Why Supply Chain Analytics is a Must Have

With a priority on business growth, supply chain analytics and performance management are key initiatives for CSCOs to implement to succeed.

Today is your lucky day. Your IT group has just informed you that all the data challenges have been resolved. Now you have all you need to run the perfect supply chain. Exuberance is short-lived, however, as you remember that availability of good data is necessary but not enough. The key to better decision making and improved supply chain performance relies on supply chain analytics. But executives are asking you, “Why should I invest in analytics?”

In her session on supply chain analytics at the Gartner Supply Chain Executive Conference,  Noha Tohamy, research vice-president at Gartner, explained the business benefits of investing in analytics.

“Your company must adopt analytics. You can make that argument easily, citing big numbers of zetabytes of data,  the number of connected devices, or the ubiquity of the Internet of Things,” said Ms. Tohamy. “But there is also a very strong positive argument for why it is in the best interest of the organization to adopt analytics. This is because analytics support business growth.”

Gartner's Noha Tohamy explains why analytics is crucial for supply chain leaders to succeed during the Gartner Supply Chain Conference.
Gartner’s Noha Tohamy explains why analytics is crucial for supply chain leaders to succeed during the Gartner Supply Chain Conference.

 

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In Gartner’s 2015 CEO Survey, 54 percent of CEOs indicated that business growth is a top strategic priority for this year. With CEOs placing a high priority on growth, the chief supply chain officer (CSCO) will take on dual roles of growth partner and operational caretaker. Supply chain analytics and performance management have become the fastest functional area to be added to the CSCO direct reports in the past three years.

There is also another reason why organizations need to invest in analytics. There is an anticipated push for “smart automation” in the future, which means reducing the level of human intervention but making better decisions. This can only be done by advanced analytics that can predict future scenarios, or analyze real time data and make complex, profitable decisions, sometimes on the spot.

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To help determine if an organization should adopt analytics, the next step is building the business case for analytics investments. To build a strong business case for analytics, strategists seek to gauge the potential return on investment (ROI). In a recent Gartner survey of supply chain strategists, when asked about the ROI in analytics, on average, 29 percent of organizations said they have achieved high levels of ROI by using analytics, compared with only 4 percent that achieved no ROI.

In addition to expected ROI, there are major trends that drive the demand and support the business case for analytics, ranging from the supply chain organization’s prioritization of analytics as the most important investment, to the dissatisfaction with embedded analytics capabilities in current supply chain management solutions.

“Analytics is a must to cope with today’s complex supply chains,” said Ms. Tohamy. “However, there are still many constraints and realities that need to be eliminated to achieve the potential of analytics. A good business case must always be clear about what might get in the way.”

 

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