There is a fundamental difference in perspective between ERP systems and supply chain management (SCM) systems: when it comes to your supply chain, approximately 80% of the data that you need to manage effectively is outside your organization—in the hands of suppliers, service providers, carriers, warehouses, etc. The traditional focus of ERP software has been on managing operations and expanding visibility within the enterprise. It doesn’t reflect the reality most global businesses face.
Supply chain activities today span multiple enterprises and multiple geographies. Globalization has uncoupled many manufacturing processes from direct ownership by the enterprise. Supplier networks can range in size from several firms to several thousand firms. Multiple supplier tiers or echelons compound the complexity and number of interactions required to orchestrate a global supply chain’s performance.
Today, the cloud is recognized as the logical business environment for managing these complex, multinational supply chains. Sophisticated software solutions help to automate processes, reduce administrative overhead, standardize communications, compress cycle times and generally make the sourcing and management of products from around the world increasingly more efficient and flexible.
The best of these supply chain management solutions don’t just offer hosted software applications on remote servers, their value propositions are based on the business communities of trading partners and service providers that interact on a common transactional and messaging platform. The ‘network effect’ of businesses actually conducting procurement, contract negotiation, production scheduling, collaborative planning, supply chain finance, procure-to-pay and transportation management on the platform contributes directly to increasing agility and driving down costs for companies active in those communities.
The remaining challenge in the fast-expanding market of cloud based supply chain management platforms is delivering the kind of advanced business analytics that users are now accustomed to applying to their in-house ERP data.
If your supply chain data lives in the cloud, shouldn’t your supply chain business intelligence solution be there too? The ability to track and measure your own performance is a fundamental benefit of business analytics. But true performance analysis doesn’t take place in a vacuum. What about the ability to compare your supply chain performance to others in your global, digital community?
Think back to the recent summer games in Rio. In those two weeks we saw the best athletes in the world compete against their peers. No one won a medal for simply beating their own personal records.The same is true in business. The ability of the enterprise to compete and succeed in the global marketplace can be improved most effectively by measuring its performance in key activities against the performance of other global enterprises.
Measuring and analyzing supply chain performance, and benchmarking that performance against a larger population of companies, poses a number of technical challenges for any business intelligence application. Accessing necessary data to build those metrics is the first hurdle. Assuring data integrity—its cleansing, standardization, normalization and harmonization—is key to generating valid results you can trust. Determining the right metrics to focus on is also critical, and generally requires domain experts to clarify the right data relationships and some good data science to design accurate, effective models and calculations. Finally, the data manipulation and transformation this process involves should not happen in the transactional system of record or that system performance will suffer, badly.
With your supply chain intelligence solution in the cloud, your access to cloud-based supply chain data is much easier. With a community-based business platform, underlying data has already been standardized and harmonized extensively to support digital transactions. It’s only necessary to purge errors or incomplete data that doesn’t contribute to effective metrics. With robust data warehouse technologies and ‘big data’ tools proliferating to handle the information exploding from our ongoing digital transformations, there are now many approaches to moving large amounts of data from transactional systems through configurable ETL functions into cloud analytics platforms that are designed for data exploration or producing dynamic executive dashboards.
Domain expertise in global supply chain business intelligence, combined with some necessary data science skills, is far rarer. Arguably, this is the underlying reason why so many enterprise business intelligence projects take years to begin delivering value; it’s a time-consuming, iterative and fragile process to transfer years of experience and specific business knowledge from a practicing manager or executive to an IT resource charged with building a useful set of analytic applications.
If time-to-value is important in making your decision about a supply chain intelligence investment (and when is time NOT important in supply chain decisions?), then you have to consider analytics solutions offered by your SCM provider. The organization that develops and maintains the cloud platform where your supply chain transactional and communications activities now live is ideally suited to deliver focused analytics applications to help you visualize and continually improve supply chain performance. Adding the extraordinary benefits of access to benchmarking data based on the activity of thousands of other companies on the platform creates a compelling value proposition.