predictive vs prescriptive analytics

With the flood of data available to businesses regarding their supply chain these days, companies are turning to analytics solutions to extract meaning from the huge volumes of data to help improve decision making. Listed below is one such diagram which is probably familiar to most of you The above diagram represents this evolution as encompassing 4 stages (Descriptive Analytics, Diagnostics Analytics, Predictive Analytics, and Prescriptive Analytics). Predictive and prescriptive analytics are two forward-looking tools used by business leaders which overcome these limitations. Predictive analytics offer a data-driven picture of where your organization is headed while leaving the responsibility for identifying potential solutions to you and your team. It also identifies potential cost-saving and growth opportunities within the value chain, making prescriptive analytics a win-win. But it doesn’t stop there. When implemented correctly, they can have a large impact on how businesses make decisions, and on the company’s bottom line. Visit the Reflexis blog for more retail, hospitality and banking-related insights. While descriptive analytics is limited to past data, predictive analytics predicts future trends. Daniel Bachar is a Product Marketing Director for Advanced Analytics for Logility. 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His experience includes development, design and go-to-market strategy of supply chain and advanced analytics products, helping clients with complex business problems to achieve complete visibility into their supply chain operations. Whether you rely on one or all of these types of analytics, you can get an answer that […] Find more technical discussions on our Developer Portal blog. Technically all four types analyze large volumes of data to identify business trends and “events” that could impact business decisions. With both forms of analysis, business executives and leaders gain both insight and foresight. At their best, prescriptive analytics predicts not only what will happen, but also why it will happen, providing recommendations regarding actions that will take advantage of the predictions. Looking at all the analytic options can be a daunting task. More recently, we have been seeking new ways to advance our Enterprise Asset Intelligence vision – to have every asset and worker on the edge visible, connected and optimally utilized. What Are Prescriptive Analytics? Your Edge Blog Team: That was a great example. We want to hear from you! Your Edge Blog Team: Is that why Zebra decided to acquire Profitect? Predictive analytics provides estimates about the likelihood of a future outcome. It can also be applied to functional roles like Asset Protection. Prescriptive analytics attempts to quantify the effect of future decisions in order to advise on possible outcomes before the decisions are actually made. Prescriptive Analytics: Advise on possible outcomes. This is precisely what Profitect does and why we continue to invest and build out our capabilities at Zebra that contribute to advancing prescriptive analytics. It also provides easy-to-follow guidance on how to address the inconsistency, whether further investigation is needed or a clear-cut fix is defined. Predictive analytics can be used throughout the organization, from forecasting customer behavior and purchasing patterns to identifying trends in sales activities. Descriptive Analytics tells you what happened in the past. Review Zebra’s Privacy Statement to learn more. Predictive analytics provides companies with actionable insights based on data. By continuing to use this site without changing your settings, you are agreeing to our use of cookies. No one type of analytic is better than another, and in fact they co-exist with, and complement, each other. Descriptive Analytics is used when you need to analyze and explain different aspects of your organization whereas Predictive Analytics is used when you need to know anything about the future and fill the information that you do not know. Predictive Analytics predicts what is most likely to happen in the future. Your Edge Blog Team: Prescriptive analytics and predictive analytics sound similar. With descriptive analytics, you’re making decision in reaction to something that’s already happened with the hope that you can replicate something that worked well or avoid repeating a mistake. We have all heard and seen the diagrams that relate to the evolution of analytics within the marketplace. Huge ROIs can be enjoyed as evidenced by companies that have optimized their supply chain, lowered operating costs, increased revenues, or improved their customer service and product mix. That is why Zebra Ventures first invested in Profitect in 2014. Common examples of descriptive analytics are reports that provide historical insights regarding the company’s production, financials, operations, sales, finance, inventory and customers. © 2020 American Software, Inc. All rights reserved. Tom: In retail, prescriptive analytics goes beyond inventory or vendor management. Companies use these statistics to forecast what might happen in the future. Larger companies are successfully using prescriptive analytics to optimize production, scheduling and inventory in the supply chain to make sure they are delivering the right products at the right time and optimizing the customer experience. You know all about sales analytics and how it can benefit your business. Predictive analytics is a form of machine learning that creates forecasts based on real-time and historical data. Predictive analytics is akin to forecasting in the sense that you are leveraging past business trends to anticipate the probability of certain scenarios occurring, ideally helping to estimate the likelihood of a future outcome based on historical data patterns. 0. Prescriptive analytics, as the name suggests, prescribes a specific course of action based on a descriptive, diagnostic, or predictive analysis, though typically the latter. Except, with prescriptive analytics, you’re in a position to take proactive measures to mitigate the risk or maximize the opportunity. Prescriptive analytics, on the other hand, kicks it up a notch. While this starts with accurate predictions of the future, without resultant actions steering the future toward company goals, knowing that future is academic. It is best to use these analytics in conjunction. Tom: The best way to describe the differences between each analytical approach is to consider how and when the extracted business insights will be used to inform decisions or actions: For example, Profitect’s prescriptive analytics solution will mine a retailer’s data to find inconsistencies that could impact sales or margins and then automatically notify stakeholders of the potentially disruptive issue using a simple description. Covid-19 (Coronavirus): Where do we go from here? Learn about Zebra's unequaled legacy of Android based innovations. Guy:  Additionally, due to the increasingly complex nature of supply chains, prescriptive analytics offers Collaborative Planning, Forecasting and Replenishment (CPFR) users a significant advantage over report-based systems. Prescriptive Analytics. They are analytics that describe the past. Whereas, prescriptive analytics are analytics for everyone (including those at the edge) with a focus on future performance through identifying controllable factors and providing actionable opportunities that deliver results. They combine historical data found in ERP, CRM, HR and POS systems to identify patterns in the data and apply statistical models and algorithms to capture relationships between various data sets. Prescriptive analytics is the next step of predictive analytics that adds the spice of manipulating the future. Prescriptive analytics are relatively complex to administer, and most companies are not yet using them in their daily course of business. He provides a unique blend of business and industry knowledge, leading successful efforts to integrate new technologies into effective supply chain solutions. As predictive analytics can’t keep up with the competition, it requires prescriptive analytics to make smart recommendations, and together they can attain optimal results. Analytics is all about course correcting the future. Predictive vs. Prescriptive Sales Analytics. Usually, the underlying data is a count, or aggregate of a filtered column of data to which basic math is applied. Prescriptive analytics, goes further and suggest actions to benefit from the prediction and also provide decision options to benefit from the predictions and its implications. Organized retail crime / Credit card fraud: A hardlines retailer saved $3.5 million in fraud in 2 days, Gift card fraud: A department store identified over $30,000 in employee gift card fraud, Pass offs: A footwear retailer recovered more than $50,000 of merchandise, Employee refund fraud: A specialty goods retailer received $225,000 in restitution. Daniel brings more than 10 years of experience in sales, marketing, supply chain planning, and advanced analytics. This empowers organizations to make better decisions and know-how actions will affect operations ahead of time. Predictive analytics sets the stage by producing the raw material for making more sound and informed decisions, while prescriptive analytics produce an array of decision options to weigh against each other and, ultimately, make the one that has the greatest impact on the business. At different stages of business analytics, a huge amount of data is processed and depending on the requirement of the type of analysis, there are 5 types of analytics – Descriptive, Diagnostic, Predictive, Prescriptive and cognitive analytics. Are they the same thing? Your Edge Blog Team: It’s not enough to have a predictive analytics solution then? And predictive analytics can give you a heads up about what may be coming, but can’t tell you how exactly to leverage that information to your advantage? Combining the real-time data that Zebra solutions capture with Profitect's access to operational data, machine learning and analytics, we can now work with our partners and customers to empower front-line workers across all verticals, not just retail, with the focused insights they need to make smarter decisions and take faster, more effective actions. If you think about that last point – “optimally utilized” – it’s really about informing and empowering that worker to take the best next action. Descriptive, Predictive and Prescriptive Analytics Explained. Guy: Prescriptive analytics also translates the data into a description, this way you eliminate the personal and political biases that affect the way you read a report. The vast majority of the statistics we use fall into this category. Our customers consistently report sales lift, as well as margin and labor productivity improvement. One example includes several stores identifying DSD deliveries that were not delivered according to the order. Predictive analytics or prescriptive analytics alone are not enough for an effective business strategy. Prescriptive analytics advises on possible outcomes and results in actions that are likely to maximise key business metrics. Now stores are informed of any DSD product that has been shipped to their store, but has not achieved sales. Prescriptive analytics is primarily related to decision optimization problems. It is crucial to remember that predictive analysis only forecasts the future and not actually predicts it with hundred percent accuracy. Predictive vs Descriptive vs Diagnostic Analytics Manu Jeevan 14/03/2018 There are three main categories when it comes to data analytics: predictive, diagnostic, and descriptive. Your Edge Blog Team: So, what are the differences between each of these types of analytics? While Profitect’s solution can identify problems and suggest actions, a continuous feedback loop also identifies best practices that can be replicated across the enterprise. It suggests all favourable outcomes and, which courses of action needs to be taken to reach a particular outcome. Prescriptive vs Predictive Analytics: A Combination for Success. These scores are used by financial services to determine the probability of customers making future credit payments on time. Guy: An interesting example would be one of our international grocery retailers whose U.S. division was challenged with Direct Store Delivery (DSD) vendors, process gaps that led to high markdowns, and technical issues impacting product resets being scanned for loss. Guy: You’re right, prescriptive analytics goes beyond predictive analytics to give you the reason for those anticipated events and what to do about them so the outcome is optimized. Predictive Analytics, which use statistical models and forecasting techniques to understand the future and answer: “What could happen?” Prescriptive Analytics, which use optimization and simulation algorithms to advise on possible outcomes and answer: “What should we do?” Predictive analytics has its roots in the ability to “predict” what might happen. Help maximize device availability and business operations with Zebra OneCare Support Services. See our more in-depth breakdown of predictive analytics for more information. Hospital Bracelet and Patient ID Wristbands, RFID Transponder Inlay Placement Guidelines, Handheld RFID Readers and RFID-enabled Scanners. Predictive Analytics: The predictive analytics goes a step ahead of descriptive analytics. In simplest terms, descriptive analytics is “what happened”, diagnostic analytics is “why did it happen”, predictive analytics is “what will happen” and prescriptive analytics is “what should I do”. Wish Your Grocery Store Checkout Lane Could Move Faster? Supply Chain Manager – A “Green” Superhero, Digital Transformation of the Supply Chain, 4 Reasons Why Good Design Is Essential for Supply Chain Dashboards, Bring Precision to your Forecasting with Causal Forecasting, Planning Optimized – A Never Ending Journey, Supply Chain Planning Transformation – A Practitioner’s Roadmap, AI and Analytics: The Importance of Visualization and Data, A Digital Transformation Guide for Supply Chain Disruptions, Kraft Creates a Recipe for Supply Chain Success, Williamson-Dickie Boosts Company Performance. Predictive Analytics: Understanding the future. This site uses cookies to provide an improved digital experience. Category: AnalyticsBlog Year: 2020Asset Category: Analytics, Digital Supply Chain. Have a question for Tom or Guy about analytics? However, predictive analytics requires users or workers to understand and know how to interpret “the future”. Knowing that business analytics can be categorically complex (even for data scientists), we’ve asked our in-house experts Tom Bianculli and Guy Yehiav to explain the benefits and use cases in the most simplistic way possible…. Predictive analytics provides you with the raw material for making informed decisions, while prescriptive analytics provides you with data-backed decision options that … However, luckily these analytic options can be categorized at a high level into three distinct types. You have read studies describing how analytics separates winners from average performers. They started leveraging Profitect’s prescriptive analytics solution to track inventory data, remedy these process gaps and bring millions of dollars back to the company’s bottom line. The past refers to any point of time that an event has occurred, whether it is one minute ago, or one year ago. Prescriptive analytics offers very pointed guidance on what you should do in any event and why, as well as what could happen if you don’t follow recommended actions – and why. This field is for validation purposes and should be left unchanged. Share it in the Comments section below. This is because the foundation of predictive analytics is based on probabilities. It is important to remember that no statistical algorithm can “predict” the future with 100% certainty. Guy:  No, they’re not the same thing, but you’re right, prescriptive and predictive do sound alike. These analytics are about understanding the future. Descriptive analysis or statistics does exactly what the name implies: they “describe”, or summarize, raw data and make it something that is interpretable by humans. Barcode Scanners and Data Capture Resources. In a nutshell, these analytics are all about providing advice. Prescriptive analytics enables fast actionability. Companies that are attempting to optimize their S&OP efforts need capabilities to analyze historical data, and forecast what might happen in the future. One common application most people are familiar with is the use of predictive analytics to produce a credit score. Want to learn more about descriptive, predictive and prescriptive analytics? Imagine the impact that these analytical tools could make on combating counterfeit drug distribution. These statistics try to take the data that you have, and fill in the missing data with best guesses. The Profitect solution is currently used by some of the most recognized retail and CPG brands in the world to improve inventory and pricing accuracy, reduce out of stocks, minimize unsellable merchandise, and fix assortment discrepancies. That has led many people to ask us: what is prescriptive analytics? Using plain-text removes any biases, ambiguity, or interpretation, and coupled together with a prescriptive action, increases efficiency and effectiveness. They also help forecast demand for inputs from the supply chain, operations and inventory. Offering the worker a prescribed action that will optimize their workflow is what it is all about. Ask the Experts: How Can We Be Sure Temperature-Sensitive COVID-19 Vaccines Have Not Been Heat Damaged All the Way Through the Last Mile? Prescriptive analytics builds upon the results of predictive analytics. In order for a business to have a holistic view of the market and how a company competes efficiently within that market requires a robust analytic environment which includes: Descriptive Analytics: Insight into the past. Editor’s Note: Learn more about how Zebra’s combined Intelligent Edge Solutions, including the Zebra Savanna IoT platform and Profitect prescriptive analytics solutions, can benefit your business. To help Profitect scale their solutions and broaden the reach of prescriptive analytics to customers in other industries? There are numerous possible applications in the manufacturing, warehousing, transportation and logistics space that we will explore in the coming months. He added that predictive analytics doesn't predict one possible future, but rather "multiple futures" based on the decision-maker's actions. Using a combination of historical data (descriptive analytics), rules and a knowledge of the business, they more accurately predict the future, and, in the case of prescriptive analytics, guide leaders to the best overall decisions. The addition of the Profitect technology and talent to our Zebra family enables us to more effectively build the "analyze and act" layers of our Zebra Savanna™ platform, which will enhance our existing Intelligent Edge Solutions. Prescriptive analytics is one of the most advanced forms of business analytics. Here’s your two-minute guide to understanding and selecting the right descriptive, predictive and prescriptive analytics for use across your supply chain. You can learn more about the cookies we use as well as how you can change your cookie settings by clicking here. Predictive (forecasting) Descriptive (business intelligence and data mining) Prescriptive (optimization and simulation) Predictive Analytics Predictive analytics turns data into valuable, actionable information. Under a report-based system, identifying who should perform what task could take a data scientist days, by which time the insight may no longer be actionable. To date, they have been able to create more than 750 “patterns” (or algorithms) to look for – and successfully find – areas that impact their business. Your Edge Blog Team: So, in a way, prescriptive analytics is to the future what descriptive analytics is to the past as far as extracting the reason behind an outcome. Predictive vs. prescriptive analytics The difference between predictive and prescriptive analytics is made clear when you understand which business question each strives to answer. Let’s see what are the key differences between predictive and prescriptive analytics: Predictive analytics aim to predict what is going to happen and aren’t valuable unless they are actionable. Predictive analytics allows organizations to become proactive, forward looking, anticipating outcomes and behaviors based upon the data and not on a hunch or assumptions. Guy: Retailers have been using prescriptive analytics for several years to capitalize on the data they capture in-store and online. Prescriptive Analytics recommends actions you can take to affect those outcomes. Prescriptive analytics is an emerging area of analysis that leverages both existing data and action/feedback data to guide the decision maker towards a desired outcome. Final thoughts on predictive vs prescriptive analytics. 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