Business Intelligence Empowers Supply Chain

Today, supply chain management has become an important strategic differentiator and is in full swing across all industries to achieve cost efficiency and greater agility. However, in order to extend the strategic evolution of supply chain management, managers must effectively address the many challenges caused by the needs of the enterprise, so that supply chain data can be used in the strategic decision-making of the enterprise.

In a typical supply chain, data and information can travel along multiple channels and be owned by a company's many collaborators, partners, and other participants. Software solutions on the market promise to give you a window into the ocean of data and information. However, experience shows that these products have their own limitations.

So, can business intelligence applications built on top of data warehouses provide the solution? Business intelligence creates an interconnected, hierarchical network of knowledge workers who can co-develop, share, and connect data, analysis, and decision-making. With a collaborative BI framework, workers can quickly access the wisdom of others and use it as a reference to make better, more responsible decisions faster.

Business intelligence systems can greatly benefit supply chain management by enabling companies to respond more quickly to unplanned customer requests. Business intelligence enables businesses to become more agile, enabling them to adapt more dynamically to the capacity of the supply chain. Business intelligence also adapts the supply chain to the optimal cost structure and eliminates waste in the process.

Eight areas where business intelligence can make a difference

Product definition Organizations often view product definition as the responsibility of the engineering and marketing departments. However, the supply chain organization is actually a rather important stakeholder. Product duplication has become less and less useful in streamlining supply chains, coordinating and sourcing inventory and raw materials, while business intelligence can proactively identify common product categories to help companies plan materials efficiently.

A business intelligence analysis of an enterprise found that in order to support the sale of complete sets and individual products, there was too much inventory of materials required. The study revealed that the main culprit for poor warehouse space and workforce planning is "packaged products." So the company decided to use a separate business intelligence system to convert the complete product into individual parts.

Inventory Management Inventory management is the core of supply chain management from a cost and inventory reduction perspective. Physical inventory starts from the supplier's warehouse, reaches the company's warehouse through the supplier's delivery system, and then passes through the company's product line into finished product inventory, and finally enters the distribution channel. In addition, virtual inventory is often hidden in a company's purchase and sales orders. These inventory points are often spread across multiple physical locations and information technology systems. It is precisely because the data is so widely distributed that it is difficult to accurately track inventory.

Data marts help integrate inventory data organically. Inventory is a function of quantity with respect to time, unit of measure, and location. If the variable cost is included, it must be defined in terms of suppliers and unit costs. Neither measure has changed substantially over time. With the ability to define all dimensions of other locations—time, location, unit of measure, supplier, and cost—analysts can aggregate numbers for new inventory locations into a data mart.

Requirements and Forecasts The primary goal of most enterprise resource planning (ERP) implementations is to unify the requirements and forecasts for materials. However, efforts to unify material requirements are often in vain due to the different business processes of each operating unit of the enterprise and the different cooperation systems in the supply chain. In addition, popular application solutions often have difficulty linking finished product requirements with raw material requirements.

Business intelligence (especially advanced statistical and data mining tools) is once again a firefighter. It can integrate sales order data and purchase order data together, and can monitor the correlation and development trend of these data. You can further integrate order data with broader inventory data to assess actual demand for items. A unified view of material requirements helps companies forecast demand more accurately—thus being able to allocate supply based on sudden demand.

Finally, business intelligence can also alleviate the fragmentation caused by the lack of correlation between marketing and manufacturing, especially the influence of competitors' activities.

Raw Material Costs and Product Prices Raw materials and finished products are located at both ends of the supply chain. Typically, supply chain organizations have no control over the assessment of raw material costs and finished product prices. But because it manages both inputs and outputs, supply chain organizations should understand the stakes and the ultimate impact on assessments.

Business intelligence tools that provide a unified view of material requirements enable companies to better negotiate prices and deliveries with suppliers. Thanks to smarter planning, businesses can reduce the cost of on-hand inventory and move to just-in-time inventory. In addition, organizations are better equipped to plan for global material procurement. By creating optimal delivery schedules and eliminating redundant shipping and storage charges, businesses can reduce material handling and delivery costs.

Finished product prices are largely determined by raw material costs and in-house raw material processing and handling costs. Business intelligence tools help companies reduce material procurement costs and improve material handling efficiency. Businesses benefit from higher profit margins: by subsidizing dynamic product pricing, it relieves market pressures.

Warranties and Claims Almost all manufacturing companies face warranty claims on products sold. Typically, distributors enter into warranty claims with companies, but at the same time they serve customers with the stock they have on hand for normal sales. It is therefore difficult to control the flow of inventory from the company for warranty claims. The problem becomes more acute when warranty claims are repeated. Advanced business intelligence solutions that integrate supply chain information enable accurate tracking of warranty claims.

Supplier Management To effectively manage your supply chain, you must manage your suppliers well. Most companies have begun to rate their suppliers on both hard and soft capital. The key performance indicators for evaluating suppliers mainly include supply cost, cost of buying and selling with suppliers, quality of supplies, timely delivery, payment lead time, cycle time analysis and transportation mode performance.

Many systems typically only record data related to these KPIs. However, to perform a broader and in-depth analysis that links KPI measures to other important company data—the impact of supply chain business performance on cash flow, operational flexibility, and overall profitability—business Smart systems are essential!

Warehouse Management Supply chain organizations must manage raw materials and finished goods in warehouses. Today, the marketplace offers a package of warehouse management applications. In addition to the operational control these systems provide, businesses need tools to manage a variety of activities: tracking inventory in terms of cost, turnaround, and accuracy; assessing warehouse structure and space utilization; Warehouse operation level analysis is carried out from the perspectives of transportation, customer demand satisfaction accuracy, and labor cost control.

It is not enough to provide the above data, business intelligence applications must also be able to perform cost-benefit analysis of various warehouse activities, help companies determine the effectiveness of reverse logistics, and identify patterns that can help strengthen supply chain business processes .

Network Architecture A network of fulfillment agencies—factories, warehouses, distributors, suppliers, retailers, etc.—form the nodes of all supply chains. Network architecture is a strategic supply chain management decision that includes determining the number, location, size, and supplies of each node organization. Micro and macroeconomic factors, logistics, technology, and operational factors all have a significant impact on such decisions.

Business intelligence tools can not only monitor the influence of the above elements to recommend the best physical center for each node organization, but also can point out the various optimal opportunities that exist in the existing network.