Business Intelligence and Supply Chain Management By Donald Shobrys A major theme in 2002 was the increasing use

of Business Intelligence (BI) for business process management (BPM). BI goes beyond static data snapshots to enable users to identify and analyze ongoing business trends and patterns. Background In the 1980's, finance and telecommunication companies pioneered BI to support financial and market analysis of the large volumes of data that they had begun to accumulate electronically. The need for BI capabilities grew in the 80's and 90's in other industries as companies began capturing data electronically across the full range of their business activities. This need was further compounded by the growing interest in real time data access which required effective tools to mine and analyze dramatically increased data volumes. To support this growing need, large software and services providers like IBM and Oracle launched major initiatives to bring data warehousing capabilities to the marketplace. These data warehouses, or data marts, are the most common sources of data for BI applications. ERP systems have also been used to capture data and enforce consistency, but they tend to be too inflexible to support ad hoc exploration of data. Fortunately, better tools for access and analysis have emerged. These tools usually start with flexible query and reporting capabilities that are combined with some mix of online analytical processing (OLAP), statistical analysis, forecasting and data mining techniques. Why Is BI Useful in Supply Chain Management? BI use is expanding from finance to other business functions because it provides a quick Return On Investment (ROI). It complements supply chain planning because BI applications provi de incremental benefits while a business lays the foundation for more sophisticated tools and related business process changes. To reap some quick returns and support their supply chain projects, some companies are using BI tools to: Improve data visibility so as to reduce inventory levels by 5% to 15% in some businesses. Analyze customer service levels to identify specific problem areas. Better understand the sources of variability in customer demand to improve forecast accuracy. Analyze production variability to identify where corrective measures need to be taken. Analyze transport performance to reduce costs by using the most efficient transport

providers. By providing wider visibility to plans and supporting data, BI tools increase the return on existing SCP applications because they help companies understand where and how they deviate from their plan objectives. In addition, they provide shared data availability that encourages a global perspective on business performance. As a result, people are more likely to make decisions based on their global impact. Some Current Developments BI capabilities are now being integrated into other products. In fact, Microsoft has vowed to bring BI to the workforce with their next release of SQL Server. Not surprisingly, its ownership of the desktop work environment gives Microsoft an edge over Oracle and IBM, who have also announced enhancements to their OLAP and data mining capabilities. All this puts pressure on traditional BI applications providers. The CRM (Customer Relationship Management) community has even come up with a name for BI analysis of customer behavior (CRM analytics). Although SCP vendors are offering BI capabilities as well by adding layers of products from the traditional BI vendors, the resulting mix of applications can be cumbersome to implement and support. In addition, IT publications report that end users often have difficulty using generic tools that were not designed to support specific roles or job functions. New SCP products, like Zemeter, have an advantage because these BI capabilities are easily incorporated as part of a single offering. These newer tools can also be configured to support specific business roles. BI applications have become increasingly cost effective because they utilize the connectivity provided by the Internet and by intranets and because component-based software development speeds implementation. Since implementation consists of installing the software and connecting the data feeds, BItools with good user interfaces can be put into use within a few weeks. Some companies that haven't developed these capabilities in an organized fashion are seeing independent, often underground, local projects popping up in their businesses. While it is encouraging to see employees take the initiative in addressing business problems, this fragmented approach often produces a series of applications with overlapping functionality drawing on a hodge podge of different technologies. Sustaining these applications becomes a headache, and effective support often hinges on the continued presence of a local super user. Some Implications for the future of Supply Chain Management Applications BI applications will become part of the standard technology set used by most businesses and will have a synergistic effect on current and future SCP applications. The continued evolution of component- based software development will lead to increased consideration of internal development, particularly around BI applications. The option of internal development will put downward pressure on software prices. Vendors will move from pricing based on estimates of value added (which are often optimistic) to pricing based on development costs. Dr. Donald E. Shobrys has 20 years experience in the design, development, and implementation of integrated planning and scheduling solutions. His career started at Exxon. He then spent 14 years with Chesapeake Decision Sciences, Inc., where he worked with over 70 companies worldwide and ultimately had responsibility for leading company operations. In

addition to refining, the industries he has worked in include chemicals, cons umer packaged goods, pulp and paper, metals, and semiconductors. He has also written and pr esented extensively on supply chain management and advanced planning and scheduling. Dr. Shobrys helps client companies improve supply chain management processes, evaluate relevant technology, and successfully implement it. He is also on the Board of Di rectors of Supply Chain Consultants, Inc. He has engineering degrees from MIT and Northwestern, and a Ph.D. in Operations Research from Johns Hopkins. 2003 Supply Chain Consultants www.supplychain.com