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All rights reserved.

Supply Chain Analytics: Findings

From the 2015 Gartner CSCO

Study

Noha Tohamy

VP Distinguished Analyst

3 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Gauge the use of different analytics capabilities by maturity level

Understand the drivers for analytics adoption.

Identify the hurdles facing adoption.

Investigate a correlation between analytics usage and ROI.

Determine the supporting analytics talent and technologies.

Goals of The Survey Were To…

4 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Geographic & Industry Breakdown

North America,

58%

Western Europe,

42%

North America Western Europe

18%

13%

9%

19%

12%

19%

12%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

ConsumerProduct Mfg

High TechMfg

HealthcareProviders

IndustrialMfg

(Discrete)

IndustrialMfg

(Process)

LifeSciences

Mfg

Retail

5 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

The Use of Analytics Capabilities

Which of the following types of analytics is used to support supply chain?

79%72%

87%

38%

74%

93%

10%

84%

93%

7%

50%

100%

0%

20%

40%

60%

80%

100%

120%

Low Maturity Average Maturity High Maturity

Descriptive analytics Diagnostic analytics Predictive analytics Prescriptive analytics

Data

Human Input

Decision

PredictiveWhat will happen?

DiagnosticWhy did it happen?

DescriptiveWhat happened?

Prescriptive

What should I do?

Analytics

Action

Decision Automation

Decision Support

6 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.6 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Drivers For Analytics Adoption

7 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

26%

17%16%

11%

9% 8%7% 7%

0%

5%

10%

15%

20%

25%

30%

Analytics willallow us toprovide ourcustomerswith better

service

Analyticshelps/will help

us withefficiency

goals

Analyticsallow us to

work with oursuppliers to

ensure supplyreliability andreduce risk

Analyticshelps/will helpus with speed

to market

Realizationthat analytics

will benecessary

with theadvent of bigdata and the

internet ofthings

Executivedecision toembraceanalytics

Analytics willhelp usmanagedemandvolatility

Inability togenerate

insights fromcurrent data

What are the top 3 factors driving your organization's need for Supply Chain analytics?

Recommendations:

• Align analytics

investments directly to

business priorities.

• Conduct analytics pilots to

demonstrate how

analytics support

business goals.

CSCO‘s Bimodal Role Drives Analytics Investments

8 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

8.5%

8.0%

13.0%

11.0%

6.5%

8.0%

10.0%

16%

18%

24%

15%

16%

17%

20%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Demand forecasting

Factory planning and scheduling

Order promising

Quality management

Sales and operation planning

Transportation management

Warehouse management

Fully AutomatedThe process is fully automated, with no human intervention.

In 5 years Now

Automation In Decision Making Requires Advanced Analytics

Level of human intervention to support the process today and in 5 years

Recommendations:

• Define the level of automation

of decision making by

process

• Hire according to your vision

for automating decision

support

• Work on change

management and

organizational readiness for

future automation

Average now = 9.4% Average in 5 Years = 17.7

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Hurdles Facing Analytics Adoption

10 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Expected Challenges In IT Integration Present Hurdles To Adoption

4%

5%

8%

11%

12%

16%

18%

28%

0% 5% 10% 15% 20% 25% 30%

Business case is not clear

No obstacles are hindering our adoption

Analytics technology is immature or does notmeet requirements

Lack of availability of internal analytics skills

Lack of executive buy-in for using moreadvanced analytics

The quality of the data is viewed as too poor tosupport analytics

Competition with other supply chain projects

Expected challenges with integrating analyticssolutions into back end or enterprise systems

What are the hurdles to adopting supply chain analytics?

Recommendations

• Ensure the availability of

data management & SC IT

resources

• Use successful analytics

pilots to prioritize analytics

projects against other

supply chain initiatives.

11 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Operational Constraints Present Hurdles To Achieving ROI

What are the hurdles to achieving ROI from using analytics?

5%

6%

8%

8%

11%

12%

13%

28%

0% 5% 10% 15% 20% 25% 30%

Analytics tools do not meet functional requirements

User resistance to using analytics in their decisionmaking

Organizational resistance to rely on analytics to fullyautomate supply chain processes

Poor data quality

Learning curve for how to adopt analytics is still steep

Organizational silos that restrict analytics adoptionacross the supply chain

Lack of analytical talent that can build models thataccurately represent and solve supply chain problems

Current operational realities constrain use of analytics Recommendations

• Secure the organization's

willingness and ability to make

analytics-supported operational

changes

• Account for the necessary change

management in building the

business case

• Work with trading partners to

understand and minimize their own

operational constraints

12 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.12 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Correlating Analytics Maturity & ROI

13 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

4%

2%

4%

5%6%

4%

30.0% 30.0%

27.5%

33.5%

29.5%

26.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Improvedasset

utilization

Improvedproduction or

supplyreliability

Shorter ordercycle time

Higherrevenues

Successfulproduct

launches

Improvedcustomer

service level

No ROI High ROI

To what degree have you achieved the following ROI through the

use of analytics?

On average, 29.3% of

organizations indicate that they

have achieved high levels of ROI

On average, 4% of organizations

indicate that they have achieved

no ROIs

The Use of Analytics Aligns With ROIs

14 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Mature Organizations Achieve Higher ROI

Have any of the following High ROIs been achieved through the use of Supply Chain analytics?

21%

24% 24% 24% 24%

21%

32%

30%

28%

33%

28%26%

30%

37%

30%

43% 43%

30%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Improved assetutilization

Improvedproduction/supply

reliability

Shorter order cycletime

Higher revenues Successful productlaunches

Improved customerservice level

Low Maturity Average Maturity High Maturity

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Supporting Talent & Technology

16 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Relying On Internal Talent Requires An Attractive Career Path

How does your organization plan to obtain the necessary Supply Chain analytics

talent to support its needs moving forward?

66%

50%47%

0%

10%

20%

30%

40%

50%

60%

70%

By developing internalresources

By hiring externally By engaging consultantsand/or service providers for

analytics resources

Recommendations

• Work with HR to create well

defined role description and

competency model

• Create a rotational program to

ensure analytics resources

align with business priorities

• Look for candidates from

functions outside of the supply

chain

17 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

More Organizations Rely On In-house Solutions

What is the primary technology that your organization relies on for Supply Chain analytics capabilities?

24%

33%

20%

22%

0%

5%

10%

15%

20%

25%

30%

35%

Analytics capabilities insupply chain

management tools

In house developedsupply chain analytics

tools

Analytics tools that arenot supply chain

specific that is usedacross the organization

Analytics toolsdeveloped by

consulting and serviceproviders

Recommendations

• Leverage existing analytics

capabilities in SCM tools and

enterprise solutions

• Ensure that the in house

developed solutions are

scalable and widely accessible

to all business users.

• Manage functional silo’ed

development initiatives

18 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.18 © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Takeaways & Recommendations

19 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

CSCOs bimodal role, increasing supply chain complexity and need for further automation drive increase in analytics adoption.

There is a significant positive correlation between analytics usage and level of analytics maturity& generated ROI.

Organizations must account for IT integration challenges and operational constraints to build a realistic business case for analytics.

Reliance on in-house talent and technologies requires defining analytical roles and career paths and managing in-house development initiatives.

Key Takeaways

20 CONFIDENTIAL AND PROPRIETARY I © 2015 Gartner, Inc. and/or its affiliates. All rights reserved.

Hype Cycle for Chief Supply Chain Officers, 2015Noha Tohamy (G00277666)

Deconstructing Supply Chain AnalyticsNoha Tohamy (G00276256)

Advanced Supply Chain Analytics: What It Is and Why It's Important to UnderstandNoha Tohamy (G00259516)

The Supply Chain Strategist's Guide to Analytics MaturityNoha Tohamy (G00270929)

Recommended Gartner Research

For more information, stop by Gartner Research Zone.

21

Gartner Supply Chain Executive Conference 2015

23 – 24 September, London, UK

Experience live analyst expertise plus much more at a Gartner event.

Visit gartner.com/events

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