DC Velocity - May 2016

half of those doing analysis— 49 percent—use their tools for diagnostics to troubleshoot the root cause of problems.

Another 43 percent use software for conducting either descriptive or predictive analytics. (Descriptive analytics represents the most basic type of software intelligence as it details and compares performance, while predictive analytics generally takes the form of demand planning tools.)

Surprisingly, 39 percent said they were engaging in so-called big data analysis, which involves sifting through reams of information for operational insights. Only 13 percent were engaged in cognitive analytics, which uses self-learning and machine intelligence technologies to mine data, while 12

percent were making use of prescriptive analytics, in which remedies are proposed. (See Exhibit 2.)

As for where they’re applying these tools, the survey found that the majority— 62 percent of those survey respondents who are using analytics—were using them for demand planning or forecasting, a critical business issue for companies trying to determine what to manufacture and distribute. Second on the list was inventory management, another important business issue as companies must balance the cost of buffer inventory against the potential loss of revenue from a missed sale. Third on the list was transportation, an area of concern as shippers seek to control shipping costs. (See Exhibit 3 for the complete list.)

Although more companies are turning to analytics, 25 percent have yet to take the plunge and another 10 percent are unsure if their companies are making use of these capabilities. When the non-users were queried about the reasons for their hesitation, the number one reason was lack of IT support, cited by 32 percent. (See Exhibit 4.) That response is not surprising given that one of the issues bedeviling analytics right now is that many of tools are not easy to use and often require the expertise of data scientists to assist in interpreting the results. The lack of data visualization capabilities (which would allow users to see the results in the form of charts and graphs) and the need to use third-party software like Tableau to provide any type of results visualization have been factors in hindering greater adoption of analytics in business disciplines like logistics and supply chain.

THE INTEGRATION CHALLENGE

Survey takers were also asked to name the biggest challenge they face to the successful deployment of a supply chain software application. As was the case last year, the number one challenge was systems integration, cited by 28 percent.

Clearly, companies still find it difficult to get disparate systems to exchange information. Next on the list was the lack of information technology (IT) resources, cited by 21

percent of respondents. Inadequate support from upper management, named by 17 percent, was the third-most-fre-quently cited challenge. Other key hurdles were lack of good user training, cited by 12 percent, and lack of employee acceptance, also cited by 12 percent.

Finally, the survey underscores two themes in the busi-
ness world in regard to information technology that,
not surprisingly, are influencing supply chain software.

Companies are increasingly turning to cloud deployments for software tools to receive a faster ROI and justify the expense. And despite obstacles such as the lack of data visualization, companies are starting to apply more analytics to gain insights into their operations in an effort to cut costs and boost profits.

James Cooke is a principal analyst with Nucleus Research in Boston, covering supply chain planning software. He was previously the editor of CSCMP’s Supply Chain Quarterly and a staff writer for DC VELOCITY.

Diagnostic 49%

Descriptive 43%

Predictive 43%

Big data 39%

Cognitive 13%

Prescriptive 12%

Demand planning/forecasting 62%

Inventory management 59%

Transportation 46%

Warehousing 40%

Manufacturing 40%

Supplier performance 30%

Carrier performance 29%

Lack of IT support 32%

No perceived value 19%

Too expensive 13%

Lack of staff resources 10%

No time for more work 6%

Too complicated 3% EXHIBIT 2

What types of analytics are being used?

EXHIBIT 3

What are the hot areas for analytics
in the supply chain?

EXHIBIT 4

What stops companies from taking
advantage of analytics?

MOST COMPANIES CURRENTLY USING ANALYTICS IN THEIR LOGISTICS AND SUPPLY CHAIN OPERATIONS ARE TURNING TO DIAGNOSTIC ANALYTICS.

WHEN IT COMES TO ANALYTICS IN THE SUPPLY CHAIN, MOST USERS ARE LOOKING FOR INSIGHTS INTO HOW TO MANAGE THEIR FORECASTING OR INVENTORY MORE EFFICIENTLY.