Page 17 - Logistics News - September October 2023

P RESCRIPTIVE AN ALY TI CS

specify a preferred course of action. While all types of Stochastic optimisation leverages linear
analytics ultimately support better decision-making, programming to measure the best action plan for a
prescriptive analytics outputs a decision rather than business given the desired outcome and functional
a report, statistic, probability or estimate of future constraints. Constraints can include:
outcomes,” according to Gartner’s definition in ‘Forecast • Production headcount and capacities.
Snapshot: Prescriptive Analytics, Worldwide’, 2015. • Legal and regulatory constraints.
• Financial limitations like borrowing and working
Simulation to initiate cost savings capital.
As enterprise networks grow to serve larger numbers of • Emissions.
customers and employ more workers, data will become
the key to bypassing risk and ensuring While the error of human analysis will be removed,
cost savings are locked in. With prescriptive profits will also benefit from a precise analysis of how a
analytics, leaders will have the power to identify given business plan will affect an organisation and what
how a system would behave under different the organisation should do.
configurations. Simulations make sure that integral
performance metrics are met, such as wait times, queue Major industries influenced
length, etc. Nearly all industries benefit from the cost savings and
increased profitability made possible by prescriptive
When decision-makers are faced with a variety of analytics, but the most notable benefits have been
choices, they can implement prescriptive analytics experienced by enterprises in fields that serve large
simulations to identify how their organisation will populations including:
function in the event of impending changes. For • Logistics. Prescriptive analytics helps leaders
example, leaders can simulate the impact of regulatory assess how to scale as capacities change, how many
changes, fewer employees working more hours, employees to hire and how to make the most of
global price changes, fluctuations in the cost of their changing global prices.
own products or services, an increase or decrease • Transportation. It help leaders identify how to drive
in emissions and the effects of various execution profit when ticket rates change, usage fluctuates
strategies to identify what situation might catalyse the and how many employees are necessary in varying
highest cost savings. demographic circumstances.
• Sales and service. It helps leaders optimise price
When it comes to scope creep, prescriptive analytics offers depending on the fluctuating nature and
will assist decision-makers in simulating future project constraints of a customer relationship.
needs so that parameters can be more reasonably • Health care. Prescriptive analytics helps leaders drive
understood and defined from a project’s inception. For cost savings and profits when outbreaks spread, as
example, through a simulation, a leader would be able demographics change and how to scale as capacity
to establish the procedure for a stage in the project that changes.
may be years down the line. • Oil and gas. It helps leaders minimise risk by assisting
with deciding on the best drilling locations.
Prescriptive analytics and stochastic
optimisation to drive profits Competitive insights
Prescriptive analytics does more than prevent risk; it If your organisation is ready to utilise data-driven cost
will also automatically direct business leaders toward savings and experience stochastic simulations to gain
the most profitable business plans based on stochastic insight on how to position yourself to drive profits,
optimisation. consider harnessing the power of prescriptive analytics. •

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