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Analytics Based Optimizations
Analytics & Optimization
Overview
Marketplace
In today’s fast-paced world company strategies have been subjected to constant marketplace change as witnessed over the last 5-10 years during which marketers experienced the Amazon Effect on consumers and the spillover of customer desire for “ease of ordering and fast delivery” expectations onto DTC and B2B. Now we have the “survival” impact of Covid-19 on business revenues and profits. As a result many businesses will be challenged in their efforts to rebuild their revenues quickly and many recovery issues are out of their control. Prior to Covid-19 companies were dealing with what the next five years will be. Thus, questions like “how do I rebuild my revenue and then how do I continue to grow my revenues and operating profits” year over year especially after the impact of Covid-19 and resultant economic conditions.
Transformation
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Actions like right-sizing business operations and adjusting the supply chain are likely to priorities.
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Success may very well depend on implementing a new or much improved distribution and supply chain strategy.
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One that is based upon what is needed for your future state that has strong potential to be good for 5+ years.
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No question, the marketplace will continue to be bombarded with new technology, strategies and tactics along with breakthrough products from company’s looking for greater growth and profits.
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From a strategic viewpoint access to your data at the very most detailed level is critical for future state analytics. Understanding the hidden value in your data attributes enables a company to make better decisions. Your customer attributes and marketplace demographics are also big factors.
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Once your data and marketplace demographics are fully understood, your revised business strategy can be finalized and plans made for implementation.
Overview - Analytics Modeling
E-Commerce
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We recommend analytics also be based upon uncovering your demographic data around each SKU, the profits at the sku level, SKU order-shipment volumes, ship-to geography, seasonality and applicable-definitive marketplace demographics and then build a growth and profit action plan supported by expert modeling.
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We have the right software tools and expertise required for building you limitless scenarios for predictions and optimizing E-Commerce and B2B distribution solutions and the use of another tool for a primarily cost based logistics network optimization and design.
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Note, we believe this type of initiative should involve your company’s chief marketing and supply chain executives as essential project team members. Talk to us, we can show you how to get there.
Supply Chain
Another important initiative would be undertaking supply chain performance improvement(s) to support your strategy.
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This could be re-engineering your existing distribution/fulfillment facilities with automation, better systems (cloud) and improving transportation management effectiveness.
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Assessing new sourcing opportunities considering cost and quality.
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Selecting new systems to support your supply chain from an execution and visibility perspective.
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Evaluate outsourcing some of or all of your distribution to a 3PL, creation of an RFP/RFQ, organize data including volumes, 3PL performance requirements and standards, systems to be deployed, automation and labor requirements.
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We can provide the experts and project management to help you assess your options based upon service level, operations cost, systems, contract terms and conditions and required Capex.
eCommerce Network Optimization
As E-Commerce continues to grow at a remarkable rate, companies are faced with complex new challenges when it comes to reaching consumers and owning the customer. In marketplace transformation manufacturers have avoided channel conflict with their retailers but today they may have little choice but to develop their own E-Commerce platforms to capture additional revenue and profits without an intermediary.
At the same time manufacturers might look first for markets to develop without significantly impacting existing customers. Further, this does not always mean discontinuance of independent channels like Amazon, Walmart and wholesalers or industry specific online channels as this is how the overall marketplace functions.
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One key priority for manufacturers as well as for industry specific distributor channels is all about creating your “right” E-Commerce distribution network.
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More to it than just the selection of “how many and which fulfillment locations” although that alone requires skills and experience as the process should be based on thorough analytics and appropriate assumptions.
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Most companies don’t have enough skilled people or the time nor do they have the right software to accomplish all of the tasks involved. Big Data analytics done right can truly be powerful.
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Modeling for your “right” distribution network should include inventory and order history by sku, volume history by sku and other necessary sku order attributes like order geographic factors.
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Of course, operationally having the correct inventory available, fulfilling orders completely with accuracy and providing order-to-delivery in a speedy manner are what you need to compete. We do the analytics involved so you can do the right planning and execution.
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Transforming your network is an important undertaking that will have a profound effect on your business. You have to make the best decisions … no mistakes.
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We support you and deliver the analytics and network scenario modeling that includes an accurate baseline and a projection of future value via multiple network scenario options for consideration.
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The software tool we utilize for this consulting work is unique:
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We use your historical data, demographics and consider operating margins, distribution and logistics costs including all warehouse expenses like rent & taxes, staffing-labor, and equipment costs.
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We examine trends that will enable predictions of future costs as well.
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We analyze and determine the appropriate marketplace attributes to include in modeling future state scenarios going out 5+ years.
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The work we do on this also has important business forecasting benefits.
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Our cloud based software offers 3 key tools for an E-Commerce strategy:
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Powerful data analytics - Identifies new markets for future growth and new profit opportunities and replicates current supply chain costs, sales, gross profits, product attributes, market population other demographics and adjusts to future costs over a planned period of time all resulting from millions of calculations.
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Conducts SKU level inventory analysis – critical to future planning.
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Key is that modeling is done from invoice line rather than grouping.
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Dynamic Network Modeling – unlimited scenario building “what ifs”.
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Business strategy Risk/Reward – cannot be ignored, scenarios developed to predict impact.
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Supply Chain Network Optimization
Most manufacturing supply chains developed organically over long periods of time and as a matter of course have become less effective and inefficient. Emphasis has been on controlling and reducing certain supply chain costs, today while not minimizing these goals for most companies emphasis is now on service levels, order-to-shipment delivery speed due to convergence with e-Commerce expectations.
Summary of reasons for a network redesign or supply chain optimization analysis are:
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Change in business model, effect of acquisitions and planned organic growth.
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Improve customer service – deliver faster, even on MTO.
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Minimize risk to the supply chain continuity.
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Overall, redesign the supply chain to positively impact revenue and profit:
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Improve logistics performance and cost
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Determine if facilities can be consolidated, reduced and/or repositioned
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Design for improved inventory management
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If applicable, design must consider and meet Omnichannel service requirements.
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Overall, achieve alignment between supply chain strategy, operations and business goals.
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Design supply chain to be able to respond fast to new business opportunities and changing customer requirements - agility and flexibility.
Software Tools - Cloud
The software tools we utilize are designed to model your entire supply chain from end-to-end as shown in the graphic above.
Based upon your historical data we create a baseline to replicate your current supply chain network and your costs for logistics (transportation, freight), manufacturing or production costs, inventory and distribution costs.
Once the baseline is validated then a series of scenarios are created via collaboration with client and are run in the model to project customer service levels and supply chain costs for each potential scenario option.
Expectations from network redesign can be: realignment of manufacturing and distribution footprint, improved customer service, reduced distribution and transportation costs.
More reasons to optimize:
Other Modeling Considerations:
For a change in business strategy that will spring from a transformation or to integrate acquisitions and/or account for anticipation of much stronger growth and improved profits … this process will help you form the roadmap.
If a manufacturer is going through change and adding eCommerce type service B2C to its existing B2B thus moving into serving an expanded customer base with eCommerce like service then we would offer to perform a study to fully understand what your supply chain future state would look like going out 5+ years.
We would perform additional “big data” analytics similar to the detail in our eCommerce Distribution Optimization Section to develop and design the right total solution.
Why perform additional software analytics?
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Most traditional network projects lack future state planning and are not designed for a changing marketplace and may conduct a lot of ad hoc analytics at a high level instead of performing robust analytics.
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If you did a network optimization/ design 5 years ago it would not likely be the network for today’s marketplace.
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5 years from now there will be more change than the last 5 years.
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The Amazon effect is hitting manufacturers, distributors and retailers.
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Technology is moving to cloud solutions providing data visibility up and down the supply chain, freight routing is becoming more of a commodity, and last mile fulfillment is also becoming a commodity.
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All of these changes will drive changes in the distribution network.
Inventory Management & Optimization
We can help you make better inventory strategy decisions. This is about where to stock product, quantities by SKU and when to stock/restock. We conduct in depth analytics including review of KPIs and S&IOP process. We also consider software tools that you can use to support optimization.
Using our analytics skills - “predictive analytics” - we get to the root cause behind your issues enabling us to intelligently consider demand variability, lead time variability, inventory handling and stock costs, and customer service requirements to determine the best inventory policy for replen and determining your safety stock.
Inventory optimization is not a one-time exercise and should be done periodically to adjust to current state for SKUs and for recent supply chain changes
We examine inventory levels to see if it look to be too high:
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Companies often maintain excess inventory to ensure product availability and speedy delivery of smaller orders, considered to be the safe way to avoid out of stocks but maybe not the best overall plan.
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Managing over-stocks requires a constant balancing act between:
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Inventory costs
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Replenishment strategy
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Shipping complete orders
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Fast delivery capability (same day to 2-3 day cycle) is required to meet customer expectations
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Typical challenges we can help you with:
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Managing inventory risk:
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There is the conflict between maximizing sales and controlling costs
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Where to place stock, considerations of inventory in-transit, how much safety stock of “what”.
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Forecasting and scheduling: tactical inventory planning with focus on forecasting and re-forecasting during S&IOP often transportation or shipment planning and other distribution requirements are not considered.
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Periodically examine errors: forecasts can usually always be improved, forecast errors affect safety stock calculations and there is usually too much reliance on safety stock.
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Making the right inventory decisions: holding inventory is a requirement in today’s customer centric market but it has to be the “right inventory”. Review your processes for Best Practices.
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Market environment: we now have to deal with the impact of tariffs, increased consideration of FTZ, scarcity of trained labor and/or shortage of labor in general.
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Technology consideration as:
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Robotics systems that perform repetitive and manual work faster than humans with greater accuracy;
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Systems that capture data automatically and provide visibility.
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Intelligent systems that process information and share actionable data with other software without the need of any human interaction.
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