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Forecasting In The Supply Chain
Business intelligence is all about employing processes and tools to achieve efficiency in commerce. These technological approaches include all business functions that occur across the enterprise, including the supply chain.Assumed within this quest for efficiency is the ultimate goal of maximizing profit through minimizing operating costs. In order for this to become reality, the performance management-savvy organization must frequently rely on the application of analysis techniques like maximizing gross margin through measuring inventory return on investment or minimizing total operating expenses. Accordingly, supply chain optimization must look at the general problem of putting goods into the hands of one’s customers at the best cost and highest yield.
The classic approach to solving this optimization problem has involved traditional forecasting based on historic demand and prediction of future events. This approach is applied to aggregate data resident in smaller data repositories that require little manipulation. The analyst then manually manages any variability in the metrics. Using this forecasted demand, a plan is crafted that addresses the salient supply-related objectives, such as manufacturing rate, plant resource scheduling, re-stock strategy, or transportation modes.
The BI supply chain forecasting and reporting ability resident in today’s software solutions provides the technical ability to access and manipulate larger databases more swiftly. The metrics are gathered and manipulated using automated processes and key performance indicators using advanced capabilities, like scorecards and dashboards. Some vendors have integrated these features into their BI products and applying multiple modeling and analytic techniques to supply chain data to enhance the optimization problem.
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Cognos Tip: The Elements Of An Effective Business Intelligence Software System
Cognos.com Tip: Development of a corporate performance management capability using a business intelligence tool can be complex and resource intensive. In order to make the right decisions when selecting the vendor and software that will, arguably, change the company forever, understanding the basic elements that should be included is valuable. According to a 2006 white paper from the vendor Cognos, there are five key elements incorporated into their product suite:
·Scorecarding - Link initiatives and projects to strategy with metrics and strategy maps. Use the same scorecard metrics to drive enterprise planning software for integrated performance management.
·Analysis - Explore and analyze large volumes of data covering all dimensions of the business, whether stored in OLAP or dimensionally aware relational sources.
·Reporting - Create any type of report, for any user, with any data.
·Dashboards - Deliver Web-based dashboards with information from different data sources in a single visual report. Provide an at-a-glance snapshot of the business.
·Business event management - Business event management goes beyond the basic notification functionality provided in other products to automate the decision-making process, launch business processes, and integrate with Business Process Management (BPM). Where human intervention is required, through decision-process automation, event management notifies the people who are accountable and provides the relevant information they need to resolve the issue.
Many vendors offer similar business intelligence tool groupings, both integrated (like Cognos) and tool-by-tool. Careful research will lead the procurement team in the enterprise planning necessary to acquire an effective system.
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Effective Visual Presentations In Performance Reporting
The spectrum of business intelligence (BI) users spans a group of professionals ranging from programmers, engineers, IT specialists, and scientists on the technical side to salespersons, marketers, accountants, economists, HR pros and operations types on the business side. Additionally, managers and executives are included, cutting across both. In some senses, the management and executive users are frequently removed from the "heat" of the BI battlefield, thus requiring special treatment due to the more generalized nature of their job descriptions.
Presenting business performance metrics to this user group is one of those cases where special treatment in often needed. Specifically, performance reporting techniques that are geared to more effective visual presentation. Stephen Few, in a White Paper prepared for the Cognos Corporation, discussed a number of interesting characteristics of effective visual displays. Graphs, he suggests, were invented to give meaning to quantitative data beyond that contained in a table of numbers.
He goes on to note that both serve a very different purpose and should be selected to present information very carefully. For example, tables are wonderful when the information to be presented requires the observer to choose values. Tables are also useful when precision in the values is required. Graphs, on the other hand, create relationships between values through the discerning of size, shape, or color. As such, there is no substitute for a properly designed graph when communication of trending, patterns, or exceptions is desired.
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Cognos Tip: Enterprise Planning Software
Cognos.com Tip: If you aren't sure if enterprise planning software is right for your company, try viewing a demo on a vendor's site. For instance, Cognos.com offers a 19 minute demo on how you can transform your business using enterprise planning software. It will show you how to improve your company's performance through planning, budgeting and forecasting.
Enterprise planning software can help you respond quickly to the pressures of the market, as well as organize financial and operational plans.
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How Performance Intensive Is Your Business?
The book “The Performance Manager,” Mosimann, et al, cited work by the McKinsey Quarterly that identified three characteristics of business performance:
Transformational – activity involved with extracting/converting materials into finished goods.
Transactional – processing materials from basic form to applied products.
Tacit – procedural activities, such as retail sales or performing services, requiring tacit or experience for success.
Among the observations made regarding these interesting categories of business, the authors note that there have been more economic gains in tacit work activities.Is this possibly an effect of technology?Then they note that investment continues to be heavier in transactional activities.Is this a result of the decades old trend of shedding labor in favor of automation or off shoring?Finally, it is suggested that it was harder to sustain a competitive edge in both transactional and transformational business.Does this follow the adage of: if it’s easy to do, everyone does it?These observations seem to raise interesting indicators of how intensity of work performance can help classify your business.
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Cognos Tip: Reporting And Analysis Software And Customer Relationship Management (CRM)
Cognos.com Tip: In an article in the Web-based journal CRM2Day, Britton Manasco discussed a perspective on the customer intelligence community that demonstrates how intelligent analysis is setting trends for future economic activity. She notes that Customer Intelligence (CI) is defined as the technology of collecting, manipulating and exploiting information contained in a customer information database. This can include insights on a customer’s needs, decision-making, behavior, state of the marketplace, and trend directions. In order to effectively handle this most valuable relationship with the customer, the right information about clients is required and organized such that the information can receive proper analysis and action.
Use reporting and analysis software, like speech analytics, for this very technology-intensive business function. Some techniques, predictive dialers for example, analyze phone calls between supply chain components and then provide insights to the dashboards of senior executives and managers. CI is the macro-area of BI that includes tools like speech analytics and enables managers and executives to: · Define and measure the customer experience · Understand the experience of their customers · Identify the reasons why customers call · Maximize loyalty and retention · Gain market and competitive intelligence · Increase sales effectiveness
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Deploying Reporting Software
Deploying reporting or any other type of business intelligence software capability is a complex and difficult process that is often hard to standardize.Help in accomplishing this capability may come from a concept pioneered by the BI developer, Cognos.It is called the BI Competency Center and is based on three suppositions:
·The deployment must connect to senior management, users, and vendors.
·There must be adequate financial support from the CEO and CFO levels.
·Appropriate staffing must be provided by the CIO function.
In order for the deployment to be successful and lead to financial and performance gains, the following observations apply:
·The business reporting software must be used at every level of management.
·The functional business areas served must be data driven (retail, multi-site, or vertically integrated manufacturing are examples.)
·The functional engine must be provided from within the IT department.
·Corporate executives must be the ultimate users.
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Cognos Tip: Forging the Foundation for Performance Management
Cognos.com Tip: Of the major BI vendor offerings that address this area, Cognos 8 Business Intelligence attends to corporate performance management with coordinated information. The systems help to determine budgets, plan targets and manage both effectively. This aided by:
·Scorecards have selectable targets to measure progress against corporate goals. Previously, companies manually created scorecards from various data sources, but lacked the ability to dig deeper on a metric without recreating and recalculating reports.
·Draw targets defined into your scorecards. With this tool, targets are set that guide future performance; and with scorecarding, you measure relevant progress towards your goals.
·Reporting and analysis from plans and budgeting software using multidimensional data sources in addition to published plans.
·Event management applied to the planning and budgeting process permits coordination of a variety of contributor’s input and development of the plan.
With these performance management technologies driving the business, understanding the classic BI and decision-making questions - what is happening; why; what should happen – becomes easier.
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