This is the second in a two-part itelligence blog series detailing how new predictive analytics solutions provide companies in the chemical industry with the ability to achieve top business objectives.
Through using analytical tools such as Lumira, a business can look at correlations between vendor pricing and commodities pricing to determine optimal times to buy product. By knowing the lag in time between the commodities pricing change and a vendor pricing change, we are able to optimize the commodity purchase and at the same time minimize inventory-carrying costs. We furthermore can predict what the suppliers pricing change would be (or should be) based on this analysis and determine our overall supplier strategy (single sourcing, multiple sourcing, etc.). We can further augment this purchasing optimization through itelligence’s buyer’s cockpit; thereby enabling bulk purchasing for the enterprise at a lower price. Thus, through combining purchase order into a single order, an organization can optimize the bulk purchase of product, have that product distributed to the appropriate locations, and enable the provisioning of the product at the right time to optimize inventory costs.
Virtual data models within the HANA Live application can also be constructed to be consumed by Lumira to further identify and analyze what these changes in prices will mean to future sales demand and margins. The ability we have in analyzing this data is tremendous. We can analyze past sales history and see what incremental increases on prices have had to overall volume of sales. We also have the capability to become more predictive and pinpointed on what price increases/decreases will have to overall sales margin. Promotional programs and greater alignment of service offerings can be achieved with a better understanding of future pricing impacts. The entire supply chain, from purchasing, to internal logistical operations to sales can be vastly improved through business intelligence applications developed by SAP.
One final requirement in the chemical industry concerning the aforementioned reporting involves the distribution of content. Chemical organizations are typically geographically spread apart and the ability to share information with ease is critical. Through the integration of the business intelligence platform, publishing reports and analytics to the cloud or the enterprise can be refreshed in real time through typical desktop applications such as Microsoft Office or tools in the SAP analytical stack/portfolio. Furthermore, the platform can distribute accurate information from a single data source to the right people at the right time at the right place and in the right format.
The future of the chemical industry will surely be met with additional challenges; some of which we can predict and many of which we cannot. Several of those challenges (such as analyzed by the price of oil in this blog) will undoubtedly arise and require careful thought on overall organization impacts. The business analytical tools provided by SAP and HANA can help address these challenges and provide the opportunity to better run an organization efficiently and profitably.