Supply Chain Analytics Next Logical Step for Companies, Experts Say
- November 6th, 2013
- By: Loraine Lawson
Supply chains account for such a large percent of a company’s value add and revenues, that the next logical step is to establish a supply chain analytics department, experts say.
“Supply chain, across industries, constitutes about 50-80% of the value add,” Kaveh Taghizadeh, vice president MESA SCM & Procurement at KPMG, told the Arabian Supply Chain. “Therefore, full understanding of the supply chain and managing it is a logical business requirement.”
Supply chains are a major cost for many industries, according to Dr. Philipp Biermann, a partner in the Competency Center Transport & Logistics at Simon-Kucher & Partners. Biermann said that’s why companies need an “integrated view of their supply chain,” so that they can understand the real costs of quality issues and late deliveries.
The experts admit it’s not easy to convince everyone about the value of supply chain analytics. First, people tend to have a limited understanding of their supply chain costs, which they interpret as “logistics only.”
While some industries do spend up to 10 percent of their revenues on logistics-related activities, that’s still a limited view of the data available in supply chains.
“Because crucial data exists on paper, it may not be practically available for analytics,” Taghizadeh said. “For example, in the ‘procure to pay’ process, many companies, especially in the Middle East, do not apply state-of-the-art solutions – which not only improve the process significantly, but also generate valuable data for analytics.”
The article’s experts recommend automating B2B partner processes such as invoicing, payment and contract management throughout all the tiers of their supply chain, organizations. Shifting from paper to electronic business processes will allow you to collect data about late deliveries, invoicing, time to pay and other key business data.
This level of data collection is key to gaining a full understanding and control of your cost structure, the article notes.
The article is a great starting place for understanding the business reasons for investing in supply chain analytics. If you’d like to learn more about how supply chain data and visibility into business processes can help you cut costs and boost revenue, check out these B2B.com resources: