In many businesses, a significant proportion of the overall cost structure is determined not by what goes on within the four walls of the enterprise, but by what goes on in the supply chain. Yet identifying—and eliminating—these sources of added cost isn’t easy. To the rescue: supply chain Business Intelligence.
Supply chain Business Intelligence, in short, enables businesses to look at how actions by suppliers, customers, and logistics partners all impact their manufacturing operations, inventory holdings, and downstream distribution operations.
And armed with the information that supply chain Business Intelligence provides, businesses can in turn take action to eliminate these profit-sapping costs, driving improvements in profitability directly to the bottom line.
So let’s look in detail at what supply chain Business Intelligence can deliver.
Supply chain Business Intelligence: identifying supplier variability
What happens when a business has suppliers who deliver late, deliver erratically, and who don’t consistently ship orders in full?
To avoid manufacturing orders running late, the business usually seeks to protect itself through holding additional inventories of raw materials.
In distribution companies, we see the same thing, but in respect of finished goods inventories.
And when late orders do finally arrive, the business often incurs extra costs in order to catch up, and meet customer promises—overtime payments to staff who are working late, for instance, or expedited premium shipping costs in order to get orders to customers as quickly as possible.
The trouble is, understanding which suppliers are causing which added costs.
Yet most businesses’ ERP systems hold the raw data required in order to identify supplier variability—the supplier records, open and closed purchase orders, goods inwards receipt data, and invoicing and payment details. The problem lies in the lack of a means to extract and analyse this data.
Which, handily, is exactly what supply chain Business Intelligence delivers.
Supply chain Business Intelligence: identifying customers’ cost-to-serve
Customers, too, can have a significant impact on cost structures. Supply chain experts call this the ‘cost-to-serve’.
Some customers order in very small quantities, for instance. Some customers insist on still ordering superseded products, or heavily modified products, adding to SKU proliferation. Some customers insist on onerous, uneconomic shipping requirements. And some customers insist on lead times which force the business to hold additional inventories in order to meet their demands.
Of course, no company wants to turn away business. But without understanding which customers incur an excessive cost-to-serve, it’s difficult to even begin a dialogue about appropriate pricing, or why such practices are necessary.
Again, the information required to identify these customers is already to hand, held within a business’s ERP system. The difficulty lies in extracting and analysing it—a difficulty that vanishes with supply chain Business Intelligence.
Supply chain Business Intelligence: delivered from the Cloud
But however attractive the prospect of supply chain Business Intelligence, many businesses will see a barrier to benefiting from it.
Namely, that they associate Business Intelligence systems—of any kind, whether supply chain Business Intelligence or not—with lengthy implementation projects, and costly IT overhead.
And frankly, that’s probably true in the case of traditional, on-premise Business Intelligence. But it most certainly isn’t true of modern, Cloud-based Business Intelligence.
With Cloud-based Business Intelligence, there’s no need to worry about server capacity, data warehouses, obtaining the in house SQL skills to write reports, or any other the other headaches associated with traditional on premise Business Intelligence.
And as for lengthy implementations, we at Matillion reckon to have projects up and running and delivering benefits in eight to ten weeks, from signed order to reports being run.
In short, for a single monthly subscription, businesses can get a full on demand supply chain Business Intelligence solution, together with self serve reporting—and get it, moreover, in a matter of weeks.
Supply chain Business Intelligence: next steps
Intrigued by the impact that supply chain Business Intelligence could make on your supply chain? We’re not surprised.
So to learn more about Cloud-based Business Intelligence, and to see how simple point-and-click self-serve reporting tools can help your business to tackle its supply chain, read our case studies, or download one of our free e-books.