BI in the Supply Chain
In a feature story in Inbound Logistics, Amy Roach Partridge says that “thanks to Business Intelligence tools, companies are no longer awash in reams of data that they don’t know what to do with. Instead, logistics managers are using BI technologies to find real meaning in their sea of numbers and take actions that boost supply chain efficiency and effectiveness”. Below some highlights, read the full story on inboundlogistics.com
The definition of Business Intelligence (BI) depends on who you ask
“An umbrella term that includes the applications, infrastructure, tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance,” says research firm Gartner.
“Business intelligence is a set of theories, methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information,” according to Wikipedia.
“Business intelligence is the use of computing technologies for the identification, discovery, and analysis of business data such as sales revenue, products, costs, and incomes,” notes Techopedia.
Regardless of its definition, many companies today are embracing business intelligence tools. And BI has become a must-have for the transportation and supply chain sector. Business intelligence/analytics is the highest-ranked functionality requested by customers, according to a recent ARC survey of leading transportation management solution (TMS) vendors.
Several factors are driving the demand for BI within the transportation and logistics space. “Companies want more granular visibility to their transportation spend so they can manage and control it more effectively,” says transportation analyst Adrian Gonzalez. “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.”
Companies are most attracted to supply chain BI tools for their coveted ability to make sense out of the seemingly endless array of data that has become available through the continuing adoption of logistics technologies such as TMS, warehouse management solutions (WMS), and supply chain execution systems. While access to data is key, being able to find, understand, and use that data to make strategic decisions that improve supply chain effectiveness is crucial.
Turning “data” into “info”
“Business intelligence allows companies to turn data into information—that capability is where we draw the line between standard reporting and BI,” says Chris Johnson, vice president of research and development for LeanLogistics, a transportation technology and solutions provider based in Holland, Mich.
“Historically, reporting has been about merely extracting data – getting it out of a system and into a spreadsheet or a database, where a company would then try to slice and dice it, and turn it into useful information,” he adds.
Today’s BI tools are taking that extra work out of the equation, offering up data in easy to understand and digest informational formats, presented in a more visual way. BI tools for supply chain users typically fall into three categories:
- Reporting… Business intelligence reports are far more detailed and dynamic than in the past. “BI reports display all the data about transportation providers as usable information, in a scorecard format,” Johnson explains. “Factors such as on-time delivery, tender acceptance rate, and meeting capacity commitments are assigned metrics and weighted averages to help users determine how well carriers are performing overall.
- Real-time dashboards… Managers and executives who want a quick, daily overview of what is happening in their transportation or supply chain network use dashboards, which provide information in near real-time to help users catch, and solve, problems as they occur.
- Benchmarking… Comparing data on factors such as freight rates and on-time delivery percentages against peers allows companies to get a more complete picture of their performance in the marketplace.
Many companies are also using BI tools to highlight patterns found in historical data that may yield clues to future risks and opportunities in their supply chain or transportation networks. This predictive analysis capability uses real-time data-driven insights to speed decision-making and help create a nimble and responsive supply chain.
Business Intelligence in action
So how are shippers using BI to improve supply chain and transportation operations? Ultimately, it’s about translating the information provided by BI tools into actions that achieve goals such as improved supply chain efficiency, reduced costs, better customer service, or improved relationships and strategic partnerships with logistics vendors.
The methods shippers use to put BI information to work range from simple to complex. “Some shippers use BI tools simply to categorize their supply chain costs at a more granular level than they have historically,” Johnson explains.
On the more complex side, companies can utilize BI tools to further drill down into the supply chain, and drive out even the smallest inefficiencies.
“Going after the last 20 percent of the supply chain that might be functioning sub-optimally is where BI can really make a difference,” Johnson says.
Say goodbye to data mining
“Managing by exception is better than mining for data,” says Owen Smith, senior vice president, product strategy for Cadec, a fleet management solutions provider based in Manchester, N.H. “Businesses that have utilized TMS for years, and are used to searching through reports for relevant data, experience a cultural and conceptual shift when they adopt BI tools.”
That was the case for Valley Proteins—a Winchester, Va., company that recovers, renders, and recycles animal by-products—when it began using Cadec’s Business Intelligence tools. The company, which operates 22 facilities and a fleet of roughly 450 trucks, began using Cadec’s PowerVue solution in 2012 to give fleet managers real-time, actionable information on fleet and driver performance, as well as pickup and delivery details.
“Our employees were used to data mining. ‘Let’s dig into the data and see what’s going on’ was our culture for years,” says Paul Battista, Valley Proteins project manager. “Now, with BI, we receive exception-based transportation information, which gives us more time to manage drivers instead of searching for data.”
“We do street-level routing, where our drivers pick up products at restaurants, grocery stores, and small slaughterhouses; we also deliver full truckloads of products,” Battista explains. “These are two completely separate operations that have to be managed separately because the drivers are performing different tasks.”
To ensure its fleet is operating at maximum efficiency, Valley Proteins counts on the business intelligence provided by Cadec’s PowerVue tool. Exception-based reports, such as planned-vs.-actual routes, help Valley Proteins managers quickly flag drivers that have taken too long or made too many stops on a certain route.
“Using these reports frees our managers from worrying about drivers who might be a little off on a route, and allows them to quickly find the drivers that went, say, 150 miles in 14 hours when they were supposed to do 100 miles in a 10-hour day,” Battista explains.
Dealing with Red Flags
When red flags such as these pop up, the company now has an easier way to analyze the data, address the issues with drivers and/or dispatchers, and determine which options it should take as corrective action.
“We look at these exceptions case-by-case,” Battista says. “Sometimes we have to make a change in our dispatch operation, and sometimes a change in driver behavior is necessary.”
Insight may be the best word to describe the power of business intelligence. By gaining insight into the inner workings of their supply chains through specific, detailed, and actionable exception-based information, companies are making strategic changes to transportation and logistics operations in real time. The end result: greater supply chain efficiencies, cost savings, and operational improvements. If that’s not intelligent, what is?