Supply Chain Efficiency

How Mid-Market companies can get the most from Supply Chain BI without a hefty price tag (pt 2)

How Mid-Market companies can get the most from Supply Chain BI without a hefty price tag (pt 2)

My goal with this series is to help with the careful planning and discipline necessary to ensure that BI efforts do not end up as another failed technology tool that never delivers on its promise. In part one, I provided two key steps to help mid-market companies evaluate their existing measurement tools and data sources. In part two below, I’ll cover the next two steps to select the right tool for the right price and the right features.

Step 3: Know why and how you use/will use the data.

This step is especially important to prevent scope creep and excess or unnecessary reports. A BI tool can create a large amount of visibility for your company. Unfortunately, I’ve seen companies work from a wish list rather than a needs list, simply due to the dramatically expanded options and control offered by BI tools. The result can be very costly, especially if the wish list includes data from less accessible systems or reports that add little overall value.

Here are three things to keep in mind when creating your base list of reports from the system.

1. If you already have a balanced scorecard or other formalized KPI measurement practice, it is a good time to evaluate for any needed adjustments or customizations and to revisit the objective, tangible value of each metric you want to include.

2. If you are on an informal KPI measurement practice, loosely mock up what you would like your reports to look like, including the data sources, how the metrics are calculated and, most importantly, the tangible decisions that can be driven by the data. The type of reports and amount of ad hoc data filtering and segmentation you need will help ‘screen in’ the BI solution providers who are the best fit.

Supply Chain BI: Dashboard

 

3. Brainstorm with key stakeholders to understand what data and reporting could be more beneficial to decision making, such as, “If we had this, we could do that.” Vet out each requested report carefully by asking hard questions such as, “What will it buy us in terms of tangible business benefits?” Many companies have a number of reports that make little-to-no meaningful contribution to the organization’s decision making at any level and simply consume resources and margin.

Step 4: Shop around.

The emergence of competition in the market means there are multiple options that put you in the driver’s seat. To take full advantage, create a prioritized list of requirements to hand to your existing technology partners that offer BI. It’s also advisable to invite a few new partners into the evaluation process. There are a number of good solutions available in different offerings, so you have the ability to be somewhat selective when it comes to price and features.

Supply Chain BI: Checklist

Two basic offerings for BI – pricing, pros and cons will vary

 

1. Stand-alone solution. Stand-alone offerings are usually more feature rich as they can be the provider’s primary solution focus. While not a steadfast rule, this can be the more expensive route from a licensing, implementation and ongoing cost of ownership. There can also be additional cost involved for integration and data storage.

2. Add-on solution. Add-on solutions are usually offered by core system providers (such as ERP vendors) as a complement to their system. Other business systems that tie multiple departments together, such as supply chain management, are also beginning to offer BI to enable better visibility and reporting of internal procurement and external trading partner performance data that flows thru their system. While not as robust as stand-alone offerings, add-on solutions, especially those that are cloud-based, are becoming far more feature rich and far more cost effective. Also, because the solution is part of a larger system, data integration and data storage costs can end up being lower.

 

To learn more about the best practices for viewing business intelligence check out our blog post: 7 Key Features of Effective Supply Chain Dashboards.

Tips for evaluating solutions

 

1. Make sure the solution is regarded as high quality within the BI industry. It should be a reliable solution that is being updated with valuable features on a regular basis so the solution can grow and change with your business needs. For example, is the solution offered in HTML5 and other emerging mobile-friendly languages? If not, you may have usability and accessibility issues with the growing trend of BYOD and mobile work computing.

The solution should be built on an architecture that provides the flexibility you need to make reasonable changes to your reports without incurring unreasonable development fees (if any). This flexibility will vary based on solution, price and architecture, but you should be able to make basic modifications and segment your report data in different ways beyond its standard configuration without getting your technology partner involved.

2. Make sure the solution can be deployed based on your IT environment and corporate purchasing policies. While historically an on premise offering, BI is increasingly available in the cloud. Some pros and cons of each are below.

A. On premise, perpetual license comes with higher upfront costs and generally higher total cost of ownership as internal resources of often required for maintenance and upkeep. Software upgrades can be included in maintenance, but implementation of the upgrade is usually a fee-based services engagement. With on premise licensing, you will need to procure all or most of the hardware and additional operating system/database licensing to run the solution. On premise has historically been the most secure, however cloud security is rapidly reaching parity, so security is becoming less of an advantage of an on premise system.

B. Cloud-based, subscription (i.e., license lease/rental) comes with lower up-front costs generally lower total cost of ownership as there is no hardware to procure and internal resources are far less involved in ongoing maintenance (other than data feeds from internal systems, etc.). Upgrades are typically included in the subscription pricing and if it is multi-tenant, there is usually no charge for implementation. For some cloud-based offerings, there can be a lower level of configuration of standard reports and customization.

Supply Chain BI Preparation and Discipline are Key to Success

BI is a valuable tool that can help assess and monitor the health of your supply chain operations. It can be used to build stronger relationships with suppliers, secure better pricing, and serve as an early warning system for issues—such as productivity and supplier on time delivery performance—that can negatively impact customer satisfaction and the bottom line…to help your business to course correct quickly.

Solution availability and pricing for mid-market companies has never been better. The key is to be prepared and disciplined in your evaluation and selection. For more information on this topic you can please feel free to contact me directly.