Business Intelligence: Key to Supply Chain Visibility

Information is vital to supply chain performance, but how can you be sure you have what you need to know, when you know it? The answer, according to Kiran G. N. and Parul Bansal at Wipro Consulting Services, might be integrating supply chain management to business intelligence.

Kiran G. N. and Parul Bansal, Special Contributors -- Supply Chain Management Review, 2/8/2010

Supply chain performance is an important, strategic and competitive factor for every company, however this area faces lot of challenges due to non-availability of information at the right time. This challenge could be effectively met by integrating Supply Chain Management (SCM) to Business Intelligence (BI).

BI capability allows monitoring of supply chain performance and helps in capturing new insights into all aspects of the businesses, fostering innovation. BI allows driving performance improvement in individual functions, business processes that span across multiple functions and in the extended supply chain through collaboration with customers, vendors and other trading partners delivering significant benefits in terms of cost reduction, customer service improvements and lower inventory levels.

Hence, looking at various positive elements of BI, augmenting supply chain with BI should be the next strategic move to place one's foot strongly in the market as it will revitalize supply chain collaboration by extending information on demand forecasts and orders in the pipeline.

Prominent challenges in SCM:

In the past 12 months, supply chain disruptions have been taking place at a larger pace due to various factors such as reduction in customer demand, raw material price volatility, fuel price volatility, commodity price volatility, unfavorable change in currency exchange rates, and key suppliers' financial standing deterioration. In such circumstances the utmost important factors which need attention are as follows:

 A. Optimize working capital, which could be done through management of inventory. Inventory could be managed in two ways:

•         Horizontal infrastructure improvement (enabling end-to-end supply chain visibility with close to real time access to information).

•         Enabling process collaboration (Internal and external).

B. Increase actionable visibility (visibility that results in developing supply chain controls). In order to increase visibility, the following imperatives have to be given due consideration:

•         A high degree of efficiency has to be maintained regarding the completeness and the authenticity of the information source, of the multiple data sets across the supply chain.

•         Data has to be processed to gain actionable insights based on a robust analysis of information.

•         Information gathered should have a greater predictable value.

•         Consolidated data should be made available to all key stakeholders in the supply chain to provide complete and consistent information for actionable analysis.

•         Reduction of informational silos in the supply chain, by periodic objective supply chain performance evaluation is essential.

The two factors stated above force the organizations to reconsider the way they manage their multi-enterprise supply chain and implement BI. While building a solution stack, it is necessary to take note of the lack of integration between individual functions, activities and supply chain processes.

Supply chain visibility can be classified based on the different processes and associated challenges. In each class there stands a scope of BI. Some of these classifications are here below:

Supplier Visibility: Collating data on the status of manufacturing, distribution, logistics, quality check performance and sourcing in the suppliers' organization.

Warehouse and Inventory Visibility: Maintaining storage of materials and their movement (which involves associated transactions such as invoice handling, shipping, placing orders and replacement of stock levels) is essential. 

Returns Management Visibility: The very nature of a return might imply a cost to business; a loss of profit by default. The lack of clarity can create fissures in supply chain, with products returned by inefficient modes to incorrect locations.

Manufacturing Visibility: Manufacturing visibility is about designing plant layouts, planning capacity, execution of daily production operations and controlling the manufacturing process based on KPIs linked to productivity. All these processes have to be enabled by a rigorous analysis of business information and customer demand data.

Logistics and Transportation Visibility: The availability of information that aids the planning, implementation and control of the storage of goods for managing the forward and reverse flow of goods between the point of origin and the point of consumption, decides the extent of visibility in logistics and transportation.

Customer/ Order Fulfillment Visibility: The dynamics of order fulfillment and in turn triggering invoices on deliver of products creates data that could be used to derive customer preferences. Customer touch-points in the entire process are the source of customer information.  Customer visibility is about providing real-time information on product availability (waiting time if there is a production queue) and relevant quotes. The information system within the organization is responsible for maintaining information regarding the company's production and distribution, this system provides key information inputs.

Supply Chain Visibility in the Supply Chain Maturity Map

  Supply Chain Maturity is directly linked with process maturity. Process maturity is primarily linked to the predictability of performance, certainty of outputs, effectiveness and accuracy in developing control mechanisms, stability as compared to systemic risks, and efficient risk management process.

Integrated Supply Chain Management (ISCM) is a framework that addresses operational problems and aims to develop coordination across various processes and functions across the supply chain to channelize efforts to enhance productivity. Implementation of BI forms a robust foundation for creating Integrated Supply Chains.

 Supply Chain Risk and Response Management (SCRRM) is a framework and a set of best practices that deals with the identification of risk, categorization of risks based on the level of impact, assessment of criticality and prioritization of risks treatment plans followed by mitigation or treatment. 

 Achieving a high degree of Predictive Supply Chains (PSC) is a challenge and is a continuing effort. If the performance of the supply chain is mature and has reached its optimum point, then the level of profitability and productivity is said to be at its peak. Supply chain visibility enhancement is the first step toward this; BI is a performance enabler across all the stages in maturity explained above and can be used to drive supply chain excellence.

Intricacies of Positioning BI as a Solution to Supply Chain Visibility Issues:

BI is often referred to technologies and applications that help supply chain management by gathering meaningful data and developing actionable intelligence based on the data gathered to enhance profitability and productivity. The functions of business intelligence technologies typically involve data warehousing, reporting features, Business Process Management (BPM), OLAP (Online Analytical Processing) and predictive analytics.

Since SCM applications are becoming modular day by day, resulting in large volumes of data about customers, transactions, sales, inventory and human resources, BI plays an important role in enabling an enterprise to squeeze a greater business insight from the increasing volumes of data. Hence, BI enables the organization to anticipate new opportunities, track key financial metrics, control operations, and identify trends. BI tooling consists of various aspects stated below:

Reporting: BI elements support the measurement and reporting of key business metrics. Most BI tools provide a complete range of reporting methods, from scorecards and dashboards that contain tables, graphs, and gauges for executives to classic deliverables such as profit and loss statements, to performance metrics that enable business unit managers to understand the performance of their aspect of the business.

Business Intelligence and Analytics: There are few elements of BI tools that support the analytical aspect of BI. These features focus on uncovering hidden relationships, identifying root cause of a problem, and understanding relationships in the data. The result of the analysis leads to knowledge about why a particular business condition is occurring. It's during the analysis process that a company can begin to understand particular business behaviors and the variables that impact behavior. Most BI tools provide the ability to do multidimensional analysis-OLAP concepts and functions such as sorting, drilling down, pivot tables, and the ability to add other variables. This is sometimes referred to as "cube analysis."

Mining and Statistical Analysis: Once managers understand the variables that impact behavior and how they impact behavior, analysts can begin to vary business scenarios and predict outcomes. Most BI tools include the ability to apply statistical, mathematical, and financial functions against the data. This enables a business analyst to look at factors such as product affinity, price elasticity, and median spending of customers.

 Operationalzing and Alerting: Once the BI infrastructure is established and the answers to key business questions are available, most BI toolsets can automate the ability to distribute report updates automatically via an intranet, e-mail, printers, or to a portal. Functions can be set up to alert business managers to business events that have high impact, such as an inventory shortage.

Recommendations for Creating a BI Roadmap in SCM

•         Empowering the supply chain with BI capability will enhance the monitoring of supply chain performance and will help in capturing new insights into all aspects of the businesses.

•         Optimizing the working capital and increasing the availability of actionable information across the supply chain are two major factors influencing a BI implementation.

•         Supply management, warehouse and inventory management, returns management, manufacturing, logistics/transportation management and order fulfillment are key areas of the supply chain where BI can play a crucial role in advancing information sharing and supply chain analytics.

•         Developing a "Supply Chain Maturity Model" which is primarily aimed at enhancing the efficacy and accuracy of control mechanisms to develop a vigorous supply chain risk management framework.

•         BI tooling consists of various aspects such as reporting, business analytics, data mining for statistical analysis, operationalizing information and alerting. Also ideal would be a "The SCM BI Implementation Cycle" which dwells deeper into various stages of implementation.

 

Kiran G. N.  (kiran.n17@wipro.com ) and Parul Bansal (parul.bansal1@wipro.com) are Consultants at Wipro Consulting Services.