How analytics can improve supply chain agility

Let's start with an example of a very simple supply chain: delivering water.

See also:

• Tapping M2M: The Internet of Things
• Going Deep on Big Data
• Making the Business Case For Big Data

The bottled water industry is huge. For our purposes,  water in a bottle represents a relatively simple product that we can use to illustrate supply chain complexity.

But when you think about the components of the product, you start to realize that even bottled water is a relatively complex product.

Since there are three main components, there are three main supply chains that have to be accounted for. When you move to something like a smartphone, the complexity becomes epic.

Each of these stages needs to be accounted for. In earlier days, supply chain data was recorded and reported after the fact. But now, we can get real-time analytics, which makes for much more agile production processes.

The need for agility and analytics becomes clear when you think about the breadth and depth of the supply chain for industries like these.

As IT  has evolved, so too has the level of tracking and insight provided by our supply chain systems.

Supply chain management isn't just one application. It's an array of systems (often involving many companies) that has to integrate together seamlessly and reliably.

Part of that process is managing the flows. Physical material flows from raw material to final production, while information has to flow in both directions, giving each stage in the process the information necessary to manage operations.

When talking about supply chain, we're almost always talking about an international operation. Even something like a simple coat has materials sourced from all over the world.

Another challenge facing supply chain managers is what happens when something interrupts the supply chain. This is when responsiveness, creativity, and agility become critically important.

Beyond natural and man-made disasters, there are many other factors that can impact the successful production of a product.

Each link in the supply chain has risk elements associated with it. As a product moves up the chain, it's essential that risk management (and the details that help showcase and mitigate risk) are made clear to production executives.

As supply chains become more agile, it's important to keep risk down, reduce cost, and reduce time to market, all while maintaining or improving the quality of the final product.

That's where supply chain analytics truly comes into its own. It needs to provide end-to-end visibility, across companies, across supply stages, and even across nations.

Here are some best practices for managing risk. All benefit from good visibility into the global supply chain.

Keep in mind that your agenda is not necessarily that of your supplier or customer. Your company's priorities may not match those of your partners.

In the context, then, of managing risk, reducing cost, and reducing time-to-market while at the same time improving quality, software developers have been looking at how to bring order, transparency, and interoperability to supply chain management. Let's look at what the future holds.

Most supply chain managers attempt to forecast demand and other factors related to what materiel has to move from one point on the globe to the other. But sometimes forecasting can't keep up with a rapidly changing world.

Forecasting, by definition, means getting in front of change. But some events happen so fast that executives need to respond in real-time. Even if there's a pre-designed game plan for a variety of contingencies, real-time analytics can let you know when those situations come into play.

When looking for vendor solutions, make sure that the products not only track components, but all of the transportation elements as well.

Keep in mind that in challenging economies, forecasting gets thrown to the winds, because customer demand is highly volatile. Building systems that can be instantly reactive may save you considerable frustration and expense.

Look for solutions that take into account the multi-player nature of supply chains. Look for strong international components as well as standards-compliance for interop between various vendors' systems.

Managers of a supply chain need to have a unique, cross-enterprise view of the process. Rather than competing as one enterprise vs. another, the game really becomes one multi-vendor, multi-nation chain vs. the systems, efficiencies, and choices of another.

As you move forward into the future of supply chain management, keep in mind the customer is in the driver's seat. You're really managing a demand chain, one where responsiveness is the key to success.

And that brings us full circle back to analytics and agility. In order to be responsive to on-demand customer requirements and volatile international environments, having real-time insights into every stage of the supply chain becomes a necessity When sourcing solutions, this is the factor you should look most carefully at as you make purchasing decisions for your IT applications.

See also:

• Tapping M2M: The Internet of Things
• Going Deep on Big Data
• Making the Business Case For Big Data