Having the Right Logistics Analytics Can Make or Break Your Operation

Published : July 26, 2016

Having the right analytics can make or break your logistics

A solid strategy may be the roadmap to success, but unless those roads are well-defined, you're heading nowhere in a hurry. If your supply chain performance hinges on following a set strategy, logistics analytics are a non-negotiable part of reaching your goals. Not only do they help inform your plan as it's being created, the corresponding performance metrics produced throughout various phases are the only true method for accurate course-correction and maximizing benefits. Trusting one's "gut" and the historical performance of past initiatives — yours or a rival's — is helpful, but the uncertainty of these methods is simply too high for comfortable risk-reward ratios.

Analytics Tell the Whole Story

Even if you watch every single order that passes through your fulfillment center like a hawk, you can only attest to what happens inside your warehouse. If you see expertly-sealed boxes and orderly 3PL pickups, it's easy to feel confident that your team is hitting their marks. Factor in end-chain satisfaction scores and reverse logistics analytics, however, and a different picture may emerge. These numbers may reveal that orders are being received with broken components due to poor packing practices or that incomplete orders are far more common than they should be. By "zooming out" through this level of transparency, companies can not only spot negative end-user trends and put a stop to them, they can use analytics success stories as templates for future planning and behaviors. 

Analytics are also immune to the biases that presentations and reports often fall prey to, even if only unconsciously. Numerical data cannot be "spun" in the same way that narrative accounts might be, ensuring that management professionals from the floor level on up are getting an accurate picture of warehouse performance.  No matter how emphatically a member of the planning team may champion a change or cause, analytics provide a neutral decision-making platform that furthers no agenda except company success. This kind of level, unbiased contribution can guide important decisions without damaging team cohesion — a helpful side-effect that shouldn't be underestimated. 

Analytics Uncover Opportunities

No matter how agile your mind may be, it's impossible to consider every single aspect of operational logistics, in depth, at the same time. Conversely, data analytic tools can do just that. Properly compiled and organized, your logistics and supply chain data can clearly point to areas in need of optimization to prevent wastes of effort and research. Data bolsters A/B style testing within the warehouse and helps confirm which pick, pack or ship methods will provide the best results with the least amount of budget allocation. Even base-level logistics analytics can signal when deeper dives are called for. Peaks and valleys can be traced back to their origin, which can, in turn, be minimalized or capitalized on, as appropriate.

Beyond specific behaviors and events, analytics can provide proof-positive reports to bring to the negotiation table, as well. If, for example, your company is considering using another service provider for packing materials, or picking equipment, you can determine to an incredible point of accuracy just how great an impact that downtime from mistakes or delays has on your overall operational success. When explored in depth, the same metrics can offer up a fairly precise dollar point that can be compared to services that are higher in price, but more consistent, ensuring that "leaps of faith" are few and far between in your decision-making process. 

Analytics Are a Must for Forecasting

Science has not yet provided hardworking fulfillment center teams with a way to peer directly into the future, but analytics comes comfortably close. By determining which data markers have historically signaled a rush or lull in business, resources such as staffing or packing materials can be boosted or cut accordingly to prevent unnecessary expenditures or performance-impacting shortfalls. Paying close attention to these data signals can benefit every aspect of warehouse performance, from procurement to outbound logistics. These signals should not become the only aspect driving important decisions, however. Rather, they should influence A-or-B decisions by manifesting a few more points into a pro or con column. 

The right data can also help guide you in competitive grab-it-or-lose-it markets that are often whipped into a frenzy by suppliers eager to clear out inventory or make a fast buck on a trend. Your analytics can tell you a lot about a given supply chain partner, including their likeliness to drop prices or short orders during key periods, allowing your fulfillment team to make sound yes-or-no calls when it's time to reorder popular products or invest in a new item during the initial market crush.

Analytics Put Stakeholders at Ease

As a fulfillment professional who is either out on the warehouse floor each day, or at least intimately familiar with the ebb and flow of traffic there, you have a deeper level of insight than most you’re your company’s operations. Unfortunately, your company's stakeholders — investors, C-suite management members, board members — don't typically have that same boots-on-the-ground view. Metrics help level the playing field by providing a medium that can be used to communicate the performance of your supply chain without needing to explain the nearly endless list of details that are likely beyond the comprehension of an "outsider." With the right numbers in hand, the only thing that will need an in-depth explanation is the range and the implications of where your data falls — a much cleaner and more concise state-of-the-warehouse platform than wading through the details of each and every SKU or process in your warehouse.

Once your baseline performance metrics have been established, your stakeholders will feel more empowered to set defined goals, ensuring mutual comprehension and realistic goal-setting. If you can show a trend for growth in order volume by 2% YOY, for example, it's easier to explain that aggressive, short-term 5%+ growth targets may be unrealistic or even harmful to organic growth. Across a board room table, the language of warehouse operations often clashes or becomes misinterpreted when it meets the language of corporate operations. Solid metric recording and reporting practices give both sides a common ground to discuss their expectations. 

Analytics aren't merely adding functionality and versatility to the supply chain as it stands today; they may be altering it altogether. In an article for Supply Chain Management Review, Bob Trebilcock quotes Raytheon's David Wilkins, who holds that analytics hold the key to adjusting focus from price-centric supply chains stretched over multiple suppliers to compact, data-driven supply chains that are more streamlined and utilize fewer nodes to obtain their stock. Data becomes more precise, easier to obtain, and current as a natural function of recording, and the need to cast wide nets, overstock or stress over a JIT-model may evaporate entirely — or at least become considerably minimalized. While manufacturers and raw sourcing agents may not celebrate the transition with the enthusiasm of end-product sellers, ultimately it translates into more accurate ordering and delivery and, in time, the achievement of that ultimate prize: customer satisfaction. 

To paraphrase a popular 80s song — it's the end of the chain as we know it, but you'll feel fine. Just use analytics to stay in fighting form, and it won't be long before you'll see less agile competitors sliding off your radar. 

Logistics Managers Guide

Topics: Supply Chain Logistics

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