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Supply Chain Analytics: Part 2

On Day 2 of the SCRC meeting, Tom Holmes and Rob Ciamarra from BiogenIdec provided great insights into the effort, challenges and success factors associated with building a spend management system from the ground up, emphasizing the need for change management, buy-in, return on the investment, and continuous improvement.  The final discussion by Kevin Potts of Emptoris also reinforced many of the points made throughout the conference.

Following the meeting, Tim Fairchild from SAS emphasized how interesting the different viewpoints were.  As you may or may not be aware, SAS’s core competency is in the area of business analytics, and they have developed a set of capabilities in supply chain analytics that span many different areas.  A number of the presenters (including me) referenced Thomas Davenport’s book “Competing on Analytics”.  As a token of appreciation, SAS offered to send all of the participants in the meeting a copy of the book, which is in process.

Traditional supply chain metrics have focused on internally-facing benchmarks, including areas such as “spend under contract”, “touch-less transactions”, “number of suppliers”, or “cost savings and avoidance”.  Logistics metrics may include attributes of delivery, service, inventory performance, or facility utilization.  While all of these metrics certainly have a place in supply chain planning, they may not always be meaningful to other stakeholders in the enterprise, as they may not be directly linked to other measures of enterprise performance.

Increasingly, supply chain organizations are being asked to step up and provide information and metrics that link more directly to enterprise-wide results.  These include the impact of the supply chain on working capital, projected budgets, revenue planning, revenue at risk, and COGS projections.  For example, one executive noted the need to better identify the impact of major currency fluctuations and commodity movements on contract pricing and the associated operating revenue projections.  Most supply chain organizations are not prepared to provide this level of analytic insight. There is a need to develop market intelligence, risk metrics, forward-looking indictors, and trigger points in market condtions as inputs into strategic planning at the enterprise and business unit level.  This may often require a new set of designated roles and responsibilities, resources, and analytic capabilities to drive and support supply chain analysis, partner performance management, and market sector strategies.  This meeting brought to light many of these insights, and we look forward to continued engagement with our corporate partners to further knowledge in this area.