Technology / Prescriptive Analytics
What is Prescriptive Analytics?
Prescriptive analytics goes beyond diagnosing a problem or predicting the likelihood of an event based on historical data. Instead, prescriptive analytics leverages different forms of mathematics and logic to prescribe an optimal, executable action. It empowers decision makers with the ability to answer the question “what should I do in order to maximize all of my objectives, given the many complexities in my organization and the market?”
Prescriptive analytics is the most impactful form of analytics because it has the greatest impact on large-scale business objectives like profit, cost of goods, service levels, risk mitigation, and decision-making agility. There are two main forms of prescriptive analytics: business rules and optimization. River Logic’s technology is powered by optimization. Optimization has several advantages over rules-based approaches, such as:
Your Ultimate Guide to Understanding Prescriptive Analytics
The current market penetration for prescriptive analytics is roughly 10%. By 2021, it is expected to rise above 35%. Thus, it’s crucial for business leaders and technology decision-makers to educate themselves on this category of advanced analytics.
For this reason, River Logic has created an interactive guide to help people like you understand the following aspects of prescriptive analytics:
“We as a company make decisions dramatically different than we did five years ago because of River Logic. We exited an entire business because we realized it was unprofitable.”
Matt Yaun, Chief Administration Officer, Cox Industries
“We were attracted to the flexibility of River Logic. We can determine things such as where and how to blend coal, adjust plans based on customized multi-criteria optimization, and simulate financial flows. We will continue to use River Logic to streamline our efforts for determining functionally-aligned plans that optimize our performance objectives.”
Head of Planning at a large Mining company
“The implementation of River Logic makes it possible to plan the delivery time and cost of each postal item, choosing the most optimal routes. This allows us to not only meet delivery deadlines but also to deliver mail faster than the norm and identify bottlenecks in the production and logistics network to promptly eliminate them. Moreover, the system has reduced logistic costs by 10-15%.”
Alexey Skatin, Deputy General Director for Logistics, Russian Postal Service
“Prescriptive analytics is the application of logic and mathematics to data to specify a preferred course of action. While all types of analytics ultimately support better decision making, prescriptive analytics outputs a decision rather than a report, statistic, probability or estimate of future outcomes.”
Forecast Snapshot: Prescriptive Analytics, Worldwide, 2017
Are You Ready for Prescriptive Analytics?
Many companies fear that their business is too immature to embrace prescriptive analytics. This video will help you decide if you’re ready to take the next step.
The Benefits off Prescriptive Analytics to Your Business
Improve Performance: Typical impact can range from 2 to 5% of your annual revenue in additional profit.
Increase Efficiency: Typical impact includes 15-20% higher throughput or 10-15% reduction in addressable cost.
Maximize ROI: Typical impact ranges from 25 to 100%—better NPV than Excel or similar, rules-driven tools.
Drive Agility: Rapidly evaluate dozens of scenarios and develop a faster approach to making trade-off decisions.
Mitigate Risk: Identify and better quantify risk associated with both short- and long-term decision-making, plus develop potential risk mitigation strategies.
Address New Planning Challenges: Unlike other forms of analytics, prescriptive analytics helps you make the most profitable decisions even in the midst of competing objectives.
Companies like PepsiCo are all working on moving from the traditional descriptive and diagnostic analytic capabilities to prescriptive analytics. Adopting prescriptive is critical for supply chains to gain a competitive advantage now and in the future.
Leslie Keating, EVP Supply Chain Strategy and
Transformation, Advance Auto Parts, Former SVP PepsiCo
Not Sure if River Logic is Right for You?
River Logic offers free assessments to companies like yours in order to determine the potential value you could gain from adopting our technology to address your toughest planning and decision-making challenges.