Advanced supply chain analytics

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SCDigest Expert Insight: Supply Chain by Design

About the Author

Dr Michael Watson, one of the industry’s foremost experts in supply chain network design and advanced analytics, is a columnist and Subject Matter Expert (PME) for Supply Chain Digest.

Dr Watson of Northwestern University was the lead author of the recently released Supply Chain Network Design book, co-authored with Sara Lewis, Peter Cacioppi and Jay Jayaraman, all of IBM. (See Supply Chain Network Design – The Book.)

Prior to his current role at Northwestern, Watson was a key manager of IBM’s network optimization group. In addition to his roles at IBM and now at Northwestern, Watson is Director of The Optimization and Analytics Group.

November 13, 2012


Advanced Supply Chain Analysis – What Is It And Is It Better Than Non-Advanced Analysis?

Better define the field of analytics by breaking it down into three categories


Readers have asked us what is “advanced analysis?” If you answer this question logically, you should also define “non-advanced analytics.”

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When you evaluate analytics solutions, you need to understand whether the solution is descriptive, predictive, or prescriptive.
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Unsurprisingly, you don’t see many vendors talking about their great “non-advanced” analytics solution or managers offering a “non-advanced” analysis project to the CEO.

This discussion highlights that although the term analytic is widely used, it is very poorly defined. And, a poorly defined word with such great connotations risks becoming a buzzword – salespeople call everything they do “analytical” and managers put the word “analytical” in all of their projects.

So before we get into “advanced” analytics, we need to define analytics. If we go back to the Davenport article “Competing on Analytics” in the Harvard Business Review that started the analytics movement, he defines analytics as “the ability to collect, analyze and act upon. Datas”.

In other words, at a high level, analytics is the ability to use data to make better decisions.

Unfortunately, that doesn’t help us much. Haven’t companies always tried to use data to make decisions? – Yes they have. Aren’t there thousands of ways to analyze data? Yes there is.

No wonder people are confused.

Fortunately, academic and professional organizations have understood that the field of analytics should be divided into three categories:

1. Descriptive analysis– using historical data to describe the business. This is usually associated with Business Intelligence (BI) or visibility systems. In the supply chain, you use descriptive analytics to better understand your historical demand patterns, to understand how products flow through your supply chain, and to understand when a shipment may be late.

2. Predictive analytics– using data to predict trends and patterns. This is usually associated with statistics. In the supply chain, you use predictive analytics to forecast future demand or to forecast the price of fuel.

3. Prescriptive analysis– using the data to suggest the optimal solution. This is usually associated with optimization. In the supply chain, you use prescriptive analytics to define your inventory levels, plan your factories, or route your trucks.

Having this definition gives you a better framework for evaluating analytics projects and understanding how they can help your supply chain. Note that this does not suggest that one type of scan is better than another – different problems require different solutions.

Once we have this definition, we no longer need the generic term “Advanced Analysis”. For various reasons, BI systems and some statistical solutions have become synonymous with the term analytics. So, to differentiate themselves, vendors offering optimization solutions, new complex statistical methods, or something that they thought was a breakthrough tried to label their solution as “Advanced Analytics”. Of course, once some vendors start using the term, others will follow suit.


Final thoughts

When you evaluate analytics solutions, you need to understand whether the solution is descriptive, predictive, or prescriptive. Then, within each of these categories, you can determine whether the solution is more basic or more advanced and what will meet your needs.

Recent comments

Concise and about without hyperbole! Thanks, Dr Watson!

John hill

Director
Saint-Onge Company
November 16, 2012

Nice final thoughts and I agree that analysis “is the ability to use data to make better decisions”.

Another interesting aspect we can take from this (aside from what the data tells us) is what the data doesn’t tell us.

In fact, it is the “don’t say” that contributes to a greater degree of complexity.

Koh Niak Wu, Ph.D.

Global supply chain and logistics
Dell France
November 27, 2012

Great article Mike. It may be too late to fear that “Analytics” is becoming a buzzword. Much like “analyze”, “analyst” or “optimize”, it has become part of the general vocabulary and has lost much of its clarity. I think I started calling what I do “Advanced Analyzes” to emphasize that not all analyzes can be done in Excel.

For people who buy such software and services, this is a crucial thing to understand. In fact, if my experience is representative, if it says “analysis” then chances are you won’t find anything other than reporting tools and maybe visualization / alerting tools. If you need a predictive model, you need to better understand what constitutes “predictive analytics”.

Personally, I tend to use the “What happened?” “, ” And if ? “And What’s Best” to explain different types of analysis, but maybe it’s time for me to make a change.

Andrew Gibson

Partner
Crabtree Analytics
November 27, 2012

It really is a good definition. Categories are very useful for supporting managers in their Business Analytics projects. Clearly defining the optimizations they wish to describe, predict and suggest will require a thorough understanding of the capabilities they have in the transactional process to generate the required level of data and information they will need to build an efficient and valuable business. added. analysis process. So maybe they will realize that they need to start with some process improvements before they start a more sophisticated business analysis process.

Valério Machado da Silva

Supply chain manager
Looking for a new position.
March 18, 2013


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