How data science, supply chain management are driving the predictive enterprise

DHL, a leading logistics company formerly known as Exel in North America, launched its latest white paper highlighting the untapped power of data-driven insight for the supply chain. The white paper has revealed that most companies are sitting on a goldmine of untapped supply chain data that has the ability to give organizations a competitive edge.

While this wealth of supply chain data already runs the day-to-day flow of goods around the world, the white paper has revealed a small group of trailblazing companies are utilizing this data as a predictive tool for accurate forecasting.

“The predictive enterprise: Where data science meets supply chain” is a white paper by Lisa Harrington, President of the lharrington group LLC that was commissioned by DHL to identify the opportunities available to companies to anticipate and even predict the future. It encourages companies to get ahead of their business and direct their global operations accordingly.

Data mining, pattern recognition, business analytics, business intelligence and other tools are coalescing into an emerging field of supply chain data science. These new intelligent analytic capabilities are changing supply chains - from reactive operations, to proactive and ultimately predictive operating models. The implications extend far beyond just reinventing the supply chain. They will help map the blueprint for the next-generation global company – the insight-driven enterprise.

Jesse Laver, Vice President, Global Sector Development, Technology, DHL Supply Chain, said, “At DHL, we’re helping our customers get ahead of the competition by working with them to harness the wealth of data information from across their businesses, allowing us to develop smarter supply chain solutions that factor in their wider business operations. For our technology customers, we use data analytics to predict what’s going on in the supply chain, such as what products are in high demand, so we can tailor our solutions accordingly.”

While supply chain analytics technologies and tools have come a long way in the last few years, integrating them into the enterprise is still far from easy. Companies typically progress through several stages of maturity as they adopt these technologies. The descriptive supply chain stage uses information and analytics systems to capture and present data in a way that helps managers understand what is happening.

Descriptive tools have been effective in helping companies cut costs and eliminate waste in their supply chains, but leading companies are moving beyond the descriptive phase towards a more predictive supply chain. The predictive supply chain allows companies to start to sense and shape demand, streamline networks, improve agility and responsiveness. Essentially, the predictive supply chain is a vital underpinning of a re-imagined, predictive enterprise.

Gary Keatings, Vice President Global Solutions Design Center of Excellence and Product Development, DHL Supply Chain, said, “A good way of thinking about the opportunities supply chain data provides is comparing it with the maintenance of cars. Historically, drivers would visit a garage when their vehicle broke down. Then came regular checks to identify problems before they deteriorated. Nowadays, smart vehicles are providing diagnostics in real-time. By working collaboratively with our customers we can help them get up a similar curve in the supply chain context. Through data analysis we can run a diagnostic that identifies existing trends and constraints in the supply chain, and use it to predict future pain points or failures caused by shifting demand patterns. Through better prediction of demand we have seen companies successfully cut 20 to 30 per cent out of inventory, depending on the industry, while increasing the average fill rate by 3 to 7 percentage points.

“We also ensure our customers stay ahead of the competition by future-proofing their business. Resilience360 is a tool that sits at the heart of DHL’s risk response control tower, allowing our customers to assess critical hot spots in their supply chains, visualize them and build a risk profile to initiate potential mitigation activities. The tool also helps businesses integrate data mining along with other descriptive and predictive analytics into their supply chain. Analyzing supply chain and sales data, with the help of Resilience360, can inform production schedules, marketing budgets, inventory positions and other key operations to intelligently give information on when to back off in one area and ramp up in another.”

You can download the “The predictive enterprise: Where data science meets supply chain” white paper here: dhl.com/predictive.

Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.