Business Analytics Applications

Session - 1

Rajesh Ray

1
Time Schedule
Day 1

Introduction (30 Mins)

 Trainer and Trainee Introduction and Class Purpose (10 Mins)
 Understanding Business Analytics Domains (10 Min)
 Business Analytics Evolution - Descriptive and Predictive Analytics (5 Min)
 Analytics Maturity of an organization (5 Min)

Supply Chain Analytics (60 Mins)

 Introducing SCOR (10 Mins)
 Procurement / Sourcing Analytics (15 Min)
 Logistics Analytics (15 Min)
 Warehousing Analytics (5 Mins)
 Transportation Analytics (5 Mins)
 Manufacturing Analytics (5 Min)
 Quality Analytics (5 Min)

Q&A 2
Understanding Business Analytics Domains

Process Area Industry Approach Next Gen

Supply Chain Retail • Descriptive • Green / Sustainability

• Procurement • Assortment • Predictive • Risk
• Warehousing • Merchandising
• Social Media • Resiliency
• Transport • Point of Sale
• Category
• Structured • Flexibility
• Manufacturing

Marketing Consumer Goods • Unstructured • Adaptability

• Brand • Trade Promotion • Text • Innovation
• Promotion & Advertising • B2C Commerce • Video
• Pricing • Direct Store Delivery
• Web
• Customer Automobile • Big Data
Human Resource • Warranty
• Employee Performance Telecom
• Recruitment • Average Return Per User
Finance • Churn Rate
• Budget Electricity Distribution
• Cost and Spend • Network Load
Business Analytics Evolution

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Descriptive and Predictive Analytics

5
Analytics Maturity of an Organization

6
Domain Analytics

Supply Chain Marketing HR Finance

SCOR
SCOR defines five supply chain processes
Level 1 “SCOR card” metrics provide a balanced
characterization of overall SCM performance
Customer-Facing Internal-Facing

SCOR Level 1
Supply-Chain Management Metrics Delivery Flexibility and Cost Assets
Performance/ Responsiveness
Quality

Delivery performance 3
% Optimum Inventory 3
Perfect order fulfillment 3
Time to Deliver 3
Upside Supply Chain Flexibility 3
Upside Supply Chain Adaptability 3
Downside Supply Chain Adaptability 3
Total supply-chain management Cost 3
Value-added Employee Productivity 3
Cash-to-Cash Cycle Time 3
Inventory days of supply 3
Return on Supply Chain Fixed Assets 3
Transportation Analytics
Key KPIs Impacted
Rate Optimization (Contact
Mgmt.)

Route Optimization (Minimize

Travel Distance)
Cost Optimization • Inbound Freight Cost as % of Purchase (BIC – 0.9%)
Load Optimization (Better
• Outbound Freight Cost as % of gross sales (BIC – 1.5%)
Utilization of Carrier Space)
• Expedited transportation as a % of total transport cost (BIC – 3.5%)
Empty Mile Optimization (Min
Empty Mile Travel / Better
Inbound Outbound Pairing
Transport Cost and
Service Optimization Penalty / Demurrage Reduction

Premium Freight Reduction

On Time Delivery

• % Ontime Shipments (BIC – 99.87%)

Customer Complaint Handling
Service Optimization • % Customer Resolution Time Improvement (BIC – X Hours)

Better Visibility

Green Transport (CO2

Reduction)
Warehouse Analytics
Key KPIs Impacted
Improved Productivity

• Pallets Per Labour Hour (BIC – 130)

Higher Automation
• Warehouse Capacity Utilization % (Average, Peak) (BIC – 92.8%, 100%)
Cost Optimization
(Productivity Levers)
Better Utilization of
Warehouse Space

Inventory Optimization for

• Finished Goods Inventory Turn (BIC – 8)
Cost Optimization Finished Goods
• Raw Materials Inventory Turn (BIC – 5.75)
Warehouse Cost and (Inventory Levers) Inventory Optimization for
• Engineering Spares Inventory Turn (BIC – 2)
Service Optimization Raw Materials / Spares

Order Fulfillment
• % Ontime Shipments (BIC – 99.87%)
• Total Order Cycle Time (BIC – 7 Hours)
Error Free Order Picking • % Order Picking Accuracy (BIC – 88.84%)
Best In Class Service • % of Back Orders as % of Total Order (BIC – 0.5%)
Stock Availability for Orders • % of Back Orders as % of Total Order (BIC – 0.5%)
• % Of cases of Perfect Order Fulfilled as part of total order (BIC – 91%)
Perfect Order Performance
Procurement Analytics

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Procurement Analytics – Different Domains

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How Procurement Analytics Role fit in the Organization

15
Supplier Payment Terms optimization helps organizations in increasing their working capital, and
reduction in cost of capital with optimal usage of standard payment terms
Background Our Solution
In these rapidly changing times, managing Loss in cost of capital
/ Working Capital due to early payments is becoming
increasingly challenging.
Usage of Non Standard pay Terms & Non compliance to
contracted Pay terms, delay in Payment Cycle Time cannot be
efficiently identified leading to missed discount opportunities.

Opportunity
• Lack of visibility into the payment patterns, which vendors are
paid early, On-time or late
• Compliance to the Contracted payment terms
• Overall Discounts accrued and missed discount opportunities
• Loss in cost of capital / Working Capital due to early payments Target Audience Estimated Cost Deliverable
• Penalty paid due to late payments Payment Pattern Overview, Discount
CPOs, CFOs Opportunity reports, Working Capital
• Usage of Non Standard payment Terms optimization report
Supplier Payment Term Optimization (SPTO) can help Watson Analytics Dashboard
organizations identifying payment patterns, compliance and
Time to Deliver Estimated Benefit Going Beyond
implement optimal usage of standard payment terms.
• Working Capital savings Use Watson Cognitive
of 0.1%* tools
Compliance Analytics solution enables organizations in the process of monitoring and analyzing
process compliance & plugging savings leakage
Background Our Solution
Identify best opportunities for improvement, indicate action
areas and track the results Quantify the effect of non-
compliance on procurement cost and efficiency.

Analytics solution enables organizations in the process of

monitoring and analyzing process compliance & plugging
savings leakage

Opportunity
Lack of visibility into procurement process, procurement
team often have questions on
• Is spend in right system?
• Is spend flowing in right sequence?
• Is spend flowing to preferred suppliers?
• Is contract pricing reflected in PO & on Invoices? Target Audience Estimated Cost Deliverable
• How do I identify any Non Compliance in the process? Insights that enable clients to take
CFO’s, CPO’s specific actions to address control
• What is the process and actions required to increase process
compliance and efficiency ? gaps.
• What is the policy changes and governance required to Time to Deliver Estimated Benefit Going Beyond
increase PO spend, process compliance, contract usage,
electronic catalogue and compliance and reduction in fraud ~2-3weeks Increased Process Use Watson cognitive
and Spend Leakage? Compliance and tools
effectiveness
Logistics Analytics

Visibility & Performance Management

Freight Spend Analysis

Network planning

Route Optimization

Lean Warehousing

Fleet Management
Visibility & Performance Management solution enables organizations to develop logistics
carrier performance scorecard & metrics
Business Challenge Typical data needed

 To develop, standardize and harmonize the key metrics and KPIs for logistics No of shipment arrivals within agreed time, total no of
carriers. shipments for a period, no of irregular or abnormal orders,
Approach total no of orders for a period, total actual volume loaded, total
volume available for transport, units discrepancy in inventory,
 Understand and assess the logistics data on a transaction level. units estimated, freight cost (inbound and outbound) for a
 Prepare following metrics basis the data available period, No of pickups made on time
1. Arrival Precision – To secure the receiving/loading process
(Total No of shipment arrivals within agreed time windows) / Results
(Total No of shipment arrivals)
2. No of Incidents – To ensure that the goods are properly handled &  Better visibility and management of logistics carrier
minimize production disturbances performance.
(Total No of orders with anomaly) / (Total No of orders)
3. Filling Rate – To measure the efficiency in loading of goods & thus  Timely alerts for logistics carrier’s performance for a period to
reduce the cots and environmental impact take corrective actions.
(Total volume loaded on transport equipment) / (Total volume
available on transport equipment)
4. Stock Accuracy – To secure proper process for handling units  Better monitoring of logistics network and creation of value
within a warehouse/logistic centre added reports.
(Total stock units discrepancy in inventory) /
(Total stock units estimated)
5. Freight cost per unit shipped – (Total freight cost) / (Total No of
units shipped per period)
6. Outbound freight cost as % of net sales – (Total outbound
freight cost) / (Total net sales) for a period
7. Inbound freight cost as % of purchases – (Total inbound freight
cost) / (Total purchases made) for a period.
8. On Time pickups – (Total No of pick ups made on time) / (Total No
of shipments in a period).
Freight Spend Analysis solution enables organizations in consolidating company-wide data,
establishing baselines and anchoring strategic sourcing decisions for better logistics
Business Challenge Typical data needed
 To assess, understand and develop an organization wide view Line item details about the product/service, date of
of inbound/outbound freight spend which is comprehensive, purchase, spend amount, spend quantity/volume,
detailed and accurate. vendor names, spend method (contract or one time
by or other method), inbound or outbound freight
 To establish a freight spend baseline against which to measure
type
and compare future freight spends.

Approach Results

 Perform Vendor Normalization  Effective management information and insight

into
 Perform Descriptive Analytics spend.
Analyzing data to gain basic insights from different
dimensions Targeted Analysis to drive deflation exercise
 Highlight data behavior and drivers including
 Highlight data relationship and movement (trend) vendor consolidation.

 Perform Advance Analytics  Enables negotiations with the supply market, and
 ABC analysis to derive critical numbers relevant to drives
business bottom-line savings.
 RFM analysis to cluster vendors with highest impact on
cost  Provides visibility into compliance and helps
 Order Quantity analysis formulate
 Distribution Centre level analysis strategies to increase the same

Provide observations & Recommendations

Network planning solution enables organizations to find a right balance between inventory,
transportation and manufacturing costs
Business Challenge Typical data needed
 To match supply and demand under uncertainty by positioning and Factory/DC & customer location details (origin &
managing inventory effectively. destination), travel time (including waiting time &
layover time), product type
 To utilize resources effectively by sourcing products from the most
appropriate manufacturing facility .
Approach
 Before doing the network planning, one needs to understand the basic need Results
of doing it. There are 3 main needs/purposes for which network planning is
done  Better management of resources, working
1. Complete new set up capital and time by targeting a match
2. Add a new one to the existing set up between supply and demand.
3. Consolidate/Crash the existing set up.
 There are mainly 2 approaches for doing the network planning
 Improved customer service levels.
1. Demand Side– When the warehouse/DC needs to be more close to the
customer location
2. Supply Side– When the warehouse/DC needs to be more close to the
supplier location.
 Assess and evaluate current logistics network
 Design and populate network optimization database
 Create network design alternatives such as fewer or more hierarchies, multi
commodity flows, pooling opportunities, merge-in-transit, direct shipping,
cross docking, supply flow optimization considerations
 Develop network optimization model & Choose the network optimization
tool (IBM ILOG or CPLEX)
 Implement network model in IBM ILOG or CPLEX & Evaluate alternate
network designs
 Compute reconfiguration cost & Make GO/NO GO decision.
Logistics Analytics

22
Manufacturing Analytics

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 Thank You
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