Time for Supply Chain Management Leaders to take on Business Intelligence

By Bill Copacino / June 30th, 2009 / Comments Off

While Business Intelligence (BI) has delivered powerful results for many companies over the past decade, the majority of applications have focused more on marketing, sales, customer and financial analysis – and less on operations and supply chain management. This is changing rapidly, and it is time for more supply chain executives to get on board.

I see three areas where BI is making a big impact on supply chain management:

Deeper Functional Analysis—Companies are using BI tools and analytics and reporting to get deeper insight into key functional areas, particularly in transportation cost analysis and inventory performance.

• BI is providing a full view of the transportation spend for many companies, allowing them both a broader and a deeper view.  It is allowing visibility to the total transportation spend on contract carriers, common carriers, private fleet including all maintenance expenditures, and the transportation overhead.  So now, the full budget can be monitored and tracked at the lowest level of detail.

Moreover, it is allowing a deeper view of transportation costs, for example – by lane, by carrier, by shipping point, by customer, by product group, by detailed accessorial changes and by period-over-period.  This deep analysis allows companies to uncover pockets of value.  Welch’s, for example, has found major cost saving opportunities by bringing BI to transportation.

• In the inventory area, BI can bring all the information together to gain new insights, as well as the information needed to act to avoid problems.  BI solutions identify items at risk of excess inventory or stock-outs, and provide information in the same report on open purchase orders that need to be pulled in or pushed out to avoid inventory imbalances.  Beckman Coulter was able to reduce its global parts inventory by over 15% with a BI solution.

Advanced Metrics—Very few companies are able to track advanced supply chain metrics such as cost-to-serve, the perfect order, the vendor scorecard or customer, product or channel profitability. BI solutions are making these advanced metrics more easily available.

Collaboration—BI solutions, and especially web based Software-as-a-Service (SaaS) BI solutions, are increasingly being used for collaboration with customers, suppliers, and carriers.  It becomes very easy to allow a shared view of critical metrics and reports that keeps all parties aligned.  Moreover, we are seeing more Sales and Operations Planning Meetings (S&OPM) supported by BI that can allow manufacturing, inventory planning, sales and others to view and engage in “what-if” analyses using the same information during S&OP meetings.  This provides one version of the truth and allows much better communication among the participants.

What BI applications have you looked at or are using for supply chain management?  What benefits or issues are you finding? I welcome your comments.