Is Business Intelligence the Answer to Supplier and Supply Chain Management?

Over on Supply Chain Management Review, an article by two Wipro consultants suggests that business intelligence (BI) software, such as the kind acquired by SAP and Oracle in recent years, is key to building supply chain visibility. The two argue that "BI capability allows monitoring of supply chain performance and helps in capturing new insights into all aspects of the businesses, fostering innovation." Moreover, "BI allows driving performance improvement in individual functions, business processes that span across multiple functions and in the extended supply chain through collaboration with customers, vendors and other trading partners delivering significant benefits in terms of cost reduction, customer service improvements and lower inventory levels." While this is a great vision, perhaps it's better for those in the implementation and advisory ecosystem than for the actual customer that's got to pay to make it all work.

There are a few reasons why the nirvana of BI supplier and supply chain visibility is most certainly a noble objective, but one that is unlikely to ever fully take hold outside of a few very expensive, highly customized implementations. For one, BI tools (especially those we think of, which are tied to an underlying data warehouse) mimic the inflexible characteristics of the ERP systems, which generate the data that we need to analyze. In other words, once you "pour the enterprise-data concrete" so to speak, such systems become rigid and unbending and make it difficult to rapidly adopt new data sources into an analysis. Perhaps there's a new third-party data enrichment that you want to add (one not supported or resold by your BI vendor), or maybe you've acquired a new facility from a supplier that is running a different ERP environment. Good luck rapidly adding these new data sources into any BI model.

In addition, BI tools do little to correct for one of the dirty secrets of corporate and supplier data: poor information quality. Except in cases where data is clean and standardized (and in certain cases, classified to a common structure), it can be very difficult to gain a unified view into different information sets. For example, if a part description varies, even slightly, among different facilities (and suppliers); or a company has not standardized on a common coding structure for a supplier or part taxonomy across its systems, the manual work involved in data remediation can make operating in a legacy BI context an absolutely nightmare. Unless, of course, you're willing to pay consultants a fortune to make it all work for you (and then to make it all work for you again once your environment changes or evolves). There are also significant limitations to the types of analyses that BI enables -- not to mention the speed with which you can drill into information -- but I'll leave that for another post.

Fortunately, there are a number of tools that can help companies overcome the limitations of BI in a supply-chain management, supply risk, supplier management and spend visibility environment. If you think, however, that BI (or a lack of it) alone is the cause of your supply-chain visibility woes, think again.

- Jason Busch