Supply chain intelligence - supply chain management meets business intelligence

"The supply chain is a complex environment and businesses do not, historically, possess a complete view thereof. Given the amount of money spent on the supply chain, improvements in efficiency can improve the bottom line markedly," he says.

"In isolation, these two concepts can only affect that part of a business at which they are directed," says Katzen. "That's their first mistake. Bringing supply chain management and business intelligence together across the enterprise is challenging, but the whole enables far more significant benefits than the sum of the parts.

Many touch points

The supply chain has many touch points. Effective, integrated supply chain intelligence requires that the integrity of information be closely guarded, while the information itself should be made more broadly available than has historically been the case. This should be done through a simple architecture and user interface that draws from all links in the supply chain.

Katzen explains that while most supply chain management systems ask more or less the same questions for the portions of value chain they serve, they are not inter-operable and information from disparate sources is difficult to consolidate.

"Business intelligence is breaking through the walls of the various silos that traditionally made up the supply chain. It can extract data from multiple systems across an entire supply chain and turn it into decision-making information on an almost real-time basis," Katzen explains. Companies are gradually moving from daily 'batch' reporting towards real-time supply chain intelligence, which would most likely leverage RFID technologies.

Says Katzen: "There is already one large South African retail group moving to consolidate information across its supply chain into a single environment."

An integrated view enables:

• A better capability to manage by exception - an increasingly important ability given the growing complexity of the supply chain.
• Optimised distribution modeling.
• An improved understanding of where merchandise is in the supply chain, similar to low-level track-and-trace functionality.
• A better understanding of the cost elements across the supply chain - a view of volumes, types of merchandise in diff areas and the resources available to move them, which enables you to analyse where the high value and high cost areas are.
• An improved ability to manage the impact of currency fluctuations on the bottom line - an important benefit for South African companies.

Katzen says supply chain intelligence will remove significant costs from the supply chain, which could enable prices on goods to be lowered by 2 - 5 % while ensuring that stock arrives at the right stores at the right times. It also promises improvements of up to 50% on contract compliance, in terms of holding suppliers to contracts and in terms of wholesalers or retailers delivering on their own. Improved demand planning and lower inventory that typically drop 5 - 20% will make a further contribution to the bottom line.

Finally, Katzen says all the integration in the world will not succeed if the people on the ground do not simultaneously learn to think more broadly than their own areas of control. "An integrated supply chain intelligence system will bring a marked increase in the visibility of each link in the supply chain, so success and failures will suddenly become equally visible to all parts of the business."