B U S IN E S S DE C I S I O N -M A K I NG
this case, network optimization uses
true market quotes rather than approximated lane and warehousing costs. In
many cases, it uncovers hidden market
potential (see Figure 4). The benefits for
sourcing transport and warehousing together with simultaneous supply network
optimization are often in the range of 10
percent to 15 percent.
Component choice. When the production process is flexible, such as if raw
materials vary or different formulations
can be used to arrive at the same result,
optimization can help determine the most
cost-efficient way to make products. This
is especially useful if costs for raw components are volatile, and different vendors
can supply materials of various quality and
resulting costs. Optimization projects that
explore production flexibility can minimize
total costs of goods sold by 1 percent to 3
percent on raw material purchasing.
WEAVING ANALYTICS INTO THE
FABRIC OF BUSINESS
Developing sophisticated models
is impractical if business stakeholders
don’t use them. Gaining their buy-in is
vital. To capture incremental business
benefits on a regular basis, analytical
solutions must be institutionalized and
incorporated into daily decision-making.
Visualization is one way to help stakeholders focus on their KPIs by presenting information in a user-friendly format.
Every analytics project needs a visualization component that reflects insights,
complexities and interdependencies so
that the advanced analytical algorithms
are not perceived as black boxes (see accompanying sidebar story, pages 43-44).
This, in turn, increases trust in the results.
R egardless of market conditions,
forward-thinking players that use analytics perform better than their competitors.
They know that capturing a competitive
advantage requires going beyond ERP upgrades. By bridging the gap between decision-makers and the vast volume of data,
an analytics-driven business transformation can ensure that optimal decisions are
an integral part of every business unit.
Alex Romanenko ([email protected])
leads A.T. Kearney’s Analytics Practice in London,
which develops and delivers analytics-based solutions
in the United Kingdom and around the world.
Alex Artamonov ([email protected]),
a manager with A.T. Kearney, leads supply chain
transformation projects that use analytics to support
strategic and operational decision-making.
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