Supply Chain BI Helps Organizations Manage Performance

Research shows mature companies use BI to shape demand and guide financial results. Is your firm at the Tactical, Advanced, Strategic or Innovative level of maturity?
Less than 10 percent of companies exploit the full potential of supply chain business intelligence (BI) technology. However, companies that do use supply chain BI to enhance profits and coordinate promotions are able to improve sales planning and supplier performance, and, as a result, they gain flexibility to meet changes in demand. These are the key findings of a recent benchmark study by Ventana Research.

Ventana's study analyzed information from 427 qualified participants from organizations in manufacturing, services and the public sector. The research examined current use of supply chain BI — both reporting and analytic applications — and identified benefits achieved through the adoption of BI technologies. Sponsored by Cognos and Salient as well as media partners including, DM Review, Montgomery Research and Software Magazine, the research assessed organizational maturity in deploying and using various business and technology processes. Based on its findings, Ventana categorized maturity into four levels: Tactical, Advanced, Strategic and Innovative.

Those at the Tactical level (35 percent of companies surveyed) are at the earliest stage of using BI to manage supply chain processes. These organizations have yet to roll out supply chain BI across the organization; only the departments that manage the supply chain directly use the technology. Information is provided only by basic reporting, and supply chain data is not integrated with financial data or corporate metrics.

At the Advanced level (representing 31 percent of respondents), organizations use supply chain BI not only to manage supply chain processes but also to manage customer demand and customer service. These firms deploy supply chain BI and applications to a few other departments that use the information to manage performance. These companies use some advanced BI technologies, including alerts, business rules engines and online analytical processing (OLAP).

Strategic organizations (25 percent of firms in the study) use supply chain BI to help manage demand-shaping activities. They deploy supply chain BI in the finance, purchasing, sales and marketing functions. They use the information to improve coordination of forecasting, promotional events, supplier performance and financial metrics. Their executives, not just middle managers, use supply chain BI. These companies also use master data management, scorecarding and business activity monitoring technologies. Strategic companies use supply chain BI to improve profit, coordinate promotions and events, improve sales planning and improve their suppliers' performance. These firms also see the value in automating integration of trading partner data. As a result, they find that supply chain BI provides flexibility to meet demand changes. These companies use a platform for BI and reporting from a dedicated BI vendor and generally are satisfied with its technology.

At the Innovative level — the most mature — organizations have deployed supply chain business intelligence across all departments. These firms (representing 9 percent of respondents) use the technology to manage everything from new product introductions to field service. They tie financial performance metrics to supply chain BI at every level of measurement, and they use leading-edge BI technologies such as predictive analytics, visualization and geospatial representation. Innovative companies not only deploy supply chain BI technology but consider it very important to integrate financial data and metrics, and they value industry benchmarking methodologies such as SCOR, VCOR and APQC. They also consider it very important to deploy supply chain BI to most user groups, especially front-line employees.

Ventana Research views business intelligence as a key enabling technology for effective performance management. BI provides quantitative data as well as tools to manipulate it so users can perform business analysis that supports decision-making. Large and midsize businesses have invested many millions of dollars in BI software implementations as they strive to provide more business users with access to information that will improve the company's results. Ventana advises firms to get the full value from supply chain BI by assessing and improving the level of organizational maturity.

Many organizations adopt technology without understanding everything required to enable people and processes to use that technology effectively. Ventana's research revealed that Innovative companies have educated themselves in this regard, moving beyond merely using supply chain BI for reporting basic data such as inventory turns or supplier costs. Instead, these companies have deployed supply chain BI to address customer-facing issues and revenue-driving activities.

Midsize and large businesses in any industry can adopt this technology to improve decision-making and provide a superior interface for supply chain or trading partner information. Ventana Research recommends that you compare the maturity of your organization to that of industry peers and then use these benchmarks to guide your strategy and determine steps needed to implement the strategy (and to that end it offers a Ventana Research Maturity Model to aid in such assessments). You should also evaluate the ability of your current technology providers to offer supply chain BI and look for areas where you can apply supply chain BI to increase the value of your investments.

Colin Snow is vice president and research director of Ventana Research's Operational Performance Management practice, which focuses on aligning business and IT in the areas of supply chain, operations and business process management. Write him at [email protected]

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