Can predictive analytics future-proof supply chains?
Monday, August 09, 2021
A recent development caught the attention of the supply chain tech industry, and for a good reason. A collaboration between Fortune Growers of Mexico and the Spanish agriculture technology company ec2ce promises to make great strides in advanced predictive analytics for the agricultural sector. A particular focus is to deploy these predictive analytics to improve operations by maximizing high-quality products for the export market. This news got so much traction because the supply chain itself has gone through the wringer in the past year.
Supply chain is a foundational pillar for most industries, and while we may have taken it for granted in the past, the pandemic has shown us how vulnerable it is to disruption. Lockdowns and border restrictions posed the initial shock, along with product shortfalls — all of which were a harsh reminder for a world that was used to meeting consumer demand anywhere anytime. But once the shock passed, supply chains became a lifeline to fight the COVID-19 pandemic. They made the movement of raw material, food and medical supplies possible around the world.
The question is, how do businesses avoid similar repercussions during the next shockwave?
Given the challenges they are facing, fundamental overhauls and critical adaptations of supply chains are required. Digitalizing old strategies and investing in resilience are the best methods to adopt. Businesses have realized that the answer to their problems lies in sustainable practices and the adoption of advanced technologies.
Earlier, the trend was relying on "lean" business models to save money at all costs. However, those who made progress in their sustainability efforts found that they made them more resilient and helped them endure the COVID-19 crisis. The slow-moving but inevitable threat of climate change leads to lasting damage. Making supply chains more resilient to climate change will certainly prepare us for the subsequent shocks, whatever the source. Trade and investment for climate adaptation will go a long way to future-proof our economies.
Along with resilience and sustainability, digitalization is another element that promises to be a big help. It became evident during the past year that digital visibility allowed real-time quantification of the pandemic's effects leading to smarter operations. Adoption of predictive analytics and the utilization of AI lead to actionable insights. These provide businesses with the visibility to streamline their supply chain management.
The current trend is that companies have begun investing in climate adaptation and accelerate the deployment of cutting-edge technologies as an insurance mechanism.
Technology is the real enabler.
The rise of big data and predictive analytics has the potential to minimize disruptions. They can predict changes in customer demand, anticipate the availability of raw materials and prepare for catastrophic situations.
The once siloed supply chain is evolving into an integrated end-to-end digital ecosystem with digitization. Data-driven organizations can harness this exponential growth in connectivity. Now, data can be aggregated from different segments, from the procurement of raw materials to manufacturing and logistics, and finally, to customer fulfillment. In the process, they can create new business value through integrated intelligence that facilitates real-time decision-making.
Predictive analytics and AI offer track-and-trace capabilities during natural disasters or emergencies. They provide real-time insights to quickly shift demand and reposition materials and products, reducing reaction times from what was once days or weeks to just hours. Businesses can improve the responsiveness of their supply chain and make their networks more agile.
How does it work?
Predictive analytics makes it possible for enterprises to assess and minimize risk by running more realistic simulations or scenarios for supply chain planning. They can reconfigure their supply chains and recalibrate stocks with unified visibility, as seen during the COVID-19 disruptions. They can make subtle shifts in demand and make inventory adjustments ahead of time to keep stock at optimum levels and avoid wastage.
Benefits of predictive capabilities
Results of utilizing predictive analytics
- Data mining and machine learning makes forecasting more accurate
- Analyzing unified and real-time data sets helps companies evolve from enterprises to move from simple planning to demand sensing.
- Makes production systems more resilient
- Minimizes negative impact to the environment and human well-being
Future-proofing supply chain via advanced technologies
A recent past of geopolitical turmoil and the global pandemic has shown business leaders the increasing problem of protecting their businesses against supply chain vulnerabilities. Predictive data analytics will form the foundation of resilient and flexible supply chains in the future, allowing enterprises to be better prepared for changes and uncertainties. Adopting advanced technology platforms that use predictive analytics and artificial intelligence will help them identify possible disruptions ahead of time. They can not only reduce risks but also proactively respond to supply and demand variability.
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