The efficiency of a supply chain relies heavily on many dynamic elements working in concert. All it takes for it to break down is a failure of one of its links. The supply system is somehow a robust and a vulnerable entity at the same time. Taking into account the fact that it’s also crucial for so many other industries, it seems like making it as resilient as possible should be a top priority for logistics operators.
On one hand, there’s the physical infrastructure and people, on the other, there’s a ton of data that can be collected to generate valuable insights. So, keeping our focus on the latter in this post, how can business intelligence for supply chain enhance your operations? Let’s talk about it.
Honestly, with the amount of data flowing through and available with so many different hubs constituting a supply chain, it doesn’t make much sense to NOT implement business intelligence efforts.
It’s there for you to collect it, analyze, and draw actionable business conclusions.
BI may be an unexplored area for you, one that’ll give you that competitive edge you’ve been looking for in areas including transportation, inventory management, and customer behavior. Even more importantly, business intelligence enables companies to identify issues and trends, allowing them to make proactive adjustments instead of reacting once the milk’s been already spilled.
What is business intelligence (BI) for supply chain management?
Business intelligence is a process of collecting, analyzing, and presenting data in a way as to help managers and other staff make the most informed decisions leading to business growth.
The information comes from all sorts of internal IT nodes, as well as external sources. Once collected, it’s processed and then showcased using data visualization techniques to make it ready for analysis and having queries run against it.
The outcomes of the two latter actions are then presented in a report, usually also containing charts and graphs, to drive strategic planning and decision-making.
BI for supply chain management can be particularly useful to obtain real-time insights into what’s going on in the extensive network of codependent parts of the chain in order to swiftly address any emerging threats and, with proper analytics, perhaps even foresee and avoid disruptions.
The primary goal of supply chain data analytics is to prompt better business decisions that result in higher operational efficiency, greater revenue, and having a competitive advantage over market rivals who don’t engage in BI.
Let’s drill down the issue and discuss what’s in it for you in more detail.
What value does business intelligence for the supply chain bring?
Business intelligence, when applied in the supply chain management process, brings in a number of tangible values including:
Removing guesswork from business decisions
A wise man knows that he doesn’t know what he doesn’t know (still with me?) but supply chain data analytics helps him get to the “knowing more” side of things and not having to take shots in the dark in regard to many of the business aspects.
With a BI system in place, companies can gather and analyze data on KPIs such as delivery times, inventory levels, and customer satisfaction. Logistics managers can then use this information to identify patterns, trends, and opportunities to optimize operations, cut down costs, and improve the overall service. Instead of relying on intuition or assumptions, BI empowers logistics companies to make more impactful data-driven decisions.
Visualization of each stage of the supply chain
Humans are extremely visual creatures. I think there’s an argument to be made that vision is our most dominant sense since the loss or lack of it incapacitates us to the largest degree. If you can’t see what’s going on, you won’t be able to move efficiently, and this applies to the business environment as well.
A business intelligence tool can be extremely helpful in visualizing data at each stage of the supply chain by providing real-time insights and analytics. Such a platform can be used to create interactive dashboards and reports that display critical information in a visually appealing and easy-to-understand format. This allows decision-makers to promptly identify any bottlenecks, inefficiencies, or opportunities for improvement throughout the entire supply chain.
Tracking of SCM-related KPIs and goals
Keeping track of your performance across multiple indices is absolutely necessary in the process of continuous improvement. How do you know how far you are from the destination if you have no clue of your current location?
BI helps you understand your performance by delivering real-time data visualization and reporting capabilities. By plugging data sources across the supply chain into a business intelligence system, you can obtain insights on metrics such as on-time delivery rate, inventory turnover, and order accuracy. This allows companies to identify areas where they can improve, set goals and benchmarks, and track progress over time. BI tools are also capable of generating alerts and notifications when KPIs fall below a certain threshold or when anomalies are detected, enabling companies to take corrective actions promptly.
Challenges in supply chain management solved by business intelligence
As I briefly mentioned before, supply chain data analytics aims to counteract all kinds of undesirable events that can disrupt logistics operations. Its task isn’t to merely inform you of what’s happened but more so to help you foresee and understand what may happen so that you can take the necessary steps and remain ready.
Some challenges a supply chain may be facing, solved by business intelligence, include:
Black swan events
Black swan events are rare and usually severe occurrences that can disrupt the supply chain in multiple ways and negatively affect a company's operations. Examples of these hard-to-predict events include natural disasters, pandemics, cyber-attacks, and geopolitical conflicts.
Business intelligence in the supply chain helps you get prepared for whenever a black swan event may occur by providing real-time analysis and predictive modeling to identify potential risks and vulnerabilities.
By crunching data from various sources, BI can help you see patterns and anomalies, and alert you to potential issues before they become major problems.
Material scarcity
Running out of stock is no bueno. With BI for supply chain management you can prevent material scarcity by getting real-time insights into inventory levels, supplier performance, and demand forecasts.
Being proactive in identifying potential material shortages allows you to take the necessary steps to avoid them. For instance, you can adjust your procurement strategy to diversify the supplier base, negotiate better pricing, or source alternative materials.
Business intelligence can also help you optimize inventory management, reduce the risk of stockouts and ensure that the right materials are readily available.
Higher freight prices
Freight prices are subject to fluctuations based on market demand and supply chain disruptions, leading to increased costs for companies. However, business intelligence in the supply chain can help you identify any emerging trends so that you can mitigate these risks.
For instance, by analyzing historical data, you can figure out peak shipping seasons and adjust the operations accordingly to avoid higher freight prices. You can also monitor real-time market conditions and make informed decisions about which carriers to use and which routes to take based on pricing data.
Unpredictable demand
The way you respond to a changing demand has the potential to either bury or elevate your business. Supply chain analytics can help you anticipate variations in demand patterns and respond accordingly.
By analyzing sales data, inventory levels, and customer behavior, you can spot patterns that may indicate a shift in demand. This insight allows you to proactively adjust production, stock levels, and transportation routes to meet the changing trade volume.
Using BI to keep your supply chain operational in an unstable environment
Companies, especially those with established brands and providing services others heavily rely on, are expected to sustain their operations in any conditions. This means keeping their supply chain up and running even in the face of an ever changing environment.
The major trend of digital transformation seen across many industries isn’t leaving the supply chain sector out and so increasingly drives the adoption of business intelligence in it.
This shift is also dictated by what seems to be a growing instability of the world, with events like financial crises, armed conflicts, health crises, and changing climate contributing to supply chain shocks becoming more frequent and lasting longer, as per McKinsey’s Global Institute findings.
Allianz, the global insurance and asset management giant, lists business interruption as the #2 biggest global business risk in 2023, following another year of supply chain disruptions.
It becomes clear that taking proactive steps in securing logistics networks is and will be a top priority moving forward. As discussed earlier, a business intelligence solution helps you get rid of the guesswork when it’s decision making time. Reliance on hard data coming from a variety of sources puts you in the best possible spot to only react to what’s already happened but more importantly anticipate what’s ahead to mitigate risks and come up on top in a crisis.
How to implement business intelligence for supply chain management
If you’re looking to transform your organization and usher it into the arriving digital age, implementing a business intelligence system is a firm step in the right direction. To get going, consider the following steps.
Identify your main concerns and problems
Start with proper groundwork. Before you implement a business intelligence solution, take time to understand the concerns and problems your supply chain is facing. At this stage you'll have to determine the types of data you're going to collect and analyze that'll be useful in making informed decisions and improving your operations.
Define your key metrics, KPIs, and data sources
Once you have identified your main pain points, move on to establishing the key metrics, KPIs, and data sources. This step will help you determine which data points to collect and analyze in order to keep track of your performance against your goals.
Define your IT project scope
Defining the scope of your project is crucial to ensure that you have a clear vision of what you want to achieve and what resources are needed to accomplish your goals. Here you should focus on the timeline, budget, and resources needed to implement your business intelligence solution.
Prepare a PoC
It's time to pick up the pace a bit. Before you proceed with the development of a custom BI solution or integration of a third-party tool, however, it's a good idea to have a proof of concept (PoC) to make sure that the solution will work as intended. This step will help you avoid any potential issues or challenges down the line and make adjustments, should the need be.
Proceed to develop your custom BI solution
Based on the results of your PoC, go ahead and proceed with the development of your own BI solution or integration of a third-party tool. If it's the second option for you, make sure to choose a platform that properly aligns with what you're trying to achieve.
Or integrate an existing 3rd-party BI tool:
In case you decide to move on with a third-party BI tool, Power BI and Tableau are two popular options for supply chain management you may want to consider. Both tools offer powerful data visualization and analysis capabilities that can provide you with insights into your supply chain operations and drive your decision-making.
Conclusions
In the words of general John J. Pershing, commander of the American Expeditionary Forces on the Western Front during World War I, “Infantry wins battles, logistics wins wars”. BI is your intelligence service in support of logistics in whichever theater you’re operating in, that gets you a strategic advantage over competitors.
In order to properly understand business intelligence for supply chain, keep in mind its core offerings:
- real-time visualization of data
- easy to understand conclusions you can act on
- prediction capabilities to avoid breakdowns
At RST Software, we’ve been working with Trans.eu, Europe’s 2nd largest logistics platform, saving 420,000 USD on location-based services APIs. We’d be now happy to get our experienced developers involved in creating a powerful business intelligence solution for you in case you decide none of the off-the-shelf solutions really meets your needs.
Ready whenever you are, get in touch with us at hi@rst.software.
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