Chad Sauter: How Predictive Analytics is Transforming Supply Chain Management – SourceToday
Chad Sauter was featured in SourceToday‘s article titled “How Predictive Analytics is Transforming Supply Chain Management.”
“Predictive analytics can be used for determining events or outcomes before they happen. This is critical in keeping companies one step ahead of the competition.” – Chad Sauter, Conway MacKenzie
Predictive analytics is being used by a growing number of electronics companies to build better supply chain and procurement forecasts, says Chad Sauter, a director at Conway MacKenzie, a business consulting and financial advisory firm based in Birmingham, Mich.
“Companies are combining standard historical demand data along with other criteria, such as weather, location, number of local web searches, seasonality and promotional uplift probabilities, to generate a more precise demand plan,” Sauter explains. “This in turn translates to a supply plan designed to bring the customer their desired product, to their desired location, at their desired time.”
Innovation and Agility
Predicative analytics has a huge potential for innovating supply chains, Sauter says. “Consider, for example, that the internal operations of any company deploying predictive analytics will benefit from [applying it to] machine maintenance.” Better maintained machinery is less likely to fail, keeping supply chains humming. Similar types of predictive analytics-driven enhancements can pop-up throughout the supply chain over time, delivering performance gains, improved reliability and other benefits to all participants. “Predictive analytics can increase efficiencies at every step of the supply chain, from sub-suppliers through point of sale,” Sauter notes.
According to Sauter, the savings generated by predictive analytics flow back through the entire supply chain as suppliers become focused on the exact quantities demanded at the right time and shipped to the correct location with little waste.
“Companies can work through demand analytics, finished goods optimization, replenishment planning, network planning and transportation analytics to make sure that they have the shipped the correct quantity, at the correct time, via the most cost effective method, to achieve the best price and margin,” Sauter says. “This efficiency is automatically translated upstream through the supply chain via the improved forecast and purchase order demand signals.”
“Any business considering the use of predictive analytics needs to assess where their organizations are with respect to the organizational processes and learning required to incorporate predictive analytics into their operation,” Sauter says. “This includes a detailed assessment of their people, processes and technology, as they will all be affected by this transformation.”