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August 10, 2003

The Smartest Link

What can BI do to transform your organization's supply chain from a costly morass into a competitive strength that works in sync with strategic objectives? Here are eight key areas where BI can have the greatest effect

by Sudhi Sinha

Continued from Page 2

Network Configuration

The network of fulfillment facilities — plants, warehouses, distributors, suppliers, retailers, and so on — forms the backbone of any supply chain. Network configuration is a strategic SCM decision that involves determining the number, location, size and supply feeder of the various facilities. Micro- and macroeconomic factors, and logistics, technology, and operational factors strongly influence such decisions.

BI tools can examine the impact of these factors to recommend the best physical epicenters for various facilities. The same tools can indicate various optimization opportunities in the existing networks.

A BI Structure for SCM

Given that each organization has distinctive SCM attributes, it's unlikely that we'll ever see the day where one BI solution structure works everywhere. However, some information needs are similar and can give IT designers a baseline set of considerations in building an intelligent SCM architecture.

To derive maximum benefit from a BI solution, your organization should try to store information under a single umbrella at the most granular level possible. This posture will enable any fashion of data manipulation and modification. One common approach is to define a unit of business (UOB) and relate all data to the UOB in a denormalized data warehouse. For a manufacturing unit, "part" could be the UOB; the data warehouse could then contain all inventory, sales, and financial information for parts.

Once most of the integrated supply chain data is in the data warehouse, you can then apply data quality, cleansing, transformation, and other BI infrastructure to the task of polishing and normalizing data into data marts for easier access by the user community. Mechanisms for extraction, storage, and data/information dissemination tend to be similar across SCM implementations (see Figure 1 for a view of a typical architecture).

Business requirements should guide the design of the data warehouse and data marts. Table 1 shows some popular dimensions (discrete and static data) and facts (repeatable data relating multiple attributes of something).

Packaged Applications?

Given the importance of SCM, the marketplace offers a variety of packaged applications that are beginning to add BI capabilities and compete with Business Objects, Cognos, Information Builders, and other traditional BI market leaders. Enterprise application providers such as J.D. Edwards, Oracle, PeopleSoft, SAP, and others have also been expanding their manufacturing solutions to include tools for data warehouse, data mart, and BI-style data access and reporting, sometimes by bundling them in one of the traditional point solution products. Increasingly, the BI layer — covering analytics and performance management — is a key way to add value in enterprise application software sales. Supply chain specialists such as SeeCommerce offer greater vertical depth and include tools and modules for frameworks featuring information gateways, data transformation, and aggregation.

Organizations should also explore packaged applications aimed at the middleware layer of process management and integration. Within its suite for business process management and integration, SeeBeyond offers custom reporting with its e*Insight module. Competitive enterprise application integration and infrastructure software providers such as BEA Systems, IBM, Microsoft, Tibco, Vitria, and WebMethods also bear examination.

So, with such choices of applications that can be "plugged in" to achieve the desired effect of greater supply chain information integration and transformation for access and analysis, should you still consider developing and deploying your own BI application with the aid of traditional BI tools?

To answer that question, a major factor to consider is how important vertical depth is to your objectives. Most package providers are particularly strong in a defined number of vertical areas. SeeCommerce, for example, is strong in the automotive sector. With that depth, however, can come limitations in terms of building out to create an enterprise solution that leverages all the potential of information integration. Supply chain integration should transcend technology: It can have a profound effect on the entire organization. It is important to examine packaged applications closely to see how they avoid increasing the silo problem many organizations have experienced. Finally, most organizations today prefer to take an incremental approach to SCM. Can the packaged application do this?

A final point that might favor BI applications is that they tend to allow users to experiment with reporting and manipulation, letting them follow their analysis beyond the box and thus extend SCM into new realms to meet developing business requirements.

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Beyond The Box

Whether built or bought as part of a packaged solution, a good BI framework is key to creating a robust, integrated, collaborative supply chain. Particularly in today's economy, organizations can't overcome funding and other challenges to take the big bang approach and create a brand-new SCM system. A phased, modular approach, based on an enterprise design, can bring desired results. BI applications should be a core part of the modular effort from the beginning so that your organization can gain immediate benefits from continuously monitoring and reporting on cost efficiency and effectiveness in the supply chain.

Sudhi Sinha [s.sinha@usa-tcs.com] is an enterprise business solutions consultant working with Tata Consultancy Services.