Big data and analytics aren’t new to supply chain strategy—but by this point they are absolutely essential and affect every level of the operation. But, predictive analytics, digital transformation, and real-time data, in specific, are primed and ready to take center stage in supply chains in 2020, raising up three trends that will reshape how supply chain operates.
A Shift from Reactive to Proactive Decision-Making
From its introduction in supply chain strategy, big data and analytics have been used to help companies drill down into their operations. Historically, this has been a reactive approach. The collected data was used to review past and current performance. From there, supply chain professionals could use that information to design their future strategies. But big data paired with innovative and intelligent technologies helps users go beyond reactive decisions. They can do more than just respond to problems—they can prevent issues from happening altogether.
That’s why the introduction of predictive analytics will continue to be a game-changer. With supply chain, understanding what happened in the past is not nearly as important as knowing what could happen in the future. According to the MHI Industry Report, 90% of respondents said predictive analytics was a technology that will “have an impact on the supply chain in the next 10 years.”
Predictive analytics allows organizations to forecast potential disruptions through predictive modeling, text analytics, real-time scoring, statistical analysis, and data collection. For example, organizations could use the technique to predict supply and demand and short-term behavioral changes like shortages or analyze how unexpected weather events could affect the supply chain.
A proactive approach to data and analytics allows industry leaders to create a more detailed and informed plan that will reduce supply chain disruption. And this shows when it comes to the bottom line. For example, retailers who have used predictive analytics have seen a 73% increase in sales.
Digital Transformation and the Cloud Will Ease Day-to-Day & Long-Term Planning
Moving supply chain operations to the Cloud is becoming the norm. But all companies view their “digital supply chain transformation” differently. Some see it as decreasing manual processes and implementing more digital ones. For others it means integrating more artificial intelligence (AI), such as machine learning. And finally, some may see digital supply chain transformation as a way to get better data to improve the overall supply chain.
The sheer growth of data has had a big effect on supply chain operations. You can’t properly use the data if you don’t have the right digital platforms and tools required to manage it all. Without the right digital tools, it’s easy to become overwhelmed and quite frankly drown in your own data. Once your data is under control and organized, you can use it to enhance your supply chain by improving efficiencies, optimizing costs and decreasing risk.
But perhaps the biggest benefit of digital transformation in your supply chain is the power to embrace visible commerce. The flow of money, goods, and services becomes completely visible, empowering businesses to make more effective and ethical decisions. Rather than simply having a data-dump list of transactions, companies could see the information they need to have a better understanding of their suppliers, customers, and partners for a holistic view of the supply chain.
Digitized, cloud-based supply chain technologies offer the benefits of real-time inventory data, making both day-to-day and long-term planning a cinch. Plus, the Cloud makes it easy to scale data and grow networks. This kind of data allows for instant growth, and it makes it easier to resolve potential supply chain problems quickly.
Supply Chain Becomes Visible Thanks to Rich, Real-Time Data
Digital transformation crosses over into this trend because it makes it possible for internal teams to collect, analyze, search, and interpret data instantly. With data at-the-ready, supply chain teams can become more strategic, less tactical, in their roles. This visibility provides transparency and removes blind spots. Imagine truly knowing the ins and outs of your suppliers. You could better vet vendors and suppliers with the right data. For example, you would be able to spot unethical behavior.
This extended level of line of sight is made even more important in today’s business environment; companies have little choice but to increase transparency. Consumers and governments are becoming more and more demanding when it comes to full disclosure and knowledge of where their goods and services are coming from and how they were sourced. Look at California’s Transparency in Supply Chains Act—a law that requires large Californian companies to provide information of their supply chains to eliminate unethical practices.
By increasing supply chain visibility, you could confidently give customers (and governments) full line of sight into your suppliers and rest assured knowing that the products are ethical, humane, and sustainable. Consumers want to know where their goods are coming from and are willing to switch loyalties in the blink of an eye if a company fails to provide the required transparency. Case in point is the E. coli outbreak that occurred at Chipotle restaurants in 2015. Chipotle failed to identify the source of the contamination due to a complex, muddy supply chain. That year, their sales fell and share price dropped to a three-year low and stayed that way for almost two years.
Had they had accurate data, they could’ve located the contamination quicker, perhaps responded in a timelier manner, and even stopped the problem before it got too far along.
Move Full Steam Ahead In 2020
This year a successful supply chain will require a full-steam ahead approach to digital transformation and abundant data to progress in a globalizing world. Pulling from both internal and external sources, supply chain risk can be minimized, while leadership can make more informed decisions and proactive choices based on their data. Cloud computing provides the agility and data accessibility needed by ever-growing companies, while the specificity of data brings full visibility to the supply chain.