Nov 22, 2023

The future is approaching fast, and companies need to prepare for the unpredictable nature that is supply chain management. With a volatile economy and uncertainties about supply and demand, making the right decisions requires a different technological approach. So what is the solution? Implementing predictive analytics.

What exactly is predictive analytics? The process anticipates future results based on previous information using data, statistical algorithms, and machine learning. The goal is to offer the most accurate prediction of future occurrences, rather than merely understanding past events of one’s supply chain. Predictive analytics has become increasingly important in various industries, especially in manufacturing, distribution, and transportation. It can aid organizations in keeping up with supply chain management with items such as inventory control, warehouse organization, and deliveries.

Related: Are You Stuck in a Fragmented Supply Chain?

Predictive analytics have been around for a while, yet more companies are beginning to implement their processes. This is due to the shift in more user-friendly technology and tougher economic conditions that are pushing businesses to separate themselves from the competition. We’ll take a closer look at the three areas in particular in which predictive analytics can be deployed for organizational improvement.

1. Upgrade Inventory Management

Inventory management is a very important aspect of supply chain management. There can be significant consequences to a company's bottom line if inventory can’t be handled properly. The traditional method of keeping up with inventory utilizes past sales data and then ordering products accordingly. However, this method is often inaccurate and inconsistent, which can result in a surplus or shortage of inventory. Increased costs and a loss in sales can be detrimental to a business in today’s economy.

Predictive analytics can provide a more accurate way of managing inventory and help companies optimize their supply chain. By analyzing data on customer behavior, sales trends, and other factors, predictive analytics can provide accurate demand forecasts, allowing companies to optimize their inventory levels. This means they can…

• • Reduce the risk of stockouts, minimize excess inventory, and ensure that they always have the right products in stock.
  • Give themselves time to respond to changes in demand more quickly.
  • Adjust their inventory levels in real-time, ensuring that they always have the right products in stock and avoid stockouts and lost sales.
  • Identify slow-moving products and reduce the risk of excess inventory to improve overall profitability.

Having a calculated measure for when there is demand and when there isn’t can dramatically improve one’s supply chain.

2. Boost Warehouse Efficiency

Warehouse efficiency is critical to ensuring that businesses can operate smoothly and meet customers' needs. Predictive analytics technology can help businesses improve operations and become more efficient. One area where predictive analytics can be useful in the warehouse is in order picking and packing processes. Efficient methods for selecting and packaging products can be determined by analyzing data on order quantities, product popularity, and other relevant factors used by businesses. For example, predictive analytics may be able to group orders to minimize travel time or determine the most efficient routes for pickers to take through the warehouse.

In addition to its various applications, this technology can also play a crucial role in optimizing employee scheduling. By leveraging predictive analytics, this system can consider numerous factors such as employee availability, shift preferences, and workload patterns to help shift supervisors create schedules that not only keep the business running smoothly but also maximize productivity and minimize downtime. This level of precision can ensure that there are enough employees on hand to handle peak demand periods, avoid understaffing or overstaffing and that employees are working during the times when they are most productive. Ultimately, this can lead to a more efficient and profitable supply chain system.

3. Level Up Delivery Optimization

Finally, the use of predictive analytics in supply chain management will provide more warehouse companies with a better solution when it comes time for delivery and transportation. The supply chain is very often unpredictable, with uncertainties such as traffic, weather, and unexpected changes in supply or demand. Predictive analytics can help companies better understand these uncertainties and proactively plan for them. This information can be used to optimize delivery routes, choose the best mode of transportation, and allocate resources effectively.

Looking more closely at how shipping and transportation can be better impacted by predictive analytics, companies can look to these three areas of improvement:

1. On-time delivery –One of the key benefits of using predictive analytics for delivery optimization is the ability to improve the performance of when deliverables arrive. These supply chain tools can help companies accurately forecast demand and adjust delivery schedules accordingly, ensuring that products are delivered to customers on time. With more consumers wanting their purchased items faster and with better insight on delivery updates, the usage of predictive analytics can be incredibly important.
2. Transportation costs – Predictive analytics can help companies cut costs as well. By optimizing delivery routes and choosing the most cost-effective mode of transportation, companies can minimize how much they spend on transportation. Predictive analytics tools can also identify opportunities for consolidation, allowing companies to combine multiple deliveries into a single delivery to maximize efficiency.
3. Customer Satisfaction – Improving customer satisfaction is a major factor in supply chain management. By optimizing delivery schedules and proactively communicating with customers about any potential delays or disruptions, companies can improve customer satisfaction and loyalty. Predictive analytics can also help companies identify areas for improvement in the delivery process, such as optimizing packaging or improving the quality of the delivery experience.

Wrap Up Supply Chain Management with Predictive Analytics

In the current economic landscape, where competition is fierce and margins are slim, it is imperative for companies to invest in tools and technologies that enable their employees to make informed decisions based on data. Predictive analytics is just one solution that can help companies prepare for the future of their supply chain processes. At Heartland, we believe in ourselves as efficiency strategists. We’re ready to create a plan that can help your company exceed supply chain expectations. Contact our team of experts to see how Heartland can create a solution tailored to your needs.