Why analytics is eating the supply chain

Why analytics is eating the supply chain

A peculiar thing happens in northern Florida every year in the springtime. That's harvest season on the many fern farms scattered across the region, and it's also the time when demand for rattlesnake antivenom skyrockets there.

That's no coincidence. Rattlesnakes like to form dens under fern crops. That means trouble for those who harvest the plants, and it puts urgent pressure on local hospitals and healthcare providers, which must come up with the highly perishable antivenom on demand.

"A lot of times you never really know how much you're going to need," said Kyle Pudenz, senior director of purchasing for pharmaceutical wholesaler H. D. Smith. "But you also can't stock up and leave it on the shelf."

It's a classic problem in the world of supply-chain planning, and today analytics tools are opening up new ways to solve it.

For H. D. Smith, an analytics platform from FusionOps is bringing new visibility to the supply chain, enabling the wholesaler to better anticipate and meet demand and offer service levels it couldn't have previously.

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With data dispersed across multiple subsidiaries and storage products, the team at H. D. Smith found that getting everything in one place for analysis was a time-consuming challenge.

"I was spending a lot of weekends trying to pull data out to see what the current situation was," Pudenz said. "By the time I could access it, things had changed."

The supply-chain team was using Microsoft's Access and Excel tools for analysis: "That was the only way they could get the data in one place," said David Guzman, the company's CIO.

Following pilot tests in the fall of 2013, H. D. Smith began rolling out FusionOps a few months later. With modules for procurement, finance, inventory, sales, production planning and customer service, FusionOps recently gained prescriptive analytics as well, enabling users to simulate different scenarios for a better understanding of the pros and cons of alternative decisions.

Among the benefits for H. D. Smith has been better insight into service exceptions, or those times when a customer wanted a product but H. D. Smith couldn't supply it.

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Today, team members create dashboards every morning to guide their efforts for the day. "We can slice and dice the data as needed," Pudenz explained.

FusionOps' proactive capabilities have also changed the way H. D. Smith understands and anticipates demand. Say the company sells 500 units of a particular product in a single order every 10 weeks, for example.

A traditional approach would probably dictate that it should keep 50 units on average in stock every week.

"You never have enough to fill the account the one time they order, and the rest of the time, you have more than you need," Pudenz explained.

By segmenting its stock according to demand and other characteristics and focusing on high-value, high-volume and high-urgency items like that rattlesnake antivenom, H. D. Smith can now keep its inventory better aligned with what it will actually sell and when.

"We've achieved an actual reduction in inventory on hand and an improvement in service levels," said Guzman. "Those are the holy grails of supply chain."

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Bottom line: H. D.

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