SUPPLY

CHAIN
ANALYTICS
UNIT II
UNIT II
 SUPPLY CHAIN STRATEGY
 STRATEGIC FIT IN A SUPPLY CHAIN
 SUPPLY CHAIN DRIVERS – FRAMEWORK
 DESCRIPTIVE ANALYTICS IN SCA
 DECISION DOMAINS IN SCA
 DEMAND FORCASTING IN SCA
 CASE STUDY
SUPPLY CHAIN STRATEGY

Supply chain strategy is a comprehensive plan

developed by an organization to manage and
optimize the flow of goods, information, and
resources from suppliers to customers. It
encompasses all the activities involved in
sourcing raw materials, manufacturing products,
and delivering them to the end consumer.
SUPPLY CHAIN STRATEGY
CUSTOMER REQUIREMENT
SUPPLY CHAIN CAPABILITIES ( FACILIES LIKE WARHOUSE ,
MANUFACTURING, DISTRBUTION CENTRES- LOGISTIC FACILITIES)
CENTRLAISED MANUFACTURING
DECENTRALISED MANUFACTURING
ECONOMIES OF SCALE
LOCATIONAL ADVANTAGES
Supply Chain Efficiency vs.
Responsiveness
While supply chain efficiency concentrates on
minimizing costs and maximizing resource
utilization, supply chain responsiveness
emphasizes the ability to react quickly to sudden
changes in the business environment.

Responsive supply chain is characterized by

flexibility, diversification, technology adoption,
and strong partnerships, allowing companies to
adapt to fluctuating market conditions and
customer demands.
SUPPLY CHAIN EFFICINECY
 Supply chain efficiency refers to the ability of a supply chain to
minimize costs and optimize resources while maintaining a level of
service. It focuses on reducing waste, lowering production costs, and
streamlining operations to get the best possible output from the
resources used. Key aspects include:
• Cost Reduction: Minimizing expenses related to production,
transportation, and inventory management.
• Process Optimization: Improving processes to reduce time and effort,
such as through automation or lean manufacturing.
• Inventory Management: Maintaining optimal inventory levels to avoid
overstocking or stockouts, thereby reducing holding costs.

Efficiency is often measured in terms of cost savings, cycle time reduction,

and resource utilization.
Supply chain responsiveness
 Supply chain responsiveness is the ability of a supply chain to
quickly adapt to changes in demand or supply conditions. It
emphasizes flexibility and agility to meet customer needs and
handle disruptions. Key aspects include:
• Speed: How quickly the supply chain can react to changes in
demand or unexpected disruptions.
• Flexibility: The capability to adjust production schedules, order
quantities, and distribution plans based on changing conditions.
• Adaptability: The ability to incorporate feedback and modify
processes or supply chain strategies as needed.

• Responsiveness is often measured by metrics like order fulfillment

lead times, the time to recover from disruptions, and the ability to
meet changing customer demands.
Supply Chain Efficiency vs.
Responsiveness
Balancing efficiency and responsiveness
In practice, businesses need to balance efficiency and responsiveness.
An overly efficient supply chain might reduce costs but struggle to
adapt to sudden changes or spikes in demand. Conversely, a highly
responsive supply chain might be more flexible but could incur higher
costs due to excess inventory or expedited shipping.
Fig no 1 1
Balancing efficiency and responsiveness

Supply chain structure

STRATEGIC FIT AND SUPPLY
CHAIN STRATEGY
you have uncertainty in the demand
and supply. What will you do?

- Discuss
What is a strategic fit in a supply chain?

Strategic fit in supply chain management refers to the

alignment between an organization’s supply chain
capabilities and its overall business strategy. This alignment
ensures that the supply chain supports and enhances the
company’s strategic objectives, such as cost leadership,
product differentiation, or customer responsiveness.
Achieving strategic fit involves making sure that all
elements of the supply chain—sourcing, production,
logistics, and distribution—are designed and operated in a
way that complements the company’s strategic goals.
Achieving Strategic fit

Step 1 : understanding the uncertainty

Step 2 : Understanding the supply chain
Step 3 : Achieving a strategic fit
Understanding the uncertainty
Understanding the Customer and Supply Chain Uncertainty
Quantity of product needed in each lot
Response time customers will tolerate
Variety of products needed
Service level required
Price of the product
Desired rate of innovation in the product

Demand uncertainty – uncertainty of customer demand for a product

Implied demand uncertainty – resulting uncertainty for the supply chain
given the portion of the demand the supply chain must handle and
attributes the customer desires
Understanding the supply chain

Understanding the supply chain capabilities

Supply chain responsiveness is the ability to respond to

Wide ranges of quantities demanded
Meet short lead times
Handle a large variety of products
Build highly innovative products
Meet a very high service level
Understanding the supply chain
Achieving a strategic fit
 Ensure that the degree of supply chain
responsiveness is consistent with the
implied uncertainty
 Assign roles to different stages of the
supply chain that ensure the appropriate
level of responsiveness
 Ensure that all functions maintain
consistent strategies that support the
competitive strategy
SUPPLY CHAIN DRIVERS – FRAMEWORK
SUPPLY CHAIN DRIVERS

 Facilities
 Inventory
 Transportation
 Production
 Sourcing
 Pricing
 Information
SUPPLY CHAIN DRIVERS
 Facilities: These are the physical locations where products are manufactured, stored,
or distributed. They include factories, warehouses, and distribution centers. The
design and location of facilities impact the efficiency of the supply chain. For example,
having manufacturing plants closer to major markets can reduce transportation costs
and lead times.
 Inventory: This refers to the raw materials, work-in-progress, and finished goods held
by a company. Managing inventory levels is crucial because it affects service levels,
carrying costs, and production schedules. High inventory levels might reduce
stockouts but increase holding costs, while low inventory levels can lead to stockouts
and lost sales.
 Transportation: This involves the movement of goods between facilities and to
customers. It encompasses the choice of transportation modes (e.g., truck, rail, air,
sea), routes, and carriers. Effective transportation management ensures timely
delivery of products and helps minimize costs while maintaining service quality.
SUPPLY CHAIN DRIVERS
  Production: This is the process of converting raw materials into finished
goods. It includes manufacturing methods, production scheduling, and capacity
planning. Efficient production processes can lead to lower costs, higher quality
products, and better responsiveness to customer demand.
  Sourcing: Sourcing involves finding and managing suppliers who provide the
necessary raw materials, components, or services. Effective sourcing strategies
ensure the availability of quality inputs at the right price and time. It includes
activities such as supplier selection, negotiation, and relationship management.
  Pricing: Pricing strategies affect demand and profitability. They involve setting
the price of products based on factors such as production costs, market
conditions, and competition. Pricing decisions also influence inventory levels,
customer demand, and overall supply chain performance.
Facility-related metrics
Capacity Utilization Processing
Setup/down/Idle time
Production cost per unit
Quality losses
Theoretical flow / cycle time of production
Actual average flow /cycle time
Flow time efficiency
Product variety / Service level
SCA – Types
What is Descriptive Analytics?
Descriptive analytics is one of the foundational aspects of data analytics that
transforms raw data into easily understood patterns, trends, and insights. It’s
a prime example of data aggregation that uses business intelligence and data
science. This analytics process focuses on giving decision-makers an
overview of historical data and an understanding of how certain events or
actions unfolded.

In supply chain analytics, it helps organizations track performance

metrics, identify trends, and gain insights into operational
efficiency. By examining past sales, inventory levels, and delivery
times, companies can make informed decisions to optimize their
supply chain processes.
 DESCRIPTIVE ANALYTICS IN SCA
1. Historical Data Analysis
• Sales Data Analysis: Examining past sales data to identify trends,
seasonality, and demand patterns. This helps in forecasting future demand
and adjusting inventory levels.
• Inventory Analysis: Tracking historical inventory levels to understand
turnover rates, stockouts, and overstock situations. This informs inventory
management practices.
2. Performance Metrics Reporting
• KPI Tracking: Monitoring key performance indicators (KPIs) such as order
fulfillment rates, lead times, and supply chain costs. Descriptive analytics
helps visualize these metrics through dashboards and reports.
• Supplier Performance: Analyzing historical data on supplier delivery times,
quality, and costs to evaluate and compare supplier performance.
 DESCRIPTIVE ANALYTICS IN SCA
3. Operational Efficiency
• Process Analysis: Reviewing past operational processes to identify
bottlenecks, inefficiencies, and areas for improvement. This includes
analyzing order processing times, production cycle times, and transportation
efficiency.
• Cost Analysis: Assessing historical cost data to understand cost structures,
identify cost-saving opportunities, and optimize resource allocation.
4. Demand and Supply Patterns
• Demand Patterns: Studying past demand data to understand consumption
patterns, peak periods, and customer preferences. This helps in better
demand forecasting and planning.
• Supply Patterns: Analyzing supply data to understand supplier delivery
trends, lead times, and any disruptions in the supply chain.
DESCRIPTIVE ANALYTICS IN
SCA
5. Customer Insights
• Customer Behavior: Analyzing customer purchase history and behavior
to segment customers, personalize marketing efforts, and improve
customer service.
• Order History: Reviewing historical order data to identify purchasing
trends and preferences, which can guide product offerings and inventory
strategies.
6. Logistics and Transportation Analysis
• Shipping Data: Examining historical shipping data to evaluate
transportation costs, delivery times, and route efficiency. This helps in
optimizing logistics strategies and reducing transportation expenses.
• Fleet Management: Analyzing vehicle usage, maintenance records, and
route efficiency to improve fleet management and operational efficiency
DESCRIPTIVE ANALYTICS IN SCA
7. Risk Management
• Risk Identification: Reviewing past disruptions, delays, and issues to
identify potential risks and vulnerabilities in the supply chain. This helps in
developing strategies to mitigate future risks.
• Impact Analysis: Assessing the impact of past disruptions on overall supply
chain performance to understand their effects and plan for contingencies.
8. Data Visualization and Reporting
• Dashboards and Reports: Creating visualizations and reports that
aggregate historical data into easy-to-understand formats, such as charts
and graphs. This aids in data interpretation and decision-making.
• Trend Analysis: Using visual tools to highlight trends and patterns in
historical data, making it easier to spot anomalies and opportunities.
Example
Descriptive analytics can also be used to identify trends in customer
preference and behavior and make assumptions about the demand for
specific products or services.

Streaming provider Netflix’s trend identification provides an excellent

use case for descriptive analytics. Netflix’s team—which has a track record
of being heavily data-driven—gathers data on users’ in-platform behavior.
They analyze this data to determine which TV series and movies are
trending at any given time and list trending titles in a section of the
platform’s home screen.

Source : [Link]
Data Visualisation Techniques
Data mining – Split the data into useful
patterns
Visualization tools – Drag and drop
interface
Charts and Graphs
Dashboards
Decision domains in supply chain analytics

Demand Forecasting fluctuations in demand  Implementing inventory

and Planning: patterns. replenishment strategies:
Ensuring timely and efficient
 Predicting future demand: Inventory replenishment of stock.
Using historical data, market Optimization:
trends, and external factors to
 Determining optimal stock
anticipate customer needs.
levels: Finding the right balance
 Optimizing inventory levels: between holding costs and
Balancing supply and demand stockout risks.
to minimize stockouts and
 Managing inventory allocation:
excess inventory.
Assigning products to different
 Managing seasonality and locations based on demand and
variability: Addressing supply.
Decision Domains
Transportation and Logistics:  Evaluating supplier performance: Assessing
 suppliers based on metrics like delivery time,
Optimizing transportation routes: Identifying
quality, and cost.
the most efficient routes to minimize costs
and delivery times.  Identifying underperforming suppliers:
 Identifying suppliers that are not meeting
Managing transportation modes: Selecting
expectations.
the appropriate mode of transportation (e.g.,
truck, rail, air, sea) based on factors like cost,  Improving supplier relationships: Building
speed, and capacity. stronger partnerships with suppliers through
 collaboration and communication.
Improving transportation efficiency:
Reducing transportation costs through load
consolidation, route optimization, and
technology adoption.

Supplier Performance Management:

Decision Domains in SCA
Network Design and Risk Management:
Optimization:  Identifying potential risks: Identifying
 Designing efficient supply chain risks such as natural disasters, supply
networks: Determining the optimal chain disruptions, and quality issues.
locations for facilities (e.g., warehouses,
 Developing contingency plans: Creating
distribution centers) to minimize costs
plans to mitigate the impact of potential
and improve responsiveness.
risks.
 Analyzing facility utilization: Assessing
 Monitoring and managing risks:
the capacity and efficiency of existing
Continuously monitoring the supply
facilities.
chain environment for emerging risks.
 Evaluating supply chain resilience:
Assessing the ability of the supply chain
to withstand disruptions.
Decision Domains in SCA
Sustainability and Corporate Social Responsibility:
 Measuring and reducing environmental impact: Assessing the environmental footprint of
the supply chain and implementing measures to reduce it.

 Ensuring ethical sourcing: Ensuring that suppliers adhere to ethical standards and labor
practices.

 Promoting sustainability initiatives: Supporting sustainable practices throughout the

supply chain.
 Demand forecasting with ML
algorithms
 Instead of relying on gut feelings or historical trends alone, companies can leverage data
from diverse sources to predict future demand with greater accuracy.
 Data from various sources like
 Point-of-sale systems,
 Customer relationship management (CRM) systems, INTEGRATED INTO A CENTRALIZED
PLATFORM
 Weather data
 Social media, and
 Economic indicators
 This allows for a comprehensive view of past and present demand patterns.
 Machine learning algorithms, flexible forecasting.
 Statistical modeling, and
 Predictive analytics are applied to the integrated data to identify trends, seasonality, and other
factors influencing demand. This helps create more accurate forecasts.
 Different scenarios, like economic downturns, competitor actions, or new product
launches, are modeled to assess their potential impact on demand. This allows for more
robust and flexible forecasting. The forecasts are constantly monitored and adjusted
based on real-time data, ensuring they remain accurate and responsive to changing
Further marketng
Readi conditions.
[Link]
Demand sensing using social media and
external data
Real-time information from various sources to improve demand forecasting
accuracy and responsiveness.

Collecting data from social

media, search trends, news,
NLP & ML Pocessing
weather forecasts, and
economic indicators,

Real time Forecast

Machine Learning Methods
 Univariate vs Multivariate Time Series
 Random Forest Regression
 XGBoost : decision-tree-based ensemble machine learning algorithm is
XGBoost,

 Store: each store has a unique ID.

 StoreType: four different store types: a, b, c, d.
 Assortment: describes an assortment level: a = basic, b = extra, c =
extended.
 Competition Distance: distance in metres to the nearest competitor store.
 Competition Open Since[Month/Year]: the month and year when the
nearest competitor was opened.
 Promo2: a promotion for some stores: (0 = not participating, 1 =
participating)
Random Forest Regression