External Data: A Perfect Way To Optimize Your Supply Chain

Frank Basten

Sales records, warehousing numbers, stock data: every organization knows its internal data. The insights that these operational data, sales figures, and customer analytics provide are undeniably valuable. But do they give you an integral understanding of tomorrow’s economy? Have you ever thought about leveraging external data like historical numbers, demographic information, and dynamic data like social media or events?

I promise you: It is a true data goldmine and the key to optimize and automate your entire business and supply chain.

Why you should take on a customer-centric approach

High on almost every supply chain trend report for 2018 is the need to become increasingly more customer-centric and to master the technologies needed for this goal. In this digital age, consumers are more demanding and, with e-commerce as a major competitor, empty store shelves are a no-go. By focusing on external data that involves the world around you, organizations are a step – or even a giant leap – closer to a more consumer-oriented supply chain. External information gives you the opportunity to create a 360-view of your own company and the economy you operate in. And, it gives you the ability to discover where you can add value to your business. Starting with the point-of-view of the customer, you can optimize your entire supply chain.

Smart distribution in the publishing industry

Audax Betapress, a key player in the world of publishing and distribution of magazines, is one of those organizations that strives to become more consumer-focused. Moreover, it wants to improve and tailor its product range to each of its more than 4,000 retailers. Smart distribution to deliver the right magazine or book, on the right shelf, at the right moment and in the right quantity. And, on top of that: accustomed to a specific retailer.

SAP and CTAC partnered up in the SAP Mobile Innovation Lab to help Audax Betapress in its ambitions. The team built a prototype of an engine that can predict the ideal product range for various clusters of retailers and its respective customers. How? By combining existing historical internal data, like sales and edition numbers, with external data. The insights from this data can immediately be processed in the product range planning. So, there is no separation of analytics and operational activities.

Anticipating to the needs of customers

In the current situation, Audax Betapress distributes, with other publishers, an agreed-upon quantity of magazine titles to more than 4,000 retailers in the Netherlands. The distribution of those titles is now based on internal data and workforce experience. In essence, it’s reactive. The prototype that was built helps Audax Betapress to anticipate customer needs. In the future, when the product range optimization tool is fully operational, the company can deliver exactly what the customers of a certain type of store are looking for.

Clustering with demographic statistics

To create a relevant engine, the development team made a segmentation of Audax Betapress’s retail stores based on publicly accessible demographic information. It included (among other variables) age and income of residents in respective areas and, for example, tourism statistics. That led to several relevant insights.

For example, the experts noticed a shift in sales in typical tourist towns. During the summer, certain magazines sold briskly – in particular, German titles. In the winter, when there are fewer tourists, the sales declined.

These are variables that can be taken into account to enhance distribution. Using this external data, the team made a cluster of stores based on these types of characteristics and was able to execute it into the product range planning, using the know-how of employees and safeguarding it in the system.

A major benefit of the data-driven optimizing tool is the possibility to make it more intelligent with machine learning and predictive analytics. You can even feed the model with big events like upcoming royal weddings or World Cup competitions, and trends on social media to deliver an up-to-date product range. Feeding the system with the lessons learned from these analyses and insights helps you make smarter decisions.

The benefits of external data for your business

Fed with external data, the product range optimization tool helps professionals from Audax Betapress allocate magazines to retailers and choose the right mix of titles for a specific cluster with just a few clicks. This allows them to comply with specific agreements with store owners and publishers.

Dick Kriens, manager ICT of Audax, sees the advantages of the solution: “A lot of know-how and experience exists in the minds of my colleagues. This tool automates the process of picking and choosing the right mix for a store location and supports it with hard data. With this engine, we can increase our profit by making smarter decisions in our logistic operation and distribution. We deliver a mix to retailers that most certainly will sell, a publisher gets the best results on the sales of its magazines, and the customer walks out of the store with exactly the type of magazine he wants.”

Watch the delivery video to learn more about the solution.

Frank Basten

About Frank Basten

Frank Basten is customer innovation expert at SAP Netherlands. In his role he aims to transform the way companies work to enable new business processes. As a true Internet-of-Things-enthusiast, he loves to discover how new technology can contribute to help businesses run better.