I was taken aback at this recent article in SupplyChainBrain on Supply Chain Optimization in the New Analytics Economy which outlined five analytics-enabled objectives which did not include strategic sourcing decision optimization, which is the next logical step in the sequence. Consider the objectives:
- Supply Chain Visibility
Step one is to understand how much the supply chain is costing you.
- Demand Forecasting and Inventory Optimization
Step two is to segment the supply chain, forecast demand, and then optimize inventory for each segment.
- Network Optimization
Step three is to periodically perform TCO assessments on the different segments of the existing supply chain network to identify the optimal performance configuration.
- Predictive Asset Maintenance
Step four is to perform preventative maintenance to minimize downtime and maximize uptime.
- Spend Analytics
Step five is to understand how much is being spent on each procurement category and identify those with the most savings opportunities.
The next natural step is:
- Strategic Sourcing Decision Optimization
Once the categories with the biggest savings opportunities are identified, it’s time to optimally source them so the overall TCO is minimized and the utilization of the current networks, optimized in step three, is maximized.
How could you possibly stop at step five?