Supply Chain Network Optimization Technology is Ripe for Disruption
Something struck me after spending a few days in Phoenix at Gartner’s Supply Chain Executive Conference. Supply Chain Network Optimization is key to running an efficient and profitable operation today. But while the market has changed, network optimization hasn’t actually advanced much since the 1990s. Yes, there are lots more features and a big increase in computing power. Yet, network optimization is still just a richer version of the 90’s experience.
Analyzing the software market
Network optimization software has become a big business that’s experienced exponential growth. There has been strong adoption of boxed solutions that are feature rich with many bells and whistles. What I heard at the Gartner conference is growing frustration with these large packages that have become cumbersome to use, too difficult for the average supply chain expert, lack flexibility and have high price tags. Sound familiar?
So what is the alternative? First, we need to go back to the original purpose. Supply Chain teams shouldn’t be overly focused on technology. Instead, they should have their eyes set on the desired outcome. Supply Chain teams want a supply chain network that runs in an optimized fashion, with signals that indicate when and where to invest in future infrastructure. The network optimization tool should just be a means to an end.
So why hasn’t it become easier and cheaper to have an optimized network? Why are companies investing more and more in this focused discipline?
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Companies in Asia Pacific Eager to Innovate with Supply Chain Optimization
The adoption of advanced analytics has moved at a much slower pace in Asia Pacific compared to Europe or North America. There are innovative firms that are setting the standard for innovation and successful analytics adoption, but as Actionable Intelligence expert Keith B. Carter explained in an interview with us last year, large businesses in the region are still lagging behind. In recent months, I‘ve been active in several events in the region and I’ve noticed a changing trend. Companies are increasingly eager to hear about optimization and advanced analytics. It’s not hard to see why. People are very intrigued by Prescriptive Analytics and Modeling, hearing success stories from counterparts in industries like energy and retail. Still, most businesses are worried about execution. Let’s take a closer look at their interests and concerns.
Areas of interest
There are several areas where companies are eager to apply optimization. These tend to be:
- Network design and planning: the process of evaluating complex trade-offs to deliver a network plan that maximizes profits and minimizes costs.
- Distribution center and coverage planning: a process to identify what the best location for your distribution centers is to ensure efficient and on-time deliveries across the chain.
- Stock allocation: the process of aligning supply and demand to move merchandise in a fast and agile way.
- Production planning: determining a production plan to serve different customers in an optimal way.
The need for advanced analytics in these areas is pressing, as large amounts of data are available, adding complexity to operations. However, there are some concerns hindering adoption.
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3 Compelling Reasons to Start Using Prescriptive Analytics
If you’ve read up on the latest topics in the field of data analysis, then you’ve probably encountered the term Prescriptive Analytics. Prescriptive Analytics is a type of Advanced Analytics that results in a recommended action. Unlike Descriptive (focused on reporting with basic trend or pattern recognition) or Predictive Analytics (focused on predicting the future with forecasting techniques), Prescriptive Analytics uses techniques like machine learning and mathematical modeling to help you improve decision making.
Prescriptive Analytics is at the cutting edge of data science and companies are increasingly interested in exploring its benefits. According to Gartner’s Forecast Snapshot, the Prescriptive Analytics software market will reach $1.1 billion in value by 2019. About 35% of companies are expected to adopt this type of analytics by 2020, but what exactly is driving adoption? AIMMS has been in the business for more than 25 years. Over time, we’ve identified 3 major reasons businesses feel compelled to adopt Prescriptive Analytics. Let’s explore them further.
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Top 5 posts from our Supply Chain Blog in 2016
As we step into 2017, we took some time to reflect on the most popular posts on our Supply Chain blog last year. Trending topics included S&OP, Prescriptive Analytics, Supply Chain Optimization, Supply Chain Centers of Excellence and Supply Chain Analytics. What are you interested in learning about this year? Let us know in the comments and check out the curated list of our most well-read blog posts in 2016: Continue reading »
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Optimizing Liberty Global’s Supply Chain: An Interview with Willem Vesters
Liberty Global is the world’s largest international TV and broadband company with operations in more than 30 countries. The company started working with AIMMS and our implementation partner Districon in October 2015 to develop a Demand Aggregation tool. Today, they are looking to expand their use of AIMMS for other planning capabilities. We had the pleasure to speak with Willem Vesters, Liberty Global’s VP Global Supply Chain Planning, to learn more about their optimization journey.
Hi Willem, can you please tell us more about your background?
I am originally from Breda, a city in the southern part of the Netherlands. I have a Master’s Degree in Aerospace Engineering from Delft University of Technology but I’ve spend most of my career in operations. I worked at ING for a short period, then moved to Philips and subsequently I became the Supply Chain Planning Director for Office Depot in Europe. These days, I head up the Supply Chain Planning division at Liberty Global.
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5 Dysfunctions of Typical S&OP Systems and How to Overcome Them
Sales & Operations planning has been around for 30 years. It was created initially by Oliver Wight and has become the standard procedure to improve business performance and predictability. Throughout the years, we’ve witnessed waves of interest in S&OP and its evolution IBP, which incorporates financial planning. In the past 2 years, we’ve seen the appeal of S&OP increase a lot more. But companies tend to struggle when it comes to finding the right technology to enable the process. In this blog post, I will delve into 5 issues companies typically experience with their S&OP software.
The whole purpose of S&OP is to discuss important questions today to prevent them from causing urgent issues 12 months from now. The business impact of this is profound. As Lora Cecere (Supply Chain Insights) explains, an effective S&OP process can result in a more controlled, aligned, agile, proactive and strategic supply chain. But to implement it effectively, companies first need to understand why S&OP is important for their business. Every company has different business drivers and different requirements. This makes S&OP implementation a difficult process, especially when it comes to finding the right tools.
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Internet of Things (IOT), Cost-to-Serve, Segmentation and Supply Chain CoEs are unable to deliver promised business value without Prescriptive Analytics
Gartner’s Hype Cycle for CSCOs is a valuable read for current and potential Supply Chain leaders. It brings together a long list of trends, enabling technologies, business frameworks and competencies that should be in your consideration set. The big theme of course, is the digitization of the supply chain and the implications it will have on business performance. What seems very clear is that if you’re not planning to jump aboard this train very quickly, you’re going to have what will appear to be a stone-age supply chain within 5-10 years.
As a Gartner recognized Prescriptive Analytics software company, we’re most interested in all things digital that have analytical flavor by nature. We see our clients deliver strong value from digital innovation, but only when organizations have the knowledge and technology to do things differently. This requires Prescriptive Analytics, a type of advanced analytics that results in a recommended ACTION.
In other words, for digital transformation to succeed, organizations need to be able to “take action” based on their data. Let’s take a look at some of the competencies mentioned in Gartner’s report so I can provide evidence to back up this outrageous statement.
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What is Storytelling with Data and How Can You Master it? Get Tips from Cole Nussbaumer Knafflic
This month, we hosted a Data Visualization webinar with bestselling author Cole Nussbaumer Knafflic. Cole wrote the popular book “Storytelling with Data” and is also known for her blog. She’s worked at and with some of the most data-driven companies on the planet, including Google, Adobe, Genentech, JPMC, Target, and the World Bank. She also works with organizations and individuals to help them become more effective data storytellers through workshops. We had a chance to talk to her about some best practices for effective data visualization leading up to the webinar. In this short interview, she shares some of her trade secrets and a sneak preview of what you can find in her book.
- How do you define storytelling with data?
For me, storytelling with data is the communication step of the analytical process. Let’s consider the analytical process. Perhaps you start off with a question or hypothesis. Then you have to gather the data and clean the data. Next, you analyze the data. At that point, it’s easy to throw it into a graph and be done. But that graph is the only part of the whole process that your audience sees. So it deserves at least as much—perhaps more—attention compared to the other parts of the process, and yet is so often overlooked or given the least amount of time. To take that a step further, my view is that you should never simply show data. Rather, you should make data a pivotal point in an overarching story or narrative. This helps it make sense to your audience, makes it resonate and can help make it stick. This is storytelling with data.
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Is Prescriptive Analytics really going to disrupt how Supply Chains evolve?
In a time when the term ‘disruptive’ is being over-used I find myself increasingly using the term when describing the impact of our product to clients and prospects.
It’s uncomfortable because prior to starting with AIMMS two years ago, I spent 20 years in consulting and IT services and experienced many terms being over-used (such as ‘optimized’ or ‘disruptive’). I promised myself that I’d endeavor to never use a meaningful term in a superficial way.
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Brexit: 5 Things Supply Chain Leaders Should Consider to Prepare for its Impact
The Brexit is a reality and with it, companies in Europe are facing even more uncertainty than before. There is serious concern that the UK’s decision to leave the EU will bring further destabilization and economic risks. How will it impact your supply chain and your bottom line? This article discusses 5 key things supply chain leaders should consider post-Brexit. It also explains how analytics can help you determine the best way forward. Specifically, I will explore how Prescriptive Analytics can help you improve decision-making and make data actionable in an increasingly volatile economic landscape, instead of only providing insight into your data’s behavior.
