The business intelligence (BI) software used by manufacturers for analysis of their plant floor data has been working its way into the supply chain end of the manufacturing operation, supplanting spreadsheets and homegrown BI applications with limited capabilities.
"A lot of manufacturers would like more intelligence in their supply chain so they can take advantage of opportunities -- and BI is the elegant way to harness the information they already have," said William McKnight, an independent consultant for data warehousing, master data management and operational business intelligence.
BI platforms aren't yet able to address the intricacies of a global supply chain, however, especially when supplier data is contained in several places, including the manufacturer's ERP software, often multiple supply chain management (SCM) systems and best-of-breed add-ons.
"At the moment, about the best you can usually do with BI is manage some specific supply chain elements, maybe a function or a single department," said Tim Payne, a Gartner research director covering supply chain management. "The capability to reach across the whole supply chain isn't here yet."
Manufacturers strive for better supply chain visibility
Improved supply chain visibility is what manufacturers want. "Not having visibility to your suppliers kills you more than anything else," says Sundar Kamakshisundaram, a senior solutions marketing manager for Ariba, a provider of supply risk management software.
BGF Industries, a Greensboro, N.C., maker of technical textiles for the insulation, marine, electronics and aerospace industries, recently adopted SAS Enterprise BI to monitor internal and external supply chain issues in order to gain that visibility.
The BI software, which is accessible by 20 business users across four BGF locations, tracks material from suppliers as it comes in, monitors it as it goes through manufacturing, and tracks what's shipped to the field. The goal is to help supply chain managers determine which suppliers' component materials work best in the manufacturing process and which perform best in the field. "With our BI capability, we can now flag information coming back from the field that might not have been noticed before," said Bobby Hull, corporate systems analyst at BGF. "We can then address what's most urgent."
Too much data, not enough analytics
BGF's focus on performing data analysis on its supply chain chimes with what Simon D. Ellis, analyst at IDC's Manufacturing Insights, is hearing. The problem for many companies, Ellis said, is that they are getting buried under an avalanche of data but have fewer people to handle all that information. As a result, when Ellis asks manufacturing executives which IT capability they need, the most common answer is more analytics.
More specifically, he said, one of the biggest manufacturing hot-buttons is the desire to track total landed costs – the total actual cost of a product to its final destination, including transportation.
That was the goal of Welch's, the maker of grape-based products based in Concord, Mass. Welch's has more than 450 grocery SKUs, and when the company moved to a company-wide Oracle ERP system to help it deal with its growing inventory, it found that "Oracle didn't have a terrific solution for transportation reporting," said Bill Coyne, director of purchasing and logistics at Welch's.
Since Welch's currently spends more than $50 million annually in transportation reporting, Coyne wanted to do a better job of tracking finished goods from factories and distribution centers to customers. In other words, he wanted to make sure the trucks were full and shipments were profitable.
Initially, the company had used Excel spreadsheets and manual methods of extracting and accumulating data. The process was, to put it mildly, cumbersome. Welch's then discovered Oco Inc., a company in Waltham, Mass., with a SaaS BI offering.
Oco's BI solution gives Welch's "perfect visibility into transportation and transportation cost structures so we can analyze individual customer order patterns to try to improve them," Coyne said. "We can now tell exactly where, geographically, those SKUs are shipping and [which] customers are getting which SKUs."
A further challenge for BI vendors is the increasingly global nature of manufacturers' supply chains, specifically the task of creating software that can capture and model the intricacies of ever more complex supply chain networks. "Many companies are running supply chains that span 5,000 miles or more, and the companies within that supply chain are probably themselves dealing with suppliers from all over the world," Ellis said. Companies can only manage such sprawling supply chains with BI.
Integrating BI into enterpise apps
Vendors such as Oracle and SAP are in the early stages of integrating BI capabilities into their enterprise applications, according to Payne. Right now, the trend is toward better presentation of information through dashboards, and next up will be drill-down capability that allows users "to do something more useful with the information."
"It's a good bet that the next generation of business applications will come with a great dollop of BI built in, what we call integrated business planning," Payne said.
In the meantime, perhaps because these more complete BI solutions have yet to arrive from the leading enterprise application vendors, a "surprising" number of companies have been gravitating toward SaaS-based analytics, Ellis said. "Many of us tended to think of analytics as a core, internal function, but I'm seeing SaaS cropping up everywhere."
But for those who worry about inefficiencies, lost opportunities and a host of other supply chain problems, BI may be the answer, according to Paul Hoy, director of sector solutions for IBM and its Cognos BI products. His reasoning is that BI investments are usually relatively small but have the potential to yield significant benefits.
"We don't say you need to replace your transactional investments [e.g., your ERP system]," Hoy said. "Instead, we can add value to an [information] infrastructure that is already there."
Alan R. Earls is a freelance writer.