To compete, innovate, and scale successfully, executives need to see beyond what is happening right now in their industry. Future answers lie in the data.
It is true that data will supply the information needed; however, aggregating thousands of data points without knowing what to look for can be like a wild goose chase. It is critical that executives in all parts of the supply chain lay the groundwork and acquire the tools necessary to analyze and strategically act upon existing financial data.
Predictive analytics ─ the process of extracting data to predict trends and behavior patterns ─ provides a wealth of information about current supply chain and market conditions, as well as areas prone to risk or prime for cost savings and cash flow optimization. To harness the full potential of predictive analytics, supply chain and procurement leaders need the dual support of a business foundation and a technology foundation.
In order to take the first step toward implementing a business plan that will accelerate growth through the use of analytics, answer these three crucial questions:
What is holding up growth?
Predictive analytics gives businesses the ability to see around corners and uncover potential opportunities as well as potential challenges. Too often, however, “enterprise inertia,” or an organization’s unwillingness to change over to emerging technologies, slows the adoption process. Yet, 94 percent of CEOs are unhappy with their enterprise’s innovative performance. Creativity and innovation should be the springboard to looking at predictive analytics, which requires not only a mindset shift, but a fact-based approach to business planning. Analytics provide the facts.
Additionally, knowledge acquisition about technologies and potential outcomes allows executives to make informed decisions about the best solutions that will harvest the most effective analytics. The best way to tap in to those resources is for departments to communicate across the enterprise. The Accounts Payable department, for example, is in a key position to track and report on revenue flowing into and out of the company. The B2B payment data collected through cloud-based solutions reveals an organization’s cash flow and security by tracking both invoices and purchase orders through every step of the process. Working interdepartmentally, companies can integrate tangible proof-points from the past into their future planning.
What are our goals?
Companies must have a plan in place that outlines the goals they wish to achieve, both short-term and long-term. These business goals do not have to be set in stone, but they will inform how the predictive analytics can be used in forecasting future plans. For example, a company’s data may show that the prices for raw material needed to manufacture their products are going down in the short-term. Using predictive analytics, executives can use this information to adjust their procurement decisions. Digitization and the knowledge acquired through analytics enable even the largest companies to make swift gains, if they know how to take advantage of these lower costs.
Companies must also have a proper tech infrastructure in place in order to handle the data that will be analyzed. However, technology doesn’t have to be the limiting factor in moving forward with a plan of action. The right cloud-based solution can accommodate and bolster existing technology platforms.
How do we get started?
Many companies are slow to delve into the solutions that will capture analytics because of the perceived complexity. In fact, these solutions simplify not only B2B processes but the reports that result and the management of data. The key is to start small; it doesn’t have to be a big initiative out of the gate. Take a look at the accounts payable function, for example, and evaluate how e-invoicing can provide visibility into spend and cash flow. Once you demonstrate success, you can scale from there.
Take three simple steps to get going on the road to predictive analytics:
- Experiment with smaller initiatives
- Evaluate what worked and what did not
- Scale along the solutions that were successful
Supply chain and procurement leaders who embrace predictive analytics can advance decision-making skills and gain the ability to guide, optimize, and automate decisions to meet specific business goals and redefine organizational processes in real-time. Predictive analytics can also be used for determining events or outcomes before they happen – this is critical if companies intend to stay one step ahead of the industry and the competition. Armed with the detailed, actionable insight from data, business leaders can spend more time on growing their companies and looking for new ways to innovate.