Grow Profits With Supply Chain Analytics

Supply chain analytics can be a powerful tool for turning massive amounts of data into a competitive edge.
Discover how some companies are doing just that and how to get the tools you need.

EDITOR’S NOTE HOW ANALYTICS IoT SENSORS THE ABCs OF

HELPS BEAT THE FEED SUPPLY CHAIN CHOOSING SUPPLY
COMPETITION INSIGHTS CHAIN ANALYTICS
 EDITOR’S
NOTE
Making Meaning Out of Data
The Internet of Things is transform-
HOME
ing business with new technologies that col-
EDITOR’S NOTE lect and analyze data. The new data analytics
gives visibility into the supply chain, providing
HOW ANALYTICS
HELPS BEAT THE insight into the location, status and quality of
COMPETITION
goods throughout the process. But before you
IoT SENSORS FEED can realize the full potential of supply chain
SUPPLY CHAIN
analytics, you need to understand the technol-
INSIGHTS
ogies. This guide provides a good starting point
THE ABCs OF
to understand the devices and applications that
CHOOSING A SUPPLY
CHAIN ANALYTICS are revolutionizing the supply chain.
SYSTEM
First, freelancer Linda Rosencrance provides
examples of businesses that are using supply
chain analytics to cut costs, gain efficiencies
and offer better customer service. For example,
The Bouqs Company, a cut-to-order flower
business, uses supply chain analytics to ensure
speedy and correct delivery of its product,
which has a limited life span.
Next, supply chain expert David Turbide
takes a deeper look at the technology that
2 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
enables supply chain analytics. Two broad cat-
egories include sensors and devices, both now
cheap and ubiquitous. Sensors connect through
the Internet for functions such as measure-
ment, counting and video. Devices, including
smartphones and tablets, add context that helps
make sense of the data, such as GPS location.
Finally, Ann Grackin, CEO of Chain Link
Research, provides practical advice on choosing
a supply chain analytics system. You need to
think of supply chain analytics in two domains:
operational, which includes daily and real-time
data; and strategic, which includes trend analy-
sis, discovery and planning. Grackin looks at
some of the key products and vendors.
The IoT is making it possible to collect all
kinds of data in the supply chain. The challenge
now is finding the tools to make sense of it. n
Jim O’Donnell
News Editor, SearchManufacturingERP
 THRIVE
How Analytics Helps Beat the Competition
Every day, companies collect massive
HOME
amounts of data from any number of sources,
EDITOR’S NOTE including social media and Internet of Things-
enabled devices embedded with electronics,
HOW ANALYTICS
HELPS BEAT THE software, sensors and network connectivity
COMPETITION
that let these objects gather and share data.
IoT SENSORS FEED And some are looking to supply chain analytics
SUPPLY CHAIN
to make sense of all this data so they can cut
INSIGHTS
costs, operate more efficiently and offer better
THE ABCs OF
customer service.
CHOOSING A SUPPLY
CHAIN ANALYTICS Take The Bouqs Company, a cut-to-order,
SYSTEM
farm-to-table, eco-friendly flower retailer
delivering straight from farms—one on a vol-
cano in South America. The company knows
how to save money at each stop along the sup-
ply chain from farm to flower recipient, said
John Tabis, founder and CEO of the firm, based
in Venice, Calif.
Most flower retail companies use a model
that is far from efficient. Typically, flowers
go from farm to wholesale, wholesale to retail
3 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
and retail to consumer, wasting about 17 days
of the lifespan of a commodity that only lasts
21 days. The Bouqs is aiming to change the
flower industry for the better with farm-to-
door flowers that are only cut once a customer
places an order and arrive on day four rather
than day 17, Tabis said.
“When you place an order, we look at what’s
available from the farms and what the projected
production is on a per-acre-by-flower level,” he
said.
Supply chain analytics allows The Bouqs to
constantly analyze the data that farms input
into its systems to determine what’s available
for sale.
“Where analytics comes into play is we’re
using historical sales to estimate what we think
is going to sell in terms of the volume of any
given type of flower in any given month so we
can ensure that our farm network can satisfy
that demand,” Tabis said.
 THRIVE

DATA EXPLOSION EXPANDS INSIGHTS makes sensor and analytics technology.

There is a lot more data available for supply
chain analytics compared to a couple of years
ago, according to ShiSh Shridhar, retail indus-
try solutions director at Microsoft.
The Internet of Things (IoT) is just one
HOME
source. There’s a lot of real-time locational
EDITOR’S NOTE data available from sensors and radio frequency
identification (RFID) tags—data that software
HOW ANALYTICS
HELPS BEAT THE can analyze and act on. The other thing accel-
COMPETITION
erating what companies can do with supply
chain analytics is the availability of public data,
IoT SENSORS FEED
SUPPLY CHAIN
Shridhar said.
INSIGHTS
Companies can put an additional layer on
THE ABCs OF
top of their historical data, such as weather,
CHOOSING A SUPPLY
CHAIN ANALYTICS demographic, economic and social media
SYSTEM
data, that can provide insight into product
demand.  “Now, you don’t have to just rely
on historic data to predict demand, to better
understand behavioral patterns and how certain
geographies work,” he said.
Understanding the current location of goods
as they’re being shipped no matter by what
mode—rail, truck or ocean—is key to optimiz-
ing supply chains, said Jim Hayden, vice presi-
dent of solutions at Savi Technology, which
“From an analytics perspective, we’re build-
ing these predictive models on arrival times
based on as much historical information as we
can gather, as well as third-party data sources
such as traffic and weather,” Hayden said.
“And we’re building machine-learning-based
models to help predict estimated times of
arrival.”
Companies use supply chain
analytics to figure out how the
lateness of one shipment will
affect other shipments down-
stream and in real time.
For example, if a manufacturer determines
that a supplier is going to be significantly late,
it can make a decision earlier to stop the pro-
duction line and not wait around for the late
shipment.
Companies also use supply chain analyt-
ics to figure out how the lateness of one ship-
ment will affect other shipments downstream
and in real time, said Mark Palmer, senior vice

4 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS

 THRIVE
president of engineering at Tibco Software Inc.
“Based on the predictive signals you find
in Spotfire [Tibco’s analytics software], you
could say ‘Let’s hold up a particular shipment
or send an alert to an operator to manually
figure out what’s going on,’ ” he said. “There’s
HOME
a tie between Spotfire for finding patterns on
EDITOR’S NOTE connected vehicles that can feed into the way
you execute against the actual real-time data
HOW ANALYTICS
HELPS BEAT THE stream.”
COMPETITION
IoT SENSORS FEED
SUPPLY CHAIN
BULLWHIP EFFECT MINIMIZED
INSIGHTS
In supply chain management, the goal is to
THE ABCs OF
avoid the so-called bullwhip effect, which
CHOOSING A SUPPLY
CHAIN ANALYTICS causes businesses down the supply chain to
SYSTEM
either undersupply or oversupply the actual
demand, said Justin Bateh, professor of busi-
ness at Florida State College at Jacksonville.
The bullwhip effect occurs because demand
is based on companies’ demand forecasts rather
than the actual demand from customers.
“This can happen if a company is running a
promotion and is placing a lot of orders [for
a particular product] because of the promo-
tion, but the manufacturer assumes demand
5 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
has increased [in general] and starts produc-
ing more,” Bateh said. “Because the customer
and the manufacturer are not in sync with each
other, there is a distortion in demand.” This
is where working together and supply chain
analytics come into play. By linking up order,
point-of-sale and inventory systems, everyone
in the supply chain can see the data in real time
and analyze it to gain insight into what is actu-
ally selling, minimizing the bullwhip effect, he
said.
StockPKG, a one-stop shop for business
supplies in Dana Point, Calif., uses analytics to
improve everything, including its supply chain.
“We use analytics to track how often we get
accurate shipping information from our carri-
ers such as UPS and FedEx,” said Blake Stoudt,
the company’s marketing manager. “We track
if the deliveries get to their destinations at the
times the carriers said they did.”
StockPKG uses data from the accuracy
reports provided by carriers. First, the company
logs that data into its customer relationship
management system, then checks it against
information that customers provide via an
online form. “If we discovered that packages
 THRIVE
to one area were always being delivered late,
we would call our rep at the carrier and say we
would need to address it,” Stoudt said.
Jack Allen, senior director of logistics and
manufacturing solutions at Cisco Systems, said
that analyzing where trucks go and how long
HOME
they take to get there also pays pretty big divi-
EDITOR’S NOTE dends for companies like UPS.
HOW ANALYTICS
HELPS BEAT THE
When Lenovo releases a product,
COMPETITION
social media buzzes with what
IoT SENSORS FEED
users love and hate about it.
SUPPLY CHAIN
INSIGHTS
Analytics enables the capture
THE ABCs OF and analysis of that feedback.
CHOOSING A SUPPLY
CHAIN ANALYTICS
SYSTEM
In fact, a couple of years ago, UPS acknowl-
edged it collects and analyzes data from sen-
sors on each of its trucks to record to the
second everything a driver does, including
loading packages in the morning and backing
up too much, to figure out how to do things
more efficiently.
Watching how vehicles move pays big divi-
dends, Allen said. “So we’re wiring up in our
proving ground wireless infrastructure to be
6 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
able to do location-based data and trying to
track, for example, if people are too far to pick
parts, and if we can move those parts much
closer.”
Allen said supply chain analytics will enable
Cisco to glean insight from the rich data gath-
ered by sensors on forklifts and wearables to
help it optimize the warehouse pretty substan-
tially. The technology can then be used to help
Cisco’s customers, he said.
Companies can also use analytics to analyze
sentiment data from social media to under-
stand what is going to be successful as a new
product, said Simon Ellis, an analyst at IDC.
“This helps the manufacturer’s supply chain
because you don’t waste time and resources
on new products that won’t be successful,” he
said.
Chinese computer maker Lenovo is doing
just that. When Lenovo releases a new prod-
uct, social media channels immediately start
to buzz with what users love and hate about it,
said Mohammed Chaara, director of customer
insights and advanced analytics at Lenovo.
“As a manufacturer that ships a device every
four seconds, we knew this timely feedback
 THRIVE

could help us make better business decisions,”
he said. “But we didn’t have a way to capture
and analyze the data efficiently and in time to
affect decisions about product design, et cetera.
We knew if we could identify trends indicated
through social media sooner, we would be able
HOME
to address issues sooner, too.”
EDITOR’S NOTE
So Lenovo worked with analytics vendor SAS
Institute in order to create a system that would
track, analyze and quickly respond to social
chatter.
“That speed around a product launch equals
millions of dollars in benefits to a customer the
size of Lenovo,” Chaara said. —Linda Rosencrance

HOW ANALYTICS
HELPS BEAT THE
COMPETITION

IoT SENSORS FEED

SUPPLY CHAIN
INSIGHTS

THE ABCs OF
CHOOSING A SUPPLY
CHAIN ANALYTICS
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7 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS

 VISIBILITY

IoT Sensors Feed Supply Chain Insights

Any discussion of analytics today has to
HOME
include some consideration of the impact of
EDITOR’S NOTE the industrial Internet of Things, or IIoT, the
proliferation of sensors and connected devices
HOW ANALYTICS
HELPS BEAT THE that are the source of much of the big data
COMPETITION
that analytics feeds on. What’s different—or
IoT SENSORS FEED not different—about IoT sensors and devices?
SUPPLY CHAIN
Where and how are they being used? And how
INSIGHTS
does this all fit with big data and analytics?
THE ABCs OF
The two characteristics of the new breed
CHOOSING A SUPPLY
CHAIN ANALYTICS of sensors that are driving the revolution in
SYSTEM
IIoT, big data and analytics are that they are
inexpensive, and they readily connect to and
through the Internet. While many sensors and
devices—programmable logic controllers, for
example—have had either Internet or Ethernet
LAN connectivity for years, connectivity has
now become ubiquitous and cheap.
And that makes all the difference. Whereas a
few years ago it might have cost thousands to
wire up a small section of a plant, or a piece of
equipment to gather a few basic pieces of data,
today they can be loaded with measurement
devices, counters, video with image recognition
software and more, for a small fraction of the
previous cost. Everything communicates “plug
and play” through IP connections. The biggest
challenge with IoT sensors is making effective
use of the data.
IoT DEVICES ADD CONTEXT
Ubiquitous and inexpensive connectivity
extends beyond simple sensors. Lots of other
kinds of devices, all connected and inexpen-
sive, add to the basic data and make it more
meaningful by adding context—GPS location,
for example—thereby going beyond straight-
forward data collection. Actuators can accept
signals from the network and actually make
things happen with switches, solenoids, equip-
ment adjustments and more sophisticated

8 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS

 VISIBILITY
transducers converting digital signals into
automatic responses to conditions identified
by software operating on sensor data feeds.
This in itself is not really new either, but wider
availability of more types of devices for far less
cost and far easier implementation changes the
HOME
playing field. A relatively high level of automa-
EDITOR’S NOTE tion is now available to small and midsize orga-
nizations that don’t have a cadre of technical
HOW ANALYTICS
HELPS BEAT THE experts on hand.
COMPETITION
The devices category also includes tablets
IoT SENSORS FEED and smartphones to access, analyze and display
SUPPLY CHAIN
the data among a much wider universe of peo-
INSIGHTS
ple, anywhere, anytime.
THE ABCs OF
CHOOSING A SUPPLY
CHAIN ANALYTICS
SYSTEM
THE UBIQUITY OF SENSORS
The IoT sensors and devices are replacing
manual reporting, and absence of reporting,
in obvious places where visibility into opera-
tions can enhance performance. In the plant,
IoT sensors directly attached to equipment and
workstations can continuously monitor equip-
ment cycles, timing, workpiece dimensions
and other physical parameters. But that’s just
the beginning. It’s more feasible to track things
9 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
outside of the plant.
Automated identification technology can
record the exact contents of each box, case, pal-
let, container and truckload along with serial
numbers; location within the truck or con-
tainer; ambient conditions, such as tempera-
ture and humidity; and location through GPS.
A truck halfway from New York to California
could be rerouted to Dallas to accommodate
a customer emergency and the exact goods
delivered, with customer service having full
knowledge of exactly what happened and how
to coordinate resupply of the original intended
recipient.
Let’s say that a company has repeatedly
experienced shipping damage on a delicate
piece of equipment despite what they thought
was good packaging and loading into the truck.
It can equip the next shipment with acceler-
ometers inside and outside the package, video
cameras, pressure sensors and more, combined
with GPS and precision timepieces to moni-
tor the entire journey in great detail to identify
when and how the damage occurs.
Or imagine a machine that is experienc-
ing problems—a molding machine that is
 VISIBILITY
producing damaged parts. Maybe the best way,
or only way, to find out what is really going
on is to observe the internal workings of the
molded-part removal process mechanism. An
inexpensive “lipstick camera”—the size and
shape of a tube of lipstick, or smaller—might
HOME
be mounted inside the machine and the result-
EDITOR’S NOTE ing video can be studied in slow motion or one
frame at a time to identify the cause of the
HOW ANALYTICS
HELPS BEAT THE damage.
COMPETITION
IoT SENSORS FEED
SUPPLY CHAIN
BRINGING IT ALL TOGETHER
INSIGHTS
The above examples may not relate to analytics
THE ABCs OF
in the traditional sense, but they serve to illus-
CHOOSING A SUPPLY
CHAIN ANALYTICS trate the extent to which new sensor and device
SYSTEM
technologies extend visibility to places where
it was not possible or affordable before. You’ll
have to use your imagination to envision how
detailed, real-time, and location or time-logged
data can provide a new and unique window into
processes, activities, goods and facilities. And
10 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
you’ll need to imagine how that might open the
possibilities for better management, earlier and
more informed preventive action, and opportu-
nities to improve performance.
The masses of new data, and the variety of
new data types, including video, click-streams
and unstructured text, strain the capabilities
of yesterday’s data-management and analysis
capabilities. Thus, the new breed of analytics is
evolving to not only “manage” big data, but also
to bring about new ways to combine traditional
data with big data to generate useful business
information.
To make it usable, modern analytics must
be “consumerized,” so that everyday users
can build their own dashboards and analyses
without the help of programmers or data sci-
entists. Data visualization—turning millions
or billions of data points into something that a
mere human can interpret and gain intelligence
from—is a core task for big data analytics.
—David Turbide
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The ABCs of Choosing Supply Chain Analytics

Supply chains today are going through a Operational analytics can sit on top of only
HOME
radical transformation. And if you’re research- one module, such as demand planning, manu-
EDITOR’S NOTE ing supply chain analytics, you’re likely facing facturing scheduling, transportation and so
plenty of questions: on. But the more interesting play today uses
HOW ANALYTICS
HELPS BEAT THE analytics that have data from multiple nodes,
COMPETITION
■■ What are the main components of an effec- such as work centers, warehouse locations and
IoT SENSORS FEED tive supply chain analytics system? Should in-motion inventory on a truck or ship. Prod-
SUPPLY CHAIN
I get a dedicated tool from a supply chain ucts available today are working toward more
INSIGHTS
provider, or should I get a generic analytics cross-functional and inter-enterprise views.
THE ABCs OF
or business intelligence (BI) tool? They have the goal of overcoming siloed views
CHOOSING A SUPPLY
CHAIN ANALYTICS to give a true picture of the supply chain as a
SYSTEM
■■ What are some of key elements today? cross-functional endeavor.
So, what might operational analytics look
■■ What might be the criteria of one choice ver- like? Here are some examples:
sus another?
Inventory and logistics decision making. Leverag-
To answer those questions, we need to think ing grid computing and multinode data across
about supply chain analytics in terms of two a supply chain, users can evaluate and make
domains—operational (daily and possibly real inventory stocking decisions based on demand,
time) and strategic (trend analysis, discovery sometimes called a demand signal repository.
and reporting). Transportation managers analyze routing and

11 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS

 SELECTING
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rating options across nodes or carriers and
evaluate spend. What’s new here is the captur-
ing of constant updates of data from the nodes
as conditions change rather than accessing
static data. In this way, data becomes opera-
tionally useful far sooner. A prominent vendor
HOME
creating systems for this arena is One Network,
EDITOR’S NOTE provider of multi-enterprise platform-as-a-
service and consumer-driven supply chain
HOW ANALYTICS
HELPS BEAT THE products. The company has rich multinode,
COMPETITION
multi-enterprise networks across complex
IoT SENSORS FEED supply chains to help customers create end-to-
SUPPLY CHAIN
end digital supply chains.
INSIGHTS
THE ABCs OF
Understanding high-level events. Complex event
CHOOSING A SUPPLY
CHAIN ANALYTICS processing (CEP) is finally being used in supply
SYSTEM
chain operations. Vendors producing interest-
ing products in this area include GT Nexus
(which embeds TransVoyant), Savi, Trans-
Voyant and, of course, SAP. Oracle has a CEP
product, but I have not seen cases yet where
this has been applied to the supply chain. CEP
looks at a series of events and influencer fac-
tors. It then tries to understand causes and
predict outcomes, in contrast to traditional
alert systems, which just tell you something
12 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
happened but not why, how or what to do about
the event. In this way, CEPs help catalyze better
outcomes.
Risk management. There are several impres-
sive risk management products that play a role
in the real-time domain to spot risks, analyze
causes and provide potential alternative solu-
tions. Some interesting companies that tar-
get this space are Exostar, IDV Solutions and
Resilinc.
From a strategic and reporting perspective
the two paths forward are analytics within a
more large-scale management system and a
business intelligence-focused product.
When using analytics within a more large-scale
management system, much of the analytics
within a function, such as the supply chain, is
based on known sets of data that are within the
supply chain management system. So, when
thinking of the supply chain analytics system,
it often makes sense to go with the same ven-
dor you’re using (or are going to use) for supply
chain management. Such products have the use
case libraries and often embed a commercial BI
 SELECTING
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product into the suite. Supply chain is a large
market so there are a number of choices, such
as suite providers like JDA Software, Logility,
or cloud providers like One Network and GT
Nexus, an Infor company. There are also more
functional approaches, such as transportation
HOME
management systems like Descartes Reporting
EDITOR’S NOTE Services or MercuryGate or manufacturing-
centric systems such as Autodesk, Dassault
HOW ANALYTICS
HELPS BEAT THE Systèmes, GE, PTC and Siemens. SAP, of
COMPETITION
course, is a consideration, but it might bet-
IoT SENSORS FEED ter fit in the BI provider category, since SAP’s
SUPPLY CHAIN
goal is to sell HANA on top of various modules
INSIGHTS
of ERP or supply chain apps.
THE ABCs OF
One interesting development here that I like
CHOOSING A SUPPLY
CHAIN ANALYTICS is JDA Software’s partnership with Google,
SYSTEM
which aims to provide richer search and ana-
lytics, which will in turn look at behavior and
trends to help plot new ways to look at markets.
When using a business intelligence-focused pro-
duct, aBI provider might make sense for envi-
ronments that use a multitude of management
systems—a best-of-breed approach. With this
choice, users must take responsibility for build-
ing data warehouses and enabling integration,
13 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS
although analytics providers have built tools
to help manage the pathways between systems.
Many enterprises turn to a BI product that
has presence in the supply chain, such as IBM,
SAP’s portfolio, SAS Institute and Tableau
Software, as well as more elastic options such
as Microsoft Azure for big data analytics.
COUNSEL AND CAUTION
Supply chain analytics is an area that is chang-
ing fast. Older analytics were largely about
accumulating data in warehouses and are user
dependent. That is, users stare at mountains of
data and build their own queries and reports.
Today, we have libraries of advanced queries for
both strategic and operation applications.
I am really bullish on the new analytics in the
operational space with their focus on real-time
data and smarter optimization and analytics.
Users should take some time to really under-
stand the power of these and how they will
use them. New supply chain analytics tools
are designed to give companies more predic-
tive, more real-time response, so operations
can solve problems more quickly. Even more
 SELECTING
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important, the analytics today are not just
about speed, they also supply richer insights
and learn over time what the best options are.
They access and use new types of data that are
fed into the supply chain applications—from
weather, traffic, sensors and so on—and blend
HOME
this with more traditional data sources. That
EDITOR’S NOTE type of complex and more immediate analysis
HOW ANALYTICS
HELPS BEAT THE
COMPETITION
and insight is where modern systems are going.
As a final note, it’s important to realize that
the business side in many companies has been
procuring analytics systems on its own without
IT’s involvement. IT should be sure to partner
with business users and understand how these
systems fit in the overall portfolio of tools.
—Ann Grackin

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14 GROW PROFITS WITH SUPPLY CHAIN ANALYTICS

 ABOUT
THE
AUTHORS
ANN GRACKIN is the CEO of ChainLink Research, a con-
sultancy based in Newton, Mass. Email her at agrackin@
clresearch.com.

LINDA ROSENCRANCE has written about technology for

Grow Profits With Supply Chain Analytics
more than 10 years and has been a journalist for more is a SearchManufacturingERP.com e-publication.
HOME than 20. A former Computerworld reporter, she is a
Scott Wallask | Editorial Director
EDITOR’S NOTE
freelance writer in Massachusetts and also an author of
Ron Karjian | Managing Editor
several true-crime books. Email her at rosencrance1@
Moriah Sargent | Associate Managing Editor
HOW ANALYTICS gmail.com.
HELPS BEAT THE David Essex | Executive Editor
COMPETITION
Diann Daniel | Site Managing Editor
DAVID TURBIDE is an independent consultant and free-
IoT SENSORS FEED
Linda Koury | Director of Online Design
lance writer serving both developers and users of soft-
SUPPLY CHAIN Martha Moore | Senior Production Editor
INSIGHTS ware and systems for manufacturers. He is the author of
Doug Olender | Publisher
Computers in Manufacturing, MRP+ and Why Sys- dolender@techtarget.com
THE ABCs OF
CHOOSING A SUPPLY tems Fail, among other books. Email him at dave@ Annie Matthews | Director of Sales
CHAIN ANALYTICS daveturbide.com. amatthews@techtarget.com
SYSTEM
TechTarget
275 Grove Street, Newton, MA 02466
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