In this article, we look at how business intelligence (BI) is helping supply-chain management (SCM).
One of the key functions of BI is turning huge amounts of data into sensible, actionable information. Due to the nature of operations and challenges faced in SCM, managers are embracing BI tools. BI helps them to find meanings in the ocean of information.
Today, businesses are facing new challenges, such as environmental and sustainability issues becoming key factors in business. Customers becoming less loyal and demanding high-quality services and products provided at the right price, time and place. All these things made forward-thinking companies focus on the improvement of their supply chain departments. SCM became one of the last frontiers for cost reduction and operational efficiency.
BI is now the most sought-after functionality in the SCM sector. This is according to a survey of leading transportation management solution (TMS) vendors.The technology research and advisory firm ARC Advisory Group made the survey.
“Companies want more granular visibility to their transportation spend. So, they can manage and control it more effectively…” said transportation analyst Adrian Gonzalez, as cited by an article in Supply Chain Minded.
“They want to identify negative trends in costs and performance—and identify root causes—as early as possible to take corrective action. And they need to conduct ‘what-if’ analyses to evaluate the service and cost trade-offs of different transportation strategies and tactics.”
With the use of BI tools, companies seek to find data, turn it into valuable information. This information then helps to make strategic decision to improve effectiveness. In SCM, BI tools are used in three main categories: reporting, real-time dashboards and benchmarking.
Reporting: in-depth and dynamic BI reports are more effective than the static reporting used in the past. All the data about transportation providers and factors, like their delivery time, bid acceptance rates, the ratio of meeting capacity commitments can be assigned metrics and seen in BI reports. Companies can then use this information to select vendors and have a basis for productive discussions with supply chain partners.
Real-time dashboards: a detailed overview of what is happening in all transportation and supply chain network. This is important for management, as real-time (or near real-time) dashboards help users to identify trends. This also helps to analyze certain parts of transportation operations, see which problems are occurring and react to them as quickly as possible.
In SCM, precision, timing and speed are of key importance. Modern BI tools provide dashboards that give a glimpse of the business activity at any given time. Businesses know exactly how many loads to prepare today and when loading trucks will arive. This in turn, helps to analyze which goods to restock for tomorrow.
“Because dashboards are updated as business is occurring, users don’t have to wait for someone to compile and send reports. Therefore, they can react faster to changes in the market…” said Cindy Winkel, vice president of data warehousing for Frisco, Texas-based 3PL and technology provider Transplace.
Benchmarking: effective comparison of a business against competitors in the market gives the whole picture of a company’s performance. Factors, such as prices, freight rates, delivery times can be all evaluated against peers.
This is important when making decisions on pricing, for example. Executives may be thinking about renegotiating a price decrease with a carrier. In this case, they would want to know what the rates are currently and what price dynamics have been. Perhaps, they are hoping to get a 2-percent reduction, which may seem to be a good deal, until they find out the overall rates in the market are falling by 4 percent. This means the deal they are hoping to get isn’t such a good deal after all.
BI tools can get access to such information quickly, helping SCM managers to negotiate with carriers more effectively.
Finally, with BI tools companies can look at historical data, highlight certain patterns and dynamics in real-time, and try to build predictive models to avoid potential risks or, on the contrary, use opportunities in the future.
The true power of BI is about providing detailed information and actionable insights. When SCM managers know all the small details of their supply chains, they can improve operations and customer service, reduce costs and get better deals with logistics vendors.
At the end of the day, customers are arguably the end beneficiaries of BI-powered supply chains – we receive products at cheaper prices, where and when we want them.