The supply chain is the backbone of operation-oriented businesses and companies. It is necessary for businesses to perform their SC operations smoothly and efficiently. However, analytical tools allow businesses and companies to optimize and improve their SC processes and operations. Today, we’ll discuss supply chain analytics projects; their definition, and the top 10 projects.
What are Supply Chain Analytics Projects?
A supply chain analytics project is the method of employing data analytical tools on a particular SC project to achieve operational efficiency and make data-driven decisions. The SC analytical tools offer you a key insight from the mass volume of data and various processes involved in the value chain. However, some of the main types and functions of supply chain analytics projects are as follows;
- Vendor Management
- Transportation and Logistics
- Demand Planning
Supply Chain Analytics Projects – Top 10
Let’s discuss the top 10 supply chain analytics projects are as follows;
A lot of businesses and companies employ vendor consolidation techniques and methods as cost-effective and cost-saving approaches; especially the ones that deal with hundreds of vendors. The goal of this approach is to decrease the number of vendors by helping them to deal with a limited number of vendors; and negotiating better terms of conditions and better prices. The terms and conditions of the business could be a longer payment period or shorter lead time; it would help them to optimize their working capital.
Vendor scoring is a very useful and beneficial tool that allows companies to score their vendors and suppliers based on the quality of product and service, and other parameters and indicators. It comprises sticking to the service level agreement, charging price for the particular product, and the criticality of vendors is significant in the overall functioning of the company. Businesses have thousands of vendors, they follow this approach. It allows companies to recognize their top vendors and establish a strong relationship with them to ensure continuous business operations.
Route optimization is a form of optimization approach that many truckers perform it while delivering goods in various locations. It focuses on recognizing the route that would help vehicles in delivering goods to the required destination. However, the input they receive is the trucker capacity, order from various locations, delivery loads, time limitations, and distance from locations to distribution centers. The input would define your objectives for the vehicles to follow like the minimum cost and making the delivery at a particular time.
Companies perform network planning, operating their business in a vast geographical area and multiple states. The goal is to choose a location for the distribution center or warehousing location where the company could ship goods to the dealers and distributors. However, their functional goal is to decrease the cost while satisfying the service level agreements. Companies perform this activity quarterly or semi-annually based on their growth.
Companies perform diagnostic activities like fleet monitoring to comprehend the flow of the fleet, especially companies that have leased or owned the fleet. It allows companies to analyze their vehicles whether they are under, adequately, or over-utilized. The driver could analyze the performance of the fleet based on the route level or trip level.
Stock out Prediction
According to an estimate, retailers lose approximately 1 trillion US dollars annually due to out-of-stock. The key to dealing with this problem is to be aware of your SKU and the time when it would stock out. It helps companies to efficiently conduct forecasting and perform reorder-level calculations.
The unsold inventory blocks the working capital of the company; it doesn’t just consume the space in the warehouse but has a great impact on the working capital. For instance, the retail worth of a company is 1 billion dollars, and 25 million dollars worth of inventory is stuck in the warehouse. Let’s calculate how much money you are losing due to the unsold inventory.
If you need to borrow a loan worth 25 million dollars from the bank, then you would have to pay a 6% interest rate comprising of 1.5 million US dollars. Your profit margin of 25 million dollars is 8% worth of 2 million dollars. However, if you reduce 8% from 6%, then your profit margin would remain only 2%, and an annual loss of 1.5 million dollars.
Price Variance Analysis
Price variance analysis means analyzing various purchased items from various vendors and determining the cost. You should know the economic disparities and whether you buying from the same or different vendors and price differences. If there is any type of fraud or kickbacks in the procurement process, then you should beware of it. Statistical and descriptive analysis plays a significant role in recognizing cost-saving opportunities and any other fraudulent activities that would happen.
Reorder Level Identification
Reorder level is significant to make sure that the production and manufacturing process doesn’t stop due to the stock-outs. It also makes sure that the working capital doesn’t get stuck due to the wrong order. Purchasing managers have been placing reorders based on their experience and judgment, but now it has become easier to calculate the reorder level for the items that you are procuring.
Forecasting and prediction is one of the key elements of demand planning. Sales forecasting is necessary to maintain a balance between consumer demand and not just focus on excessive inventory. Historically speaking, forecasting and prediction used to be based on experience and judgment. Advanced technological tools and algorithms have made it much simpler and easier.
Conclusion: Supply Chain Analytics Projects
After an in-depth study of supply chain analytics projects; we have realized that SC analytical tools are highly significant for SC projects. If you are learning about SC analytics projects, then you should keep in mind the abovementioned projects.
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