BY JAMES COOKE, EDITOR AT LARGE
techwatch
the case for business intelligence
LOOKING FOR ANOTHER WAY TO CONTROL YOUR DISTRIBUtion and supply chain costs in tough economic times? The answer
might be business intelligence (BI) software. Business intelligence systems, which extract information from different database applications
and then analyze the data, can help companies manage their supply
chains by determining which areas of an operation offer the greatest
opportunities for improvement.
Business intelligence solutions are nothing new. In fact, they’ve been
around for more than two decades. But in the past, they focused primarily on such corporate functions as sales, marketing, and financials.
Only in the last couple of years have applications geared toward logistics and supply chain operations begun to emerge. Vendors offering BI
software for the supply chain include IBM Cognos,
Oco, and Equazion, among others.
What can these apps do for supply chain operations? “BI can provide tools for monitoring performance of suppliers, spending on commodities,
and profitability of products and customers,” says
analyst Sarah Burnett of the Butler Group, an information technology advisory firm based in England.
“Performance management analytics can provide
‘what-if’ planning scenarios in the supply chain.
Solutions from operational BI vendors can help
with logistics tracking of goods and services.”
In the distribution area, for instance, BI applications can make managing carriers and third-party
logistics service providers a snap. Want to know which carriers are living up to their delivery promises? A BI program can swiftly sort
through the data and generate a report showing which have made good
on their pledges and which have not. Going one step further, the software might also identify opportunities to cut costs and boost service by
shifting more freight to carriers with the best on-time records and lowest costs.
In a similar vein, users can employ BI software to analyze a third-party logistics service provider’s performance against various warehouse operations metrics: the percentage of orders delivered on time,
the percentage of items damaged, invoice accuracy, and order fulfillment time. For companies that use more than one 3PL, the BI software
could rate all of the 3PLs against a standard set of measures, making it
easy to identify both star performers and those that are failing to make
the grade.
Historically, companies have had to purchase licenses for BI solu-
tions and install them on their company servers. But nowadays, more
vendors are making their applications available via the software as a
service (SaaS), or “on demand,” model. “More
BI on-demand solutions are appearing on the
market and these reduce some of the pain
points of implementing BI,” says Burnett. It’s
likely that vendors offering BI software for supply chain operations will follow that trend.
Because business intelligence software
crunches data drawn from other applications—
for example, a warehouse management system
or transportation management
system—integration can be an
issue. But new processing techniques promise to eliminate
some of the hassles. In the past,
companies had to take the preliminary step of storing the data
in a repository, a process called
data warehousing, before they
could tackle the integration
process; now it can be done
through a technique known as
data federation. “Data federation
is a different approach to data
integration that pulls data from source systems
on demand,” says Burnett. “It does away with
the need to consolidate data from different
source systems into another data store.”
Integration issues aside, BI applications offer
companies an efficient way to sift through
reams of data and uncover cost-cutting opportunities. That’s why it was surprising to read in
a Butler Group brief earlier this year that the BI
market was slowing—presumably a casualty of
the global economic downturn.
Although she recognizes that IT groups are
under pressure to conserve cash, Burnett thinks
postponing a BI investment is false economy. “I
know it goes against the spending freezes that
always come about in a recession,” she notes,
“but a lot of expenditure can be saved if there is
proper measurement and visibility of costs.”
