How supply chain analytics are going from strength to strength

Supply chain analytics are currently big news, but have they got what it takes to revolutionise supply chain operations? According to a new study from The Hackett Group, the answer is ‘yes’.

The report, ‘Analytics: Laying the Foundation for Supply Chain Digital Transformation’, offers valuable insights into the use of analytics as a means to improve supply chain performance. However, not everyone has embraced it. According to the report, 94% of supply chain experts recognise that digital transformation will redefine supply chains this year, but just 44% say they have a relevant strategy in place.

The study confirms the impact of advanced analytics across a number of industries and identifies the driving forces leading to digital transformation. Here are some of the report’s key findings:

1) Supply chain analytics are of critical importance

66% of supply chain leaders see analytics as critical to their operations over the next two to three years. The report indicates an increasing sense of urgency among supply chain professionals to establish advanced analytics. In addition, advanced analytics that offer scalability across an entire supplier network are proving more desirable.

2) Potential to fill knowledge gaps

With the help of advanced analytics there’s an opportunity to fill a number of supply chain knowledge gaps. These include forecast accuracy, demand patterns, product tracking traceability, transportation performance and analysis of product returns. For example, the rigorous quality standards followed during medical product manufacturing (as per US Food and Drug Administration Code of Federal Regulations 21), illustrate the huge potential of advanced analytics in product tracking and traceability. They can help organisations meet the increasingly complex demands of compliance, reporting and quality standards.

3) Improving working capital: most important use case

56% of respondents cited optimising production and sourcing to reduce landed costs as the most important use of advanced supply chain analytics over the next 24–36 months. The Hackett Group categorised four use cases; improving working capital, reducing costs, improving service and improving quality. The aggregated critical importance scores from respondents relating to these were 39%, 29.5%, 28.6% and 25.75% respectively.

4) Enhancing ERP functionality is key

44% of respondents already use advanced analytics to enhance the functionality of their legacy enterprise resource planning (ERP) systems. Integrating analytics transforms these systems from simply managing supply chain operations to achieving end-to-end supply chain network visibility. In terms of key priorities, virtual collaboration platforms for internal and external use came out on top, with 94% of respondents considering them either more important or critically important.

5) More work is needed to reach supply chain analytics maturity

Based on The Hackett Group’s supply chain analytics maturity model, the majority of companies are operating at maturity levels one and two. These companies may have visualisation tools or advanced statistical analytics suites in place, but more technologies are required before they can shift towards predictive analytics. It is only when a company can leverage analytics and align them based on decision-making requirements that level four can be achieved.

How far away from supply chain analytics maturity are you? To find out how they can give your business a competitive edge, get in touch with Adare International today:


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