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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

business-idea-831053_1280Gartner’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.

Cost-to Serve

I was fortunate to work with Alan Braithwaite in the 90s. He created the initial cost-to-serve methodology. Data availability and technology wasn’t what it is today. There were significant challenges. But we got through them and often after 12 weeks of hard work, we generated a cost-to-serve that often lead to some surprising results and strategic choices. Given the many step changes in data and processing capability, we now have the ability to move towards a far more dynamic cost-to-serve model. Conceivably, we could soon move to a near real-time cost-to-serve. How do you take the dynamic results of cost-to-serve and translate the results into dynamic actions? Only Prescriptive Analytics can do this. We have many clients that build and use these applications with our technology.

Segmentation

Segmentation shares many similarities with cost-to serve. However, it also adds the value of clients and products to the equation, such that precious resources can be aligned with the most valuable customers as a product moves through its lifecycle. SC segmentation is great to determine your products’ initial allocation to a segment, but its real value lies in the timely re-allocation to a segment as a product moves through its lifecycle. To access this benefit, you need a toolset to build a segmentation model/application and an automated capability that alerts you to perform optimum segment changes. No off-the-shelf technologies cater to this need; only Prescriptive Analytics can deliver this enabling technology.

IOT

The Internet of Things has the potential to transform supply chain or mire SC practitioners in a tsunami of unwelcome data. Gartner predicts that by 2020, over 20 Billion devices will be connected. What are you going to do with this data? Processing it with Microsoft Excel simply won’t cut it. It’s clear that this data could be utilized with Descriptive and Predictive Analytics to better forecast demand/consumption but predictions don’t result in action. You’ll need highly automated Prescriptive Analytics to convert better forecasts into better action.

Supply Chain Centers of Excellence

We’ve worked with SC CoEs for many years. Some of our clients are many years ahead in this regard. SC CoEs need tooling to be successful, as we explained in a recent webinar. They need tools that quickly bring business value and result in action. We recommend that CoEs start early embedding Prescriptive Analytics. It can be one of the quicker technologies and capabilities to bring into your business and value is typically delivered within the first 8 weeks.

We see many of our customers fully accessing the benefits of these types of initiatives using our Prescriptive Analytics technology as a value delivery vehicle. Talk to us, we’ll tell you how.

This entry was posted in AIMMS, analytics, Prescriptive Analytics, Segmentation, Supply chain optimization on by .
Chris Gordon

About Chris Gordon

VP North America at AIMMS

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