Dive Brief:

• At the APICS 2017 conference this week, thinkSCM launched a prescriptive analytics tool that uses artificial intelligence (AI) to analyze data and make predictions and recommendations for future actions. While the new tool isn't the first to use AI for analytics purposes, it's part of a trend in supply chains to move fast predictive analytics into the prescriptive realm. 
• Patrick Green, a founding partner at thinkSCM's sister company SCM Connections, said the company developed the tech to bridge a gap in SAP software for a client. Because the tool was successful, thinkSCM decided to launch it commercially.
• "Our goal at thinkSCM is to get more out of companies’ existing data, using a proprietary Artificial Intelligence system which gives better forecasts, compared to standard and advanced statistical models. It also gives better insights, such as whom to concentrate on and where to spend marketing dollars," Green said in the press release.

Dive Insight:

It's not enough anymore for companies to use descriptive, diagnostic and predictive analytics — now they need algorithms that give them business recommendations based on data analysis. According to Green, prescriptive analytics is already a trend in larger companies that have sufficient resources.

"We saw the need, and we saw it was a broader need," he told Supply Chain Dive. "All the big guys are doing the same thing."

One way to think about it, according to Green, is as a coordinated effort between S&OP and supply chain divisions. Companies need to know when to release and promote new products, how to market them efficiently and then get them down the pipeline effectively. A prescriptive analytics tool can help with that.

"You don't want a product to show up at dollar stores or at Big Lots because you have a poorly run supply chain," Green said.

Because the tool is an artificially intelligent algorithm, it continuously learns from data input. Therefore, if you're not putting enough data into the algorithm, it's going to have a harder time giving you recommendations. The question you're trying to answer which this algorithm addresses, according to Green is, "How do I sell efficiently without cannibalizing on my product?"

The long-term effects of such a tool are far-reaching, and has the potential to revolutionize how supply chains are run, from inventory management to distribution. It's not just the future, it's an established trend among big companies like Facebook, Google and Tesla, and now it's taking hold in smaller companies.

"The bigger issue here is having enough data," Green said. "We're seeing a big push for a coordinated effort between S&OP and supply chains. We see this as something we have the business knowledge to solve."