Mulani on Excellence: Business intelligence enters the supply chain
By Narendra Mulani -- Logistics Management, 4/1/2008
I am seeing a growing need for better analytics and management reporting across all areas of supply chain management. Over the last decade, we have made great progress in improving the efficiency and effectiveness of our transaction systems, with most companies now having an ERP system to handle order management, procurement, inventory management, and financials, and often a separate transportation management system (TMS) and a warehouse management system (WMS).
However, while these transaction systems do a great job of executing the business, they are not designed for business analysis and management reporting. Most supply chain managers I speak with are frustrated that they cannot easily extract, analyze, and report on the data from these transaction systems to gain new insights, identify root causes for improvement, and analyze new ways to improve the business.
For example, many of my colleagues at Accenture in the transportation practice note how difficult it is to get decision-oriented reporting out of traditional TMS systems, specifically custom analysis and reports. The issue is that these systems are not designed to be data warehouses and invariably there is some performance degradation when these systems are asked to provide this type of functionality.
Moreover, effective supply chain management requires integration across functions or departments. Some of the most useful reporting is around cross-functional processes such as total cost to serve; product or customer profitability incorporating logistics, ordering, fulfillment, selling and other costs; vendor scorecards; the perfect order; order-to-cash cycles; and variable cost productivity. Each of these reports requires assembling data from multiple source systems, and most companies cannot easily do this.
Instead, they conduct periodic or one-time analyses of these cross functional processes, consuming a lot of time for cumbersome manual data collection, massaging, and analysis. Most companies have not been able to create regular, periodic reporting to provide on-going tracking of these processes.
The good news is that an emerging group of business intelligence software approaches are available that allow affordable solutions for the rapid extraction of data from multiple, disparate transaction systems, and the quick organization of this data into a reporting database.
Some of these solutions have focused on the supply chain management area with pre-packaged solutions, capturing best practices and pre-configured reports, in the areas of transportation, inventory analysis, strategic sourcing, procurement operations, distribution operations, and cross functional process analysis.
These capabilities provide operating managers with a leg up in analyzing data across these functions to gain new insights into improvement opportunities. They also allow for easy on-going tracking and monitoring of key metrics, without the cumbersome, and often prohibitive, effort to collect the data. Therefore, supply chain managers can be one step ahead in seeing trends, identifying opportunity areas, operating more strategically, and best leveraging the valuable data in your transactions systems.
The bottom line: Thoughtful supply chain managers are bringing cost-effective business intelligence to their operations.
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