Supply Chain Intelligence Tips: 6 Steps to Success

In the difficult economy that we all face, it's never been more important to have a solid grasp of the key metrics that underlie your business. Many of the old adages definitely apply:

"Inspect what you expect."

"In God we trust, everyone else needs data."

"The chance is negligible that you'll measure the right things accidentally."

"Experience is what you get when you don't get what you wanted."

One basic tenet rings through them all: you won't know whether you've succeeded or failed unless you establish your expectations and measure your results. Hard to argue with, isn't it? Yet in a recent Aberdeen study only 54% of those surveyed responded positively to the question "Do you have the ability to provide visibility to executives into critical business level metrics?" And, if you really drilled into the question you'd find that a healthy percentage of the 54% are delivering metrics by hand crafting them in spreadsheets. Not the ideal approach - labor intensive to produce, prone to error, little or no ability to drill into the numbers and difficult to broadly distribute.

So, with the wealth of business intelligence tools available today, why are there so few success stories?

Because, for the most part, it's not the technology! Like any fine "cuvee", it is a sensitive mixture of elements that have to come together in just the right proportions to insure success:

  • People – lack of communication, collaboration and accountability can grind the decision making cycle to a halt
  • Processes – if the business processes underlying the project aren't properly aligned with corporate objectives, the chance for success is minimal
  • Technology – all too often the necessary "data" is locked away in disparate systems with only a few "information ninjas" knowledgeable enough to find it

Over time, we've seen successful business intelligence projects and some that were not so successful. This white paper is intended to offer you some tips and guidelines that will stack the deck in your favor.

Defining the Terms

It would be easy to simply define "supply chain intelligence" (SCI) as the use of business intelligence tools applied to supply chain problems. However, the reality is closer to the definition provided by The Business Intelligence Community:

"Supply chain intelligence provides a single view across your supply chain to make data your ally, not your enemy. Pre-packaged key performance indicators (KPI), analytics, and alerts help you zero in on the primary drivers behind supply chain processes—planning, procurement, manufacturing, logistics, and returns—so you can analyze and act to increase your supply chain efficiency."

When you begin examining the breadth of possible metrics that fall into the SCI category, three distinct roles begin to emerge:

  • Tactical – exists as a real time or near real time measurement used to look at metrics needed to manage the day to day operations of the business. They may be internally focused on the company's own supply chain performance or may be gathering information about key supply chain partners. Examples might include metrics like warehouse orders waiting to be fulfilled, late deliveries by carrier, etc. Tactical metrics create "action opportunities" usually demanding nearly immediate decisions
  • Operational – determined over a short time frame, usually between a week and a month. Operational metrics show performance criteria that can be reviewed and used to create potential "adjustment opportunities" allowing a company to gain efficiency. Examples might include order cycle times, fill rate %, picking accuracy, etc.
  • Strategic – have a much longer term viewpoint, usually between a one quarter and several years. They are typically used to compare information over long periods to capture trends, analyze root causes, or develop future plans. Strategic metrics create "planning opportunities" that may recommend significant change that could result in long term gains for the company. Examples might include metrics like warehouse capacity utilized, revenue per XXX, etc.

As Aberdeen found in their recent study, a healthy company spends time evaluating and utilizing metrics that fall into all three types. So, as a precursor to your upcoming SCI project, make sure that you choose a technology provider that can address them all.

6 Steps to Success

Step #1 – Start with a Mission in Mind

As Yogi Berra once said, "If you don't know where you're going, you might wind up someplace else." Make sure that you have a firm grasp on what you are expecting from your SCI project. Ask yourself these questions:

  1. What areas of my company are in need of improvement?
  2. Which one is my area of greatest pain TODAY?
  3. Do I have the right people in place to attack that problem?
  4. If successful, is there an adjacent area that I can leverage this success against?
  5. What is it worth to me if I succeed?

Once you can answer these questions, you can define the specific mission and goals that you have for your project. Remember to keep the opening salvo small and establish your mission as continuous improvement growing off of previous successes.

Step #2 – Understand the Information Needed

DC Velocity wrote in their article entitled Taking the Measure of Metrics, "Warehouse and distribution center managers can and often do gather a vast amount of performance data on their operations, but the ability to use that information to make management decisions is finite. In order to prevent all the data from becoming so much noise, managers have to determine which measures are, first, reliable, and second, most useful, and then concentrate on those." Once you've established what information is needed to support the metrics you want to begin with, make sure that you have systems in place that are capturing accurate data. The quality of the data going in is more important than the usability and timeliness of the information coming out of the SCI system.

Make sure that the information meets the following requirements:

  • For the organization – alignment, visibility and collaboration
  • For the business user – intuitive, personalizable, and insightful
  • For the IT group – deployable, manageable and affordable

Step #3 – Involve Key People in the Organization

Few projects have ever failed because of executive commitment. Many projects have floundered due to the lack of clear executive direction and backing. Involve the key decision makers, influencers and executives early and often in the project. Make sure that they communicate to the team why the company is taking this project on and what it hopes to gain from success. Ensure that the stakeholders at every level understand and can internalize what is in it for them.

Step #4 – Choose the Technology Wisely

Selecting the product or products to base your SCI project on can be tricky. All of the software on the market today is very capable. The question that you have to ask yourself is which software solution provides you with the tools to meet the mission you set in step #1. Business intelligence software falls into several identifiable categories:

  • ETL Tools – these products (extract, transform and load) provide the basis to "integrate" your various data sources into a homogeneous "data warehouse". Some ERP systems and supply chain systems support and provide proprietary data warehouses. And, some databases (like MS SQL Server) include ETL tools as part of the basic package
  • Query Tools – products like Excel, Cognos (IBM), Business Objects (SAP), Hyperion (Oracle), QlikView and Targit fall into this category. They support the capability of selecting multiple data sources and constructing a query to pull information from your underlying data. Information is often presented in a dynamic grid that can be filtered, sorted and printed
  • Dashboard Builders – many of the same products as the Query tools have the ability to "assemble" the queries that they produce into user-definable dashboards
  • Portals – the pre-eminent product in this category is MS SharePoint, although IBM Websphere, SAP, and Oracle also have portal products. The portal's job is to organize and present multiple dashboards to your employees and potentially other stakeholders
  • Reporting Tools – products like Actuate, Crystal Reports (SAP), SQL Reporting Services and Oracle Reports fall into this category. While not traditionally considered part of an SCI toolset, many customers look for a unified means of delivering reports alongside dashboards and queries.

At the center of your decision on technology should be whether you're looking for a set of "tools" or a prebuilt solution. Licensing tools will still require that you invest either through your IT organization, an outsourced consulting firm or the software vendor some amount of time and money to construct the solution that allows you to fulfill your mission. Finding a pre-built solution that offers some level of the same flexibility and extensibility that the tools have can provide you a much more cost effective way of delivering valuable information to your constituents. As Aberdeen stated in the recent study, "Perhaps the two most important things that a business intelligence solution can provide for small to medium businesses are the ability to manage and reduce the complexity of their analytic environment and to do so at as low a cost as possible."

Step #5 – Communicate, Incentivize, Empower

Many SCI projects run off the rails because the team isn't working as a team. Even when they are sent forth with the executives blessing, they can fail unless these three points are considered:

  • Communication – it is vitally important in this kind of project to communicate early and often. Make sure that the entire organization understands what the mission is and the "pot of gold" at the end of the rainbow. Keep them informed through the process of the status and momentum that the project has gained
  • Incentives – although not a mandatory part of an SCI project, finding a way to incentivize the behavior that is expected ensures that no one is confused as to the importance nor of your motives
  • Empowerment – make sure that the team is empowered at the point of contact. Give the autonomy to determine rollout plans, dashboard design, etc.

Step #6 – Learn from Your Successes and Failures

Well, we're down to the last step in the process. We've made our choices, implemented them well, empowered the team and communicated like we never have before. Even with all of that – we'll likely have some setbacks. Unlike implementing your business software, it is OK to learn from your mistakes. In fact, it's probably desirable. You think that you know what you want on a dashboard, who you need to have access to it and the regularity that you update the information. Once you've begun delivering the information, you'll find things that you hadn't thought about or that there are other areas of information that might actually bring you greater return. Iterate! Make changes and move forward. Accentuate the positive and minimize the negative. The last thing you want to do is stop!

In closing, Yogi Berra also said, "In theory there is no difference between theory and practice. In practice there is." Hopefully, these six steps will assist you in your journey to examine the key metrics of your supply chain, fine tune the processes and drive greater return for your business. At least that's the theory…


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