Organizations with high decision latency move slowly and risk losing their competitive edge in a volatile business environment. That’s because they take too long to access supply chain data, spot insights, and turn them into profitable action.
In modern supply chains where the only constant is change, slow decisions can be as damaging as wrong ones. With powerful technology like GAINS’ supply chain decision intelligence platform, you get decision-making support and real-time, centralized insight visibility that helps you take action faster.
What Is Decision Latency in Supply Chains?
Decision latency is the delay between when data becomes available and when a business acts on it. In a supply chain, it’s the time lost between detecting a change — like a demand spike, shipment delay, or inventory shortfall — and executing the correct response.
High decision latency means the organization sees what’s happening but can’t move fast enough to capitalize on opportunities or prevent disruptions.
When making data-driven supply chain decisions, latency may show up in three main areas:
- Data ingestion means collecting, cleaning, and syncing information from supply chain tools, such as supply chain planning and warehouse management systems. If these tools don’t communicate to unify their data, teams waste time switching between platforms, which delays decision-making.
- Analytics processing involves pulling insights from your supply chain data. When analytics tools wait for data to accumulate over a particular period before analyzing it (instead of processing it in real time), insights that should’ve been instant show up late.
- Decision execution is all about turning insights into action. The lag between having an actionable insight and actually implementing it increases when decision-making is manual or when approval workflows are complex.
Main Types of Decision Latency
Here are the three main types of decision latency based on where it happens in the supply chain:
- Demand latency: Demand latency is the delay between when customer demand changes and when organizations notice that change in the supply chain.
- Planning latency: Planning latency is the delay between supply chain changes and when you update your plans to reflect that change.
- Execution latency: Execution latency is the time delay between when you finalize a supply chain plan and when you put it into action.
How do these types of decision latency affect your organization and supply chain?
The Impact of Supply Chain Decision Latency
High decision latency has serious consequences.
For example, when it takes too long to make a replenishment decision, inventory may run out before you reorder. This, in turn, causes stockouts that could lead to missed sales and dissatisfied customers.
And if a slow decision-making process misleads you into using outdated sales data to forecast demand, you end up carrying more stock than necessary. Excess inventory drives up storage costs.
Additionally, decision latency can reduce your company’s supply chain agility and competitiveness. How? It delays your reaction to demand shifts or supply disruptions. Competitors who act faster can capture market share, leaving slower rivals struggling to keep up.
The Causes of Decision Latency in Supply Chains
Top causes of decision latency in the supply chain include:
Outdated Data
If you don’t update your supply chain data in real time and act on it as soon as it’s available, you may end up basing decisions on old insights that don’t reflect the current market reality.
Siloed Data
If your supply chain systems don’t talk to each other, they store data separately. As a result, teams spend more time switching between platforms to look for insights. In other words, making data-driven decisions becomes slower than if the insights were available in one place.
Too Many Approval Steps
Decisions that require multiple sign-offs lengthen the approval process. By the time the insights go through every approver, the supply chain issue or condition they were meant to address may have already changed. And as a result, the insights become outdated.
Infrequent Reporting
Some supply chain insights are only valuable for a short period of time. If you generate reports too slowly (weekly or monthly instead of daily), by the time you interpret them and make changes, you could have already missed out on weeks or months of opportunity.
Manual Processes and Unclear Roles
Supply chain decisions, such as inventory replenishment, can be automated. Making them manually slows down the entire process because it would require human reviews, approvals, and handoffs.
In the manual process, even simple decisions take way too long to make if it’s unclear who owns which decisions. Time is lost figuring out who should do what, as opposed to getting things done.
Now that you know the key causes of decision latency, how do you avoid them? Implementing the best supply chain strategies can help.
How To Reduce Decision Latency in Your Supply Chain
Reducing latency can speed up your supply chain decision-making. Doing so comes down to three things: being able to access supply chain data the moment it’s available, extracting insights from the data, and immediately acting on those discoveries.
The following tips and best practices can help you meet these three requirements and make faster supply chain decisions with data signals:
- Centralize Your Supply Chain Data and Get It Flowing in Real Time: Make sure your supply chain tools can connect with each other and share data in real time. That way, you can access up-to-date insights from one place, instead of switching between tools. This real-time, centralized visibility speeds up decision-making.
- Use Automation Where Possible: Not every decision needs human approval. Supply chain planning platforms like GAINS can help you automate alerts, trigger reorders, and handle exceptions. They can also quickly extract insights from data and provide actionable recommendations so that you can make decisions quickly.
- Simplify Your Approval Process: Make the process of signing off on decisions as short as possible. Use the fewest possible number of approvers, and make sure everyone in the decision-making process knows their role.
Make Smart Decisions Faster With GAINS
A robust supply chain and decision-making platform like GAINS can automatically:
- Generate insights from your supply chain data using AI
- Give you actionable recommendations (instead of simply building dashboards) so you can make decisions quickly
- Reveal the impact of every recommended decision by helping you understand the cause and effect of a supply chain event
With GAINS, the data you need to make confident supply chain decisions is accessible in one place — no jumping between multiple disconnected tools.
Request a demo today to see how GAINS helps you make quick, smart decisions that drive results.
