Supply Chain Innovation: Focusing on Demand and Analytics
Last week we talked about growth, and how supply chain executives can support this CEO priority with advanced technology and supply chain innovation. Now let’s look at where to apply the technology.
Lora Cecere’s Voice of the Supply Chain:Leaders Speak on Technology survey says the answer is supply chain demand analytics. Based on the responses of 40 supply chain professionals at 35 companies, 83% said improving demand planning was their top focus area. She says, “There is a shift in focus from supply to demand. The largest gaps are in demand systems, and the fewest answers on how to redefine and improve processes are in the area of demand management.”
Driving the need for improved demand planning and management is increased demand volatility, cited as a pain point by 75% of respondents. In the survey, Cecere finds that to address the problem of volatility, executives have begun to emphasize demand sensing and new types of analytics. “Supply chains respond, but they do not sense,” she says, adding that most companies “are drowning in data and short on insights.” She finds that executives are shifting their focus from transactional data and reporting systems to predictive analytics based on structured and unstructured data that can achieve faster and more meaningful insights.
Cecere also found that organizations and individuals are in alignment. Demand volatility is important to the organization and getting the right data and actionable analytics is important to the individual.
Gartner’s 6th Annual Supply Chain User Wants and Needs Study (by Dwight Klappich and Chad Eschinger) showed similar results when it polled supply chain executives at leading companies. Asked to name the main obstacles to supply chain success, forecast accuracy and demand variability came out on top.
A Gartner headline: “The Demand for Analytics Is Deafening.” Three-quarters of firms say they need more. These numbers map pretty closely to results from past years, and also with input we have received from the ToolsGroup customer community.
Another insight from the Gartner study is the rising trend of companies viewing supply chain management as “strategic”—the percentage doubled in four years, climbing from 27% to 55%.
Gartner recommends you:
- Recognize supply chain demand analytics technology is a source of competitive advantage
- Focus on adaptive applications
- Invest in the new, not just polish the old
- Move beyond executing to enhancing decision making
- Reallocate investments from running the business to growing and transforming it
Cecere concurs. “Today, we are at an inflection point. Supply chains have grown in importance; new technologies are evolving, and supply chain leaders are looking for new solutions.” Cecere says it’s a time for best-of-breed solutions, and novel forms of predictive analytics. “Explore new solutions… there are starting to be some great advances in the use of new technologies to solve supply chain problems.”
She concludes: “What seems clear is that the path that we have walked is not the path of the future.”
Next week we explore the latest Economist supply chain study on “How companies are using data and analytics to make their supply chains more connected and agile”.