5 Key Trends for Supply Chain Analytics and Optimization This Year
Martin Pahulje - June 10, 2021
This year has brought many unexpected changes. Businesses worldwide have had to completely reinvent how they perform operations, especially in the supply chain industry. As a result, 2021 has produced innovative developments in supply chain analytics and optimization. New technology has been introduced and old ones enhanced, further changing how companies operate. With more technological capabilities, organizations are able to perform better and faster than ever before. To provide your organization with the information and tools necessary to welcome these changes, we will discuss the five most prominent trends of the year regarding supply chain analytics and optimization.
New Data for COVID-19 Disruptions
It is impossible to talk about the changes that 2021 has brought without mentioning COVID-19. The pandemic took the world by storm and completely uprooted our lives and businesses. In terms of supply chains, the COVID-19 pandemic has been the biggest disruptor of supply chains since the 1940s. In the year prior, supply chain managers had to quickly readjust operations due to lockdowns, reopenings, government protocols, economic downturns, and shifts in consumer behavior – clearly, many changes were made. While changes such as these can be extremely challenging to predict, thankfully, with the help of analytics tools and data science teams, supply chains were able to adjust forecasting and optimization models to make up for some of these disruptions. While many businesses did not survive the past year's changes, many became more resilient than ever, thanks to the tools they have implemented and optimized. Many of the adjustments that had to be made were implemented using new signals and data sources that were not used before the pandemic, such as seasonal influenza statistics, international data, and macroeconomic data of previous years. This information was used to help supply chain companies become more resilient and predict when they could begin to resume operations. With so many changes and adjustments made over the past year, it is likely that we will not return to how things were but simply adapt to our new normal. As a result, digital supply chain developments will continue to progress, optimizing supply chains to operate in 2021 and years beyond. The advancements made in 2021 are not going anywhere, so it’s best to jump on board and implement them into your own supply chain.
Decision Support Tools with Predictive Components
2021 has been a year of surprises, forcing supply chains to overcome constant disruptions and changes. As a result of this, there has been a significant rise in decision support tools equipped with predictive technology. While these solutions have been widely adopted in supply chain management previously, it is often challenging to develop integrated solutions for complex chains with multiple types of warehouses, distribution channels, or service level agreements. This year, more and more companies are developing comprehensive service lineups that enable them to search for an optimal supplier and logistic options while simultaneously accounting for complexities.
Decision support tools with predictive software is a fairly broad topic, but there are a few prominent options for you to choose from. One excellent resource is that of what-if scenario analysis. Scenario planning allows users to weigh advantages and disadvantages by comparing various potential solutions, providing supply chain managers with greater insight into decision-making. This technology also offers parallel access capabilities, enabling multiple users to access scenarios simultaneously, even if they are in different departments or organizations. With a what-if scenario analysis, data can be viewed and shared with ease, quickening and optimizing the decision-making process. Another decision support tool equipped with predictive components is multi-dimensional monitoring. This advanced level of monitoring provides you with extreme clarity into the supply chain, allowing you to monitor and track all parts of the supply chain network simultaneously. With this, you can also track potential disruptions in weather, traffic, and market changes, allowing you to conduct operations proactively and maximize efficiency.
Automation of Prescriptive Methods
Hand-in-hand with predictive technology is demand forecasting. This solution has been widely adopted in the supply chain industry and serves as the foundation for many supply chain planning and optimization operations. But, while many companies utilize this, not many have developed comprehensive decision automation capabilities to go along with it. This coming year has brought developments that will replace manual analysis of forecasts and other predictive outputs with systems with a higher level of automation. These automated systems will combine statistical, economic, and risk scoring models to make decisions more autonomously. While users will still have an ultimate say in decisions, they can set controls on the system to help it discern what data should translate into a specific decision and action. The automation of demand forecasting will increase speed and accuracy in decision-making, reduce human error, and relieve team members of repetitive tasks, allowing them to focus on more critical projects.
Blockchain in Supply Chains
Another significant trend of the year is the adoption of blockchain in supply chains. While blockchain has become increasingly popular recently, most frequently used in cryptocurrency, its place in the supply chain industry is growing more prominent. As a tool in authenticating data, blockchain can provide more transparency and traceability to supply chains than ever before. By digitizing physical assets, users can track materials from start to finish in the supply chain. This capability is instrumental in verifying the authentication and origin of productions, which aids organizations in reducing fraud and ensuring compliance. With blockchain, you can create a decentralized record of all transactions, creating advanced transparency and visibility. As blockchain continuously and automatically validates data, users can spend less time on similar tedious tasks and focus their energy elsewhere. This is also beneficial in reducing communication and transfer errors as it replaces a traditional direct exchange of information. Because blockchain is constantly authenticating data, you can be confident that your materials and suppliers are verified and original.
While not necessarily new, thanks to the past year and the COVID-19 pandemic, omnichannel scenarios have drastically increased in popularity and capability. This can be seen through the increasing presence in omnichannel services such as buy-online-pickup-in-store (BOPIS) and numerous e-commerce platforms. As more consumers are looking to avoid in-person shopping, omnichannel options are becoming increasingly necessary. As a result, the role of omnichannel inventory management has been elevated. With these changes, more challenges have developed for supply chain managers. BOPIS functionality requires a retailer to manage in-store inventory reservations in a way that maximizes the online exposure of products while minimizing the risk of out-of-stock situations. To combat this dilemma, omnichannel options will require new types of predictive and optimization models to balance between in-person and online shopping. The adoption of cross-channel features such as this will continue to grow in 2021. Even though businesses are beginning to transition back to in-person operations, we are in a new normal and must adjust accordingly. On the bright side, challenges such as these have driven the development of supply chain analytics and optimizations, pushing organizations to innovate and grow. In the age of Industry 4.0, you need to improve organizational and process performance. Get truly agile supply chains that integrate IT systems both vertically and horizontally.
Click below to download our guide on Industry 4.0.
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