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Accelerating Supply Chain Intelligence to Create a Significant Strategic Business Advantage

Pressure on companies is mounting to assimilate and exploit more information in less time for more business value. The pressure is coming not only from competitive forces but also from increasing regulatory imperatives and rising market complexity. At the same time, data volumes are growing across the enterprise. Most knowledgeable executives are looking to invest in analytical solutions on an enterprise scale that result in precise, actionable answers to questions asked anywhere, anytime from across the value chain.

Most executives instinctively realize that the integration of data will provide better answers and lead to more integrated processes. This is particularly true in the arena of supply chain management (SCM). The dynamics of SCM are increasingly complex and the data required to make decisions of value in near-real time - is increasingly detailed. Alerts and notifications based on rules-driven metrics at the most detailed level of data have superseded the old stacks of summary reports. The leading corporations have learned that management can do very little about bygone days, months and quarters and the activities that have occurred in the past. Reports are informative, but there is a completely advanced method of utilizing reporting data: real time.

Leading companies openly and publicly recognized for best-in-class supply chain management - primarily those with highly complex product movement - would include Wal-Mart, Dell, FedEx, and 3M - just to name a few. One thing these companies have in common is that they have already migrated to an enterprise data warehouse (EDW) for an integrated view of their supply chain - and real-time performance management. Shared intelligence through information consolidation, convergence and accessibility is the key to manageability, accountability and successes.

The business thought leaders running these companies know that the days when supply chains were built to forecast demand and manage large inventory holdings for later sale into the marketplace are long gone. Old supply chains were driven by productivity-centered factory schedules. Today, companies must make their supply chains flexible, responsive and synchronized to customer demand, even though both demand and supply variables are increasingly complex and challenging to accurately see, let alone predict.

Companies who recognize this value chain and single view of the business approach now lead in supply chain optimization through the centralized and cross-organizational EDW approach. They have not stopped there, and are already advancing into operationalizing their EDWs. This has led to the rise of active data warehousing (ADW), which refers to evolving the EDW as an enabler of operational decisioning applications, notably supply chain optimization.

So what is an EDW and how does it improve supply chain visibility and drive significant strategic advantage? The concept of an EDW is not rocket science; it is information science. Specifically, an EDW is a totally integrated, holistic information environment. We agree with definitive comments made by Charlie Garry, a journalist, analyst and recognized data warehousing expert: " The overall design goal of an EDW is to create a definitive version of the organization's business data. To do this, it logically follows that an enterprise data warehouse must consist of multiple subjects from across business units (such as finance, marketing, sales, service, delivery, inventory, procurement) representing areas of interest both for individual groups and for managers who need to view data across business functions."1

Garry adds that as an EDW matures to include several important subject areas, it will by default become a mission-critical environment - and eventually the most shared system within the enterprise. This enables management to focus on new questions and solutions, and then manage the actions to be taken to resolve issues from learned intelligence.

Teradata Chief Technical Officer Stephen Brobst, a recognized global authority in the practice of data warehousing, has repeatedly emphasized that the amount of query freedom a system offers users is paramount. In other words, the EDW or ADW and its corresponding infrastructure must be able to accommodate any query. This includes any question asked from anywhere, anytime. The ADW enables immediate action on that intelligence through automated procedures and desktop process management applications.

Therefore, an EDW is not just a "nice to have" IT repository - it has become a "need to have" information asset for strategic execution and competitive advantage. Again, the ADW will evolve when a company's EDW has reached maturity and the business seeks to operationalize its intelligence across the business in real time.

The deployment of a data warehouse has become quicker with the use of an extensible logical data model, which accelerates implementation by populating the warehouse with facilities to help users select the data elements they need, designed specifically for the industry they compete in.

This means that the data model (which is the method of storing the data and linking or associating your data) reflects the form and function of business processes and is not designed around the database technology per se. In short, it is designed around the relevant subjects and activities of your unique business. This is a new and different approach to managing massive amounts of data. It also reduces data duplication from many databases or data marts (as they are sometimes called), and, in turn, reduces total information management costs.

Having set the stage, let us set forth the reasons to move to an EDW approach for optimal supply chain management - and the resulting strategic advantages. In 2005, AMR Research published a report titled "The Supply Chain Management Spending Report," focusing on this subject. They cite several trends, notably one through four, pushing companies toward the need to consolidate, integrate and centralize their data. Building on these key trends, we have added insights based on our experiences deploying supply chain management solutions across industries.

  1. Escalating variability in supply and demand is driving up inventory - and data volume levels.
  2. The growing need for greater supply chain transparency across the enterprise.
  3. Increasing customer expectations and the need for value chain synchronicity.
  4. The rise in contract manufacturing and its information challenges.
  5. The growing complexity of suppliers and data traffic, driving the need for a centralized vantage point - an integrated view of the enterprise to provide tracking of events and milestones at a detailed level for all products from inception to destination - whether to an individual person or to the store shelf.
  6. The need for a better statistical platform to drive continuous improvement for both operations and standards management.
  7. The growing need for personalized business alerts - driven by event-based processing - for deviations, trends and exceptions - and a central significant-event detection system.
  8. The need to provide detailed, item-level tracking and forecasting across the entire supply chain and the benefits of a shared view of that knowledge.
  9. The increasing need for decision-makers to be able to ask any question, anytime, on any subject pertaining to the value chain and get a rapid and accurate answer for tactical decisions where latency becomes problematic in minutes, not hours.
  10. The rising importance of immediate and accurate demand and supply chain visibility in the boardroom for executive-level strategic planning and decisions.

If your answer is yes to any of the following questions, then you may want to quantify the value of an investment in an EDW for supply chain management:

  • Are lead times and cycle times longer than the competition and prevent quick response to changes in demand or market?
  • Do you carry excess inventory to compensate for variability of performance or lack of visibility?
  • Have you been out of stock or inventory when your customers want to buy?
  • Do you have to wait for data assimilation before you can answer a customer question of an upside demand?
  •  Do you exit the quarter with excess inventory but failed to execute shipments during the quarter?
  • Do your planning tools report excellent performance to plan, yet customer deliveries were late or product was not available when promised?
  • Are your supply chain metrics all acceptable but you routinely expedite shipments and pay overtime to catch up?
  • Are you forming your questions to accommodate a rigid report or data formats?
  • Is your management team realizing the benefits of the mass of data you own?
  • Do your testing or delivery schedules need to be condensed or combined?

The deployment of an EDW or ADW may be a significant solution for many supply chain problems. As we have seen from the company case examples above, there are powerful business advantages to having first-hand supply chain intelligence at your fingertips. Companies who rely on secondhand reports and summaries from disparate, isolated islands of information are taking unnecessary business risks.

It is a powerful business advantage to be able to ask any question, anywhere, anytime and know that you are getting a complete and credible answer. In the future, we will witness EDWs with tens of thousands of users accessing petabytes of data, with response times for decision-making measured in milliseconds. Immediate visibility to supply chain events - actually, all business events - will be required. Automated measurement and tuning will be handled by rules-driven triggers. Executive dashboards will appear on pocket-held BlackBerries. And the companies that are best able to accelerate the delivery of the supply chain intelligence they need, when and where they need it, will become the powerhouses of tomorrow. Ultimately, your stockholders will love you for your strategy and vision.

Reference:

  1. Charles Garry. What Makes an Enterprise Data Warehouse? Eweek.com, 7 July 2005.

Jerry Hill is vice president, Manufacturing Industry Consulting, Teradata. Hill has held senior positions in engineering, quality and operations in aerospace, semiconductor and disk drive manufacturing. He led a very successful data warehouse project at Western Digital that utilized Teradata. Hill founded a software company in 1999 that focused on Supply Chain analytics which was acquired by Teradata in 2002. He has since held positions in Teradata in the supply chain COE, industry consulting and marketing. He has also been very involved in the development of unstructured text analysis, master data management, advanced planning system integration, supply chain risk management and other expansions of Teradata's expanding manufacturing offers.

Ronald S. Swift is vice president of Cross-Industry Marketing Solutions for Teradata, a division of NCR, and an internationally known consultant, author, visionary and strategist in the areas of analytical marketing, customer management systems, enterprise data warehousing, financial management, demand and supply chain support, and electronic commerce. Swift is the author of the book, Accelerating Customer Relationships (2000), and is currently working on another book on the subjects of increasing customer value and the new economics through analysis of integrated customer, supply and financial information. He also is a popular lecturer at major conferences, universities, symposiums, executive forums and leading business schools. Contact him at ron.swift@ncr.com.

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