If the past few years have taught us anything, it’s‘s that the past simply does not predict the future of supply chains.
Supply chain professionals and technology providers have been focused on fighting the fires in response to the unexpected. The reality is that he‘s the ability to be predictive, prescriptive and proactive (identifying problems and reacting with the right actions at the right time) which will reveal a new source of competitive advantage for supply chains.
With that in mind, what can we gain when we stop focusing on responding to disruption and instead reimagine the way we make decisions?
A recent BCG report found that, in an analysis of supply chain KPIs from 2011 to 2020, delivery performance declined regardless of inventory and staff levels. Even though companies increased inventory and headcount at the start of the COVID-19 pandemic, they still couldn’t prevent a sharp decline in service.
The central issue is the need to improve decision-making. As the authors of the report note: “More [companies] always focus on using AI for analysis and prediction, for example, to forecast demand and plan production. Companies haven’t pursued the most valuable application of using AI to make recurring decisions by recognizing patterns in big data that humans can’t see.
This is an opportunity for decisional intelligence, which Gartner defines as “a practical area framing a wide range of decision-making techniques bringing together several traditional and advanced disciplines to design, model, align, execute, monitor and adjust decision models and processes.
To say it in profane‘Simply put, business intelligence not only collects and aligns data from business systems and data sources, then uses it to provide data-driven recommendations, but also executes those decisions. writing them back into transactional systems, capturing the results of decisions. and their context for the future.
Large Scale Decision Making: The New Competitive Advantage
This opens up a new opportunity for supply chain planners by giving them the ability to automate decisions based on business rules and strategy.
Historically, scheduling solutions have focused on identifying and providing a suggested response to an event, and they’re very good at it. But the issues we need to focus on are the performance inefficiencies in supply chains that prevent companies from making better decisions when the impact is greatest.
With technology that automates decision-making, businesses can avoid risk and capitalize on opportunity, allowing them to keep pace with the volume and speed of decisions that need to be made every day.
As the BCG states in its report, “Planners need to understand the information they receive, but they usually don’t have enough time to digest all the information and make good decisions. The authors recommend moving to a new approach to piloting AI and automation tools to generate decisions.
Consider the growth opportunities that can be a game-changer for a business, prioritizing the inventory that‘is about to expire to generate more profits — or align with more consistent suppliers to ensure better performance of OTIF — or unify optimal payment terms for all purchase orders.
In many cases, the window of opportunity to capitalize on these decisions is small. But it can take teams hours or days to analyze the data, align to an action plan, and execute, and that‘s assuming they have the bandwidth and visibility to seize the opportunity.
The human element: less “firefighting”, more strategic planning
Not only does this technology enable faster and better decision-making at scale, but it also helps supply chain planners excel at their jobs.
Employees typically managed decision-making through a patchwork of data science, spreadsheets, planning and modeling, data warehouses, and collaboration, all while relying on fragmented data sources. Today, these processes and technologies are no longer sufficient to respond effectively to changing conditions, or even to support fast and reliable decision making in the best of times.
Decision intelligence changes the paradigm by leveraging AI to understand, recommend, predict and act with machine speed and precision. AI becomes a virtual business analyst, working 24/7/365 to interpret data at scale, make recommendations, and execute decisions. This allows supply chain professionals to focus on value-added, strategic tasks that help businesses stay competitive.
What‘Additionally, business intelligence addresses the need to capture internal knowledge by recording not only data, but also the context and outcomes of decisions made. This is essential, because the number of employees who left their jobs during the Great Resignation highlighted the need to retain knowledge over the long term. This will continue to be important as younger workers taking on these roles lack the decades of experience of their predecessors and are more likely to move into different positions in a shorter time frame.
As more companies begin to scale and automate supply chain decision-making, they‘will begin to see the benefits across their entire business ecosystem, with a level of visibility that goes beyond planning. This investment can extend beyond the business to enable resource optimization, waste reduction, improved customer service and more.
Businesses will benefit in just weeks from reducing the complexity and accelerating their decision cycles, while simultaneously reducing their reliance on multiple disconnected people, processes, data models and niche technology investments. .
Early adoption of business intelligence will pay dividends by empowering businesses to solve problems and make the decisions they might‘didn’t consider before or didn’t‘I don’t think that’s possible with the status quo.