Research Perspective

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Supply Chain Planning with Prescriptive Analytics:

Technology Enables a More Effective Process

Advanced Analytics Drive Better Planning

Technology has steadily advanced the analytic techniques that enable businesses to undertake the challenge of supply chain optimization. These have evolved from basic inventory optimization routines to more complex algorithms that address multiple objectives and constraints simultaneously. Analytics facilitate even complex scenario analyses to provide a more complete picture of the future. They have moved beyond merely being descriptive, explaining what just happened, to being able to prescribe one or more options. Prescriptive analytics suggest decision options and calculate the consequences that follow from each. This allows executives and managers to accelerate decision-making cycles because they can rapidly explore alternative courses of action and identify the best options because they understand the impacts of each. Being able to speed up decision cycles by quickly getting answers to “what if” questions can give companies a competitive advantage in today’s dynamic markets.

Managing Ever More Moving Parts

Managing supply chains is a complex task because of the ever-increasing number of moving parts that must be considered. Supply chains link otherwise unconnected business units, each of which has its own set of business objectives and constraints that will impact supply chain efficiency – minimizing unit costs by maximizing production, for example, or only shipping full truckloads. On their own, each of these business units would choose trade-offs that optimize their individual results. In the aggregate, though, they could result in, for example, longer than necessary delivery lead times for priority customers, higher freight costs and bloated inventories.

 
 

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