How to Use Data to Monitor Your Supply Chain
The pandemic has shown us how important it is to have a reliable supply chain to keep warehouses and retail shelves stocked during crises. While a portfolio of quality suppliers and a robust physical infrastructure to distribute products may help address supply chain challenges, data can also play a significant role in monitoring issues with the supply chain and ensuring that it runs smoothly.
Use Data to Monitor Demand and Coordinate Supply
Data allows businesses to track shipments in real-time, monitor inventory levels, and assess supplier performance. It helps them use predictive tools to anticipate problems before they arise and avoid significant disruptions. Data also allows businesses to evaluate customer substitution patterns and plan contingency if the most preferred products face supply chain issues. Combining supply chain and customer data can help companies maintain high levels of fulfillment to maintain sales performance and increase customer satisfaction.
The coordination between supply chain, inventory, and customer preference data is crucial for perishable goods because demand-supply mismatch costs are very high. Product shortage can result in permanently lost sales, whereas excess inventory can result in damaged and unsaleable goods. In such cases, data to predict demand more accurately and the information to optimize production levels or shipments can help immensely with fulfillment-based customer satisfaction and optimal inventory through the supply chain.
Data-driven Supplier Monitoring
Another practical use of data is in monitoring supplier performance. For example, businesses have several data sources on suppliers, including invoices, shipments, fulfillment times, pricing terms, damaged goods, and returns. This data can be used to build a supplier classification system based on multiple criteria that can be measured using the available information. Businesses can also use them to create indexes that they can track to gauge changes in supplier performance over time. For example, they can use these indexes to determine the reliability of individual suppliers and use risk management tools to develop a portfolio of suppliers that minimizes disruption risk while maintaining quality.
Businesses can also use comparative and longitudinal data to negotiate better terms with suppliers based on multiple criteria such as purchase volumes or the supplier’s cost of doing business. They can also build service level agreements and negotiate discounts based on missed deliveries, quality levels, or returns.
Data is a powerful tool to manage the supply chain and achieve higher sales and more significant margins while minimizing disruptions.