The recent turbulence in the financial markets highlights the damaging effects of uncertainty, stemming from the lack of reliable information from veiled market participants such as hedge funds and private equity firms and from off-balance-sheet transactions at leading institutions.
This serves as a stark example of a business system deprived of good and timely information. This, in turn, has forced companies to move toward building more transparency into their information systems so everyone is on a level playing field and nobody is at an advantage or disadvantage.
In most companies, the supply chain is viewed as a mission-critical system. In the very best performing companies, the supply chain is seen as a strategic weapon with which to club the competition and drive shareholder value. The type of meltdown experienced in the financial sector should have companies begging the question: Are we getting all the necessary intelligence from our supply chain system to make the best decisions for our business?
There are many individual things you need to do well in order for your supply chain to become a competitive weapon, but in the end they all boil down to having the optimal supply chain design combined with ruthlessly efficient execution. You need to combine "information" (the communications or receptions of knowledge) and "intelligence" (the ability to apply knowledge to manipulate one's environment as measured by objective criteria). This combination of information and intelligence is what is commonly referred to as supply chain intelligence. Supply chain professionals can leverage the power of this insight to unlock information they previously could not access, giving their companies a tremendous competitive advantage.
One Person's Data is Another Person's Intelligence
Companies' supply chain systems create an impressive amount of data. However, there's not any value in loads of data if you can't access it or understand it. The biggest obstacle in managing this amount of data involves identifying the information that matters and then seeing that the same meaningful information gets to all the individuals who need it to make the best decisions for your company.
Some of the more common challenges that companies face when it comes to business intelligence for the supply chain are:
• What is just operational reporting and what is true business intelligence and analytics?
• Which data is needed in real time and which data can be updated less frequently?
• What data should be retained over time to analyze and measure supply chain performance?
• Users don't have to use business intelligence tools to do their jobs, but they do have to use them to do them more effectively. How do you get that message across and incent them to use tools?
• Are the business intelligence tools easy enough to use and yet powerful and flexible enough to be worth using?
• Business intelligence typically relies on attribution and classification data on master (i.e. item) and transactional (i.e. shipment) objects and will not be useful if this data is absent or inaccurate.
True Supply Chain Intelligence Combines Content with Capabilities
Supply chain intelligence is all about bringing together content and capabilities. "Content" is all of the data held in various data structures and the various predefined reports or views over that data. "Capabilities" include all of the tools that allow users to access the data and create new ways of accessing the data (i.e. new "content").
Examples of content include:
• Picking data
• Receiving data
• Shipments data
• Labor performance data
• Transportation invoices data
• Predefined reports and analysis views
• Predefined metrics (sometimes referred to as key performance indicators or KPIs)
• Predefined events/alerts
The key with data is organizing it into subject matter areas familiar to supply chain users. There are two important types of data within each of these subject matter areas. The first is measures/KPIs that represent the actual business performance. The second is the dimensions of analysis-the ways the measures/KPIs can be analyzed (i.e. by item, by supplier, by location, by product class, etc.)
For example, when gathering intelligence in the subject area of warehouse management, if you take a look at the receiving data, sample measures might be: total units received, average value of goods received per day and average inbound LPN lines received per day. The sample dimensions of analysis would be: warehouse, item and hour.
On the other hand, capabilities are organized into three layers within a fully functional architecture in a supply chain intelligence solution:
1. Content storage - This is where all the business data and the specifications of the various types of objects that access the business data are kept (along with configurations, user data and system data).
2. Content analysis and configuration - This set of tools allows users (with varying levels of training and skills depending on the tool involved) to create new ways to view and evaluate the data (i.e. new reports, analysis views, scorecards, dashboards, metrics, events, etc.).
3. Content access tools - This represents the various ways that users can access supply chain intelligence-via the Web, via Microsoft Office or via mobile devices.
Examples of major capabilities within a comprehensive supply chain intelligence system include:
• Report writer
• Ad-hoc data query tool
• Event/alert definition tool
• Metric (KPI) definition tool
• Trading partner access
• Microsoft Office integration
• Mobile device access
How to Build Vision with Supply Chain Intelligence
In order to create a broad vision that both maximizes value for your company as well as makes that value achievable, supply chain intelligence should ideally be:
• Pervasive - Use business intelligence everywhere it makes sense in the supply chain.
• Seamless - Weave business intelligence into the fabric of your users' operational processes.
• Filled with broad and rich information - Cover all relevant subject areas and provide comprehensive measures/KPIs and dimensions of analysis.
• Best-practice driven - Standardize on well-accepted metrics for measuring supply chain performance.
• Highly configurable - Allow individual users to make it their own solution to meet their specific needs.
• Quick to deploy - Ensure initial implementation is fast (weeks, not months) and make it very easy to administer on an ongoing basis.
• Easy to use - Users should need no more than an hour or two of training to get good value from the solution.
• Highly visual - With so much data inherent in a business intelligence solution, rich visualization is essential to get information from the mass of data quickly.
• Accessible anywhere - On the PC, in Microsoft Office or on a mobile device (e.g. smartphone)-supply chain users are often not tied to their desks but may be on the warehouse floor, in the yard or traveling.
• Available to your extended eco-system - It's not just your internal users that need the information-trading partners also need to know how they are performing.
• Highly scalable - Supply chain business intelligence generates huge amounts of data on a daily basis that has to be quickly organized, categorized and accessed.
• Low cost - Leverage the hardware and third-party investments that you've already made with operational supply chain systems (e.g. warehouse management, transportation management, etc.).
• Globally deployable - The supply chain is global, whether it's internal users or trading partners - and not everyone speaks English.
• Technologically advanced - Build on a service-oriented architecture (SOA) so that components of the solutions can be quickly combined with other systems to deliver new solutions (i.e. mashups/composite applications).
• Secure - In this world of heightened compliance, you need to know you can secure data inside the organization so only those authorized to see certain data can see it and those prying eyes outside the organization can't.
Positively Impact Cost, Customer Service and Productivity
Business intelligence is the ultimate tool for supply chain analysis because, when used appropriately, it can significantly impact the activities that directly affect costs, customer service and productivity. Today's economic turmoil proves that what you don't know can hurt you. Proactive companies that implement a supply chain business intelligence system can expect to benefit with the new-found ability to respond to user needs for timely data; improve supply chain decision-making; keep up with the increasing complexity of managing reporting; effectively manage trading partners; and leverage the investment in sophisticated supply chain management systems.
Frank Tomany is director of product management at Manhattan Associates (www.manh.com), a provider of supply chain planning, optimization and execution solutions.
Timely, incisive articles delivered directly to your inbox.