Can Analytics Change the Cost of Your Christmas Dessert?
December 21, 2016
Last week we questioned if analytics change the cost of Christmas, and the answer was an emphatic “Yes!” When you pick up your favorite holiday treats at the local market, odds are they include an international mix of ingredients. Sugar, flour, fruit, nuts, and dairy products are procured from all over the world. They must be shipped – sometimes thousands of miles – to be combined into your favorite treats.
Transporting raw materials efficiently
Wherever they are grown, raw materials need to be transported to some kind of bakery or manufacturing plant to be processed, mixed, and cooked. Commercial bakers in the UK can use analytics to determine whether it is more cost-effective to buy sugar from Brazil (which might be cheaper to buy but more expensive to deliver) or to buy more expensive sugar from the EU and spend less on transport costs. Analytics also help manufacturers work out the best time to buy. Sometimes entering an agreement in June to buy in November is more cost effective than bulk buying in a mad rush in November.
Data and analytics can also help buyers work out the best trading routes and transport methods, taking into account costs such as transport fuel (a huge input cost), freight costs, the likely congestion in shipping routes, the need for refrigeration and other forms of compliant storage, international trade deals, demands for provenance and hundreds of other factors. Even choosing the size of ships can have an impact, by making it possible to dock and unload at ports with lower fees or shorter onward routes.
Planners can make the best scheduling decisions possible by using Eka’s Commodity Analytics Cloud’s optimization techniques and ‘what if’ scenarios. They can determine when it is better to store materials instead of moving them, and optimal routes for movement – optimizing storage and transport costs. When transport, warehousing, and other logistics are all lined up, buyers can shorten the time to market for seasonal goods, cut expensive waste, and avoid rent for unnecessary storage.