Decision Management Systems Effectively Apply Analytics in Supply Chains

Here is an excerpt from our Decision Management Systems Platform Technologies Report on Supply Chain Management:

Decision Management Systems are just beginning to penetrate supply chain management. There is tremendous potential for Decision Management Systems in this area, particular as organizations look for ways to bring predictive analytics to bear on their supply chain. By focusing predictive analytics on specific orders or shipments, Decision Management Systems make it possible to effectively apply more advanced analytics even in very complex supply chains. Many examples exist despite a low overall penetration rate.

Eligible supplier

One of the most basic use cases for Decision Management Systems in the supply chain is that of determining eligible suppliers. For organizations with large numbers of suppliers, especially for those where commodity products are sourced from many competing suppliers, the automated determination of eligible suppliers can be a big time and cost saver. Allowing organizations to determine for themselves if they could become a supplier and allowing each country or product line to add its own additional criteria for eligibility are additional reasons for using a rules-based approach to determine eligibility in a flexible way.

Best supplier selection

While supplier eligibility can be made more efficient using a Decision Management System, it is also possible to become more effective in the use of suppliers by automating the selection of the most appropriate for a given order. Using both eligibility rules and predictive analytics that show the likelihood of on-time and to-specification deliveries for example can create a system that automatically selects suppliers based on the right balance of cost, speed and quality given the circumstances of the order. Such systems improve straight through processing, reducing the need for human involvement in increasingly complex supply chains.

Routing and Shipping Selection

As supply chains become more complex and distributed, it is also increasingly hard to know how to route a delivery or what shipping mechanism to use. When those shipping the order are not those paying for it, as is often the case when many small manufacturers are tied into a global supply chain, real-time determination of the right thing to do is essential. A Decision Management System can apply best practices, policy, short-term deals offered by shippers, current traffic problems and more to come up with the best shipping option and the best routing, reducing costs throughout the supply chain.

Reorder levels and alerting

While many supply chain systems have automated thresholds for re-ordering or for alerting a user that stock is low, these are often simplistic. The reality of a modern supply chain is that the amount of stock, and where that stock should be, is highly variable. It can depend on the season, on trends in sales, on competitive behavior, on marketing campaigns and much more. Using a Decision Management System allows multiple sources of rules to be applied to the decision, allows the integration of predictions and forecasts, and supports short-term adjustments and “tweaks” as necessary.