BI in the Supply Chain

By Viktoriya Sadlovska and Nari Viswanathan
 
In the context of today’s complex demand-supply networks, in which visibility into key performance indicators across the entire network is key to business success, companies have begun focusing more strongly on their supply chain Business Intelligence (BI) capability, as a key enabler of strengthening or regaining control over their supply chain networks. Focus on supply chain BI will remain strong in 2010, contributing to operational and strategic supply chain improvements at the top-performing companies. 
 
The only way to ensure that a business is able to adapt to changes fast enough is to establish an adequate level of supply chain intelligence, i.e. put in place processes and tools to effectively monitor supply chain performance and notify specific process owners and managers before problems turn into disruptions. These capabilities should not only serve as each supply chain’s operational “command and control” center, but also help uncover new revenue and savings opportunities with the help of advanced analytics.
 
In order to successfully monitor, capture and analyze performance data in a complex supply chain, top-performing companies across industries have implemented a series of capabilities and software enablers to help them in managing this mass of information. Having a supply chain business intelligence technology that is designed to integrate data and event flows across the broad array of departments, functions and roles within the global enterprise is an advantage versus an infrastructure that is not designed with such robust connectivity and functionality. A company needs to be able to integrate information across internal and external groups and trading partners and enhance collaboration and agility during tracking and responding to the myriad of supply chain events.

Dashboards and Scorecards
Multiple Aberdeen research studies have shown that Best-in-Class companies are more likely to use internal dashboards to measure supply chain performance, and external scorecards to measure their supply chain partners’ performance. Scorecards help companies formalize the evaluation of supply chain partners’ performance in order to improve the supplier and services provider selection process, potentially adopt performance-based incentive programs, and improve overall supply chain partner relationships.
 
It is important to ensure the adequate quality of the data feeding the above-described systems. Even if information is timely, it is worth nothing if it is inaccurate. In Aberdeen Group’s recent study – Supply Chain Intelligence: Adopt Role-Based Operational Business Intelligence and Improve Visibility – Best-in-Class performers dedicate a lot of effort to making sure that the data exchanged is accurate and complete, which enables them to make the right decisions for their supply chain. Best-in-Class performers in this study are 85% more likely than all others to report that data obtained during supply chain monitoring is accurate over 90% of the time (48% versus 26%). Some solution providers offer their customers help in cleansing the data, or even embed the data cleansing capability into the systems.
 
In the same study, when asked how companies planned to improve supply chain visibility software capabilities, responses included:

• Improve data quality and timeliness of status messages – 66%
• Enhance analytics capabilities – 56%
• Add warning alerts if actual events deviate from plan – 46%
• Incorporate additional status events – 40%
• Increase the number of trading partners providing status information – 40%
• Add escalation policies to help manage alerts – 30%
  

Best-in-Class respondents were 21% more likely than all others to focus on improving the analytics capabilities. Supply chain analytics (e.g. dashboards showing on-time versus late shipments along with detailed shipment information, charts and graphs with information on current shipment location and accumulated landed costs) are contributing to more effective decisions, improving both the quality of supply chain decision-making and time-to-response.
 
As a result of superior process and technology capabilities, coupled with a stronger focus on data quality and timeliness, Best-in-Class companies are between 19% and 42% more likely to respond to non-catastrophic supply chain disruptions within hours. The biggest differentiation is on the international inbound side: 51% of the Best-in-Class report this ability, versus 36% of all others. This means that if, for example, a shipment gets held up at a foreign port, they will be notified of this delay within hours and will not miss the opportunity to re-plan the route or resolve the issue fast enough to have the cargo shipped within the acceptable time window.
 
Companies need to obtain appropriate tools for tracking and managing network-wide supply chain performance and collaborative workflows. Network-wide supply chain intelligence paves the way for companies to have the most complete view of their business, including the potential impacts of their customers, suppliers, and other partners’ performance on the company’s bottom line. With such a 360-degree view of the business, executives can adopt the best supply chain strategies to meet the changing business needs.
 
The benchmark report Supply Chain Intelligence: Adopt Role-Based Operational Business Intelligence and Improve Visibility is available for free download for a limited time. Click here to download before April 23, 2010
 
Viktoriya Sadlovska is Researcher, Product Value Chain Benchmarking & Analysis at Aberdeen Group. Nari Viswanathan is VP/ Principal Analyst, Supply Chain Management at Aberdeen Group.