for the Use of Data Analysis in Audit

There are several best practices for the use of data analysis in audit:

1. Define the objectives of the audit and the specific questions that need to be
answered. Data analysis should be used to support the overall audit objectives
and answer specific questions related to the audit.
2. Understand the data. Before beginning any analysis, it is important to understand
the data and the data sources. This includes understanding the structure of the
data, the data quality, and any potential biases or limitations.
3. Use appropriate data analysis techniques. The specific data analysis techniques
used should be based on the type of data, the audit objectives, and the specific
questions being asked.
4. Validate the results. The results of the data analysis should be validated and
checked for accuracy. This includes reviewing the data, the analysis, and the
results to ensure that they are consistent with the audit objectives and the
specific questions being asked.
5. Communicate the results. The results of the data analysis should be clearly and
effectively communicated to the audit team and the stakeholders. This includes
providing a clear explanation of the results and the implications for the audit.
6. Continuously monitor, evaluate and update the data analysis techniques in use.
As the data, the technology and the audit objectives change, the data analysis
techniques should be continuously monitored, evaluated, and updated to ensure
their relevance and effectiveness.
7. Compliance with regulations and industry standards: Data analysis must be
carried out in compliance with relevant laws, regulations and industry standards
for data privacy and security.

These best practices help auditors to ensure that the data analysis is reliable, accurate,
and relevant to the audit objectives. It also helps to improve the quality of the audit and
increase the credibility of the results.
People Analytics: Understanding people through data
People analytics is the use of data and analytics techniques to understand and manage the
workforce of an organization. It involves collecting and analyzing data about employees, such as
their demographics, job performance, and engagement levels, in order to gain insights that can
inform decisions about recruitment, retention, and development.

Some examples of how people analytics can be used include:

 Identifying patterns and trends in employee behavior and performance, such as high
turnover rates or low engagement levels among certain groups of employees.
 Analyzing recruitment data to identify which sources and strategies are most effective in
attracting top talent.
 Identifying skills gaps and training needs within the organization to inform development and
training programs.
 Measuring the effectiveness of employee engagement and development programs.
 Identifying potential leaders and high-potential employees for succession planning.

People analytics can be used to inform a wide range of decisions, from recruiting the right people, to
developing and retaining top talent, to understanding and improving the overall performance of an
organization. However, it's important to use the data ethically and in compliance with laws and
regulations, to avoid any potential discrimination or other ethical issues.
what is HR Reporting & Analytics
HR reporting and analytics is the process of collecting, analyzing, and interpreting data related to
human resources (HR) in order to inform decisions and strategies for managing the workforce. This
process involves collecting data from various sources, such as HR systems, payroll systems, and
surveys, and using analytics tools to turn this data into actionable insights.

Some examples of HR reporting and analytics include:

 Generating reports on employee turnover, headcount, and demographic information to

understand trends and patterns in the workforce.
 Analyzing data on employee engagement and satisfaction to identify areas for improvement
and measure the effectiveness of engagement initiatives.
 Using data on employee performance to identify top performers and high-potential
employees, as well as areas where the organization may need to invest in development or
training.
 Analyzing data on workforce costs and budgeting to identify areas for cost savings and
improve financial performance.
 Generating reports on workforce compliance with laws and regulations, such as equal
opportunity and non-discrimination laws.

HR reporting and analytics can help organizations to make data-driven decisions, improve workforce
performance, and optimize the return on investment in human capital. HR professionals use the
insights gained from reporting and analytics to make decisions about recruitment, retention,
development, and more. It is important to use the data ethically and in compliance with laws and
regulations, to avoid any potential discrimination or other ethical issues.
Case Studies: Predicting Employee Performance
There have been several case studies of organizations using data and analytics to predict employee
performance. Here are a few examples:

1. Google: Google used data from employee performance evaluations and other sources to
develop a machine learning model that could predict which employees were most likely to
leave the company. The model was able to predict with over 90% accuracy which employees
were likely to leave, and the company used this information to improve retention efforts.
2. GE: GE used data from employee performance evaluations, as well as data from social media
and other sources, to develop a machine learning model that could predict which employees
were most likely to be promoted. The model was able to predict with over 70% accuracy
which employees would be promoted within the next year, and the company used this
information to improve succession planning and development efforts.
3. Deloitte: Deloitte used data from employee performance evaluations, as well as data from
social media and other sources, to develop a machine learning model that could predict
which employees were most likely to be high performers. The model was able to predict with
over 80% accuracy which employees would be high performers, and the company used this
information to improve recruitment and development efforts.

These case studies demonstrate how organizations can use data and analytics to predict employee
performance and make more informed decisions about recruitment, retention, and development.
However, it's important to note that there are some ethical concerns to be considered when using
data to predict employee performance, such as the potential for bias and the possible negative
effects on employee privacy and trust.
Operations Management ?
Operations management is the process of managing the production and delivery of goods and
services. It involves planning, organizing, and overseeing the various activities that are required to
create and deliver a product or service. Operations management also involves managing the
resources required to produce and deliver a product or service, including people, materials,
equipment, and technology.

The main goal of operations management is to ensure that products and services are produced and
delivered efficiently and effectively, while also meeting customer needs and expectations.

Some key activities of operations management include:

 Process design: determining the most efficient and effective way to produce and deliver a
product or service
 Capacity planning: determining the resources required to meet demand for a product or
service
 Scheduling: determining the most efficient and effective schedule for producing and
delivering a product or service
 Quality control: ensuring that products and services meet customer needs and expectations
 Inventory management: managing the level of inventory to ensure that products are
available when needed
 Supply chain management: managing the flow of materials and information from suppliers to
customers
 Continuous improvement: identifying and implementing ways to improve operations, such as
increasing efficiency and reducing costs

Operations management plays a critical role in the success of any organization as it helps to ensure
that products and services are produced and delivered efficiently and effectively, while also meeting
customer needs and expectations. Effective operations management can lead to improved efficiency,
cost savings, and customer satisfaction.