Traditionally, supply chain optimization has relied on something called a retroactive perspective. Businesses analyze data from previous years of operation to derive improvements to the supply chain. Predictive analytics looks toward the future. It can help businesses adjust to observable external factors by using an algorithm based on things that have been known to affect your market. Prescriptive analytics pairs well with predictive analysis. Prescriptive analytics allows for businesses to better adapt to an ever-changing global marketplace.
Prescriptive analytics uses many technological components, including cloud computing, statistical modeling, and scalable applications to help businesses explore pathways to greater success. The process minimizes the need for complex coding, data collection and interpretation, and collaborative infrastructure. Implementation of prescriptive analytics allows for ease of creation and dissemination of supply chain plans. Top-down and bottom-up organization procedures and behaviors interact in a way that optimization decisions can be decided more smoothly.
Predictive vs. Prescriptive
The main difference between prescriptive and predictive analytics is the method of risk management. In a predictive analysis paradigm, the business tries to navigate success by looking at historical data from the perspective of the worst possible scenario. Prescriptive analytics allows a business to incorporate the potential of effects of external factors, internal decisions, and optimization goals to chart a path based on positive potential outcomes.
Prescriptive analytics allows a business to conduct long term supply chain planning exercises. These exercises and the data produced by them are then compartmentalized to allows for ad-hoc changes to supply chain planning models. In an ever-competitive global market, prescriptive analytics balances data, connectivity, intelligibility to provide businesses seeking to optimize supply chain planning. The difference is envisioning and planning possible improvements to business rather than solely risk and threat management. Prescriptive analytics envisions new tools for successful optimization.