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Suppliers focused on improving their data analytics

Most suppliers plan to invest in data analytics so they can improve the way they operate and deliver services, according to a new study.

According to a survey of more than 450 representatives of supply chain businesses across a range of sectors, nearly 80% said they view analytics as being either very important or moderately important. Most also said they were intending to "increase their investments in this area". The study was carried out by supply chain trade body the MHI and Deloitte. Most respondents were senior executives.

"Our experience shows that at many companies the supply chain side of the house is a step or two behind the commercial side when it comes to tapping the full power of analytics," the 2014 MHI annual industry report (complete fields for 27-page / 2.42MB PDF) said. "Investing in analytics can help leading companies gain competitive advantage by being more predictive and forward-looking with both external and internal information. This is especially important as supply chains become more expansive and complex. Analytics can help companies tame the complexity and unearth hidden value for the business."

"Analytics can also be a useful tool for reducing costs and improving efficiency - not only as a way to generate short-term savings, but also to support strategic decisions that can make a supply chain network more cost-efficient and agile over the long term," it said.

Suppliers are also prioritising investment in "multichannel fulfilment", according to the report. They want their supply chain to be better aligned and coordinated for serving consumers that "want to shop for what they want, where they want, when they want — and then have all of their purchases delivered seamlessly on a consistent timeline", whether that be in-store, online or through other channels.

However, the report found that efforts to innovate in the supply chain are being inhibited by a lack of skills and a focus on cost cutting.

"Our study showed that cost reduction is still the [number one] concern for many supply chain executives," it said. "Over 70% of respondents across industries say that 'controlling costs' is a top priority. However, that singular focus might now be working against them, limiting investment in essential innovations that are key to long-term growth, performance and efficiency."

"At the same time, companies appear to be under-valuing the strategic importance of investing in new technology areas such as supply chain analytics – and critical capabilities such as supply chain agility and multichannel fulfilment could be getting lost in the shuffle. If a focus on cost reduction prevents a company from adequately investing time, money and effort in other critical areas, it may soon find itself in a downward spiral of declining performance and competitiveness relative to other companies in its industry," the report said.

MHI and Deloitte said that their study had also found that the use of mobile devices and machine-to-machine (M2M) technology within the supply chain was increasing. They said that response times and customer service can be improved if the technology is used effectively. However, suppliers must overcome the challenge of integrating new technology into existing systems, according to the study.

"According to our survey, the biggest challenges are integrating mobile applications with existing infrastructure and across value chain partners," the report said. "Many existing applications were developed for specific uses and do not provide integrated end-to-end solutions that would help drive adoption. However, integration is a common challenge for emerging technologies and is likely to be addressed over time as the ecosystem matures and application providers improve their offerings."

"Looking ahead, it is likely mobile and M2M technologies will produce their greatest value when combined with business analytics. This powerful combination has the potential to enable real-time decision-making and deliver major breakthroughs that could make supply chains far more dynamic and efficient," it said.

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