In today's podcast, hear TEC research analyst Lyndsay Wise and RCG Information Technology's Robert Abate discuss how manufacturers can use business intelligence (BI) to optimize their supply chains and increase customer satisfaction.
Some key issues discussed include
- manufacturers' sensitivity to overruns, high production costs, and customer dissatisfaction
- BI's ability to centralize data from disparate sources to provide alerts, identify potential supply chain problems, and turn information into knowledge
- how BI connects the dots between supply and demand
- BI's role in reporting on the overall health of the business
Listen to the entire 6:10 minute podcast
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Hi and welcome to TEC radio. My name is Lyndsay Wise, and I'm the senior research analyst for business intelligence [BI] here at Technology Evaluation Centers. Today with me I have Robert Abate, the managing principal and global practice lead for RCG Information Technology. RCG Information Technology is a leading consulting firm with in-depth project experience within the manufacturing industry. Today with Robert I'm going to explore how manufacturers can optimize their supply [chains] to maximize profits and increase customer satisfaction through the use of business intelligence.
Lyndsay Wise: Hi Robert, it's a pleasure to have you with us today.
Robert Abate: Hello.
LW: Robert, how do you feel organizations can optimize their supply chains to maximize profits and increase customer satisfaction?
RA: That is a very good question. I start by saying that because the optimization of a supply chain obviously would maximize profits and would increase customer satisfaction, and manufacturers are specifically sensitive to overruns and costs and customer dissatisfaction. Obviously, the need for a supply chain in any manufacturing organization is keygetting raw materials into that chain in delivery of its products.
LW: How does BI add benefit to this process, and why is it important?
RA: Well, business intelligence, as you know, is the revealing of data or the reporting on data and the "turning data into information." So, BI specifically helps manufacturers in optimizing their supply [chains] by reviewing tons of products, read tons of raw materials and, in turn, allows for things like alerts. Reports can alert organizations to problems in their supply [chains], to problems in the manufacturing process, or in problems with delivery. So, BI is a component of understanding the data you have and organizations, and especially manufacturing organizations[they] have tremendous amounts of datapulling that data and turning it into information and knowledge is what business intelligence is all about.
LW: Based on your experience within the industry, could you provide an example of a customer who has used this approach?
RA: Yes, and many examples. First, I would start withas a director of Polo Ralph Lauren, we used business intelligence to first understand what were the issues we were having with the lead time of materials. One issue in the development of clothing is [that] clothing is seasonal-based, so raw materials are brought to manufacturing facilities usually with a long lead time prior to getting it out into the sale and retail floors. And when there are issues with those materialsany of the materials in the manufacturing processit would cause problems downstream, and the ripple effect occurs. One small problem in the manufacturing process could cause a much larger problem by the time it gets to the retail process. So what we did was we collected information on all the raw materials, predicted deliveries and times, and created a number of different reporting metricsmanagement metricsthat helped us analyze not only the production of the raw materials, but the transportation and delivery of raw materials which added to the problem, which allowed us to maximize not only the ordering and delivery of the materials, but the just-in-time delivery of materials, which increased our ability to manufacture, and also increased our productivity and profit as well.
LW: Why did the client choose BI to solve this issue?
RA: Business intelligence was the preferred method to isolate what the issue was. First, we had to determine what problem was occurring in the supply chain and the manufacturing process. We weren't sure whether the problem was the delivery of raw materials or if the problem was related to the stacking of supplies in the manufacturing facilities and therefore wasn't a delivery problem, it was a manufacturing problem. So, business intelligence allowed us to determine what was the root cause of the problem, and then allowed us to maximize or improve the productivity of that supply chain.
LW: How is BI beneficial?
RA: Well, business intelligence in itself is part of a loop, and it's a loop of business learning. Business intelligence provides executives with information, and what I was referring to earliermetricsspecific indicators that would allow us to determine what are issues or what are problems. But business intelligence itself is part of a circle, a collection of information, the learning from that information, the correction or change of business profits, and then the re-evaluation of that information to see, "Was the correction made improving the course of the manufacturing facility, or [was it] detrimental?" And then further improvements or further changes can be isolated to determine how we would improve the efficiency and the effectiveness. That's the primary 101, the primary benefits. Business intelligence itself is part of a management reporting of the health of a business, and to understand the health of a business, we have to understand the business itself, the process, the associated metrics with that process. For example, to manufacturers specifically, there is a need to understand what part of the businesses might be affecting other parts downstream of prophecies. For example, the collection of raw materials [is] important in supply chain, but just as important as the demand plan. What is the demand of product and where does that plan fit in? And since it's all interrelated, business intelligence allows us to connect the dots between the supply and the demand, and allows us to report on changes to that process which would improve the overall health of the organization and productivity.
LW: Robert, thank you so much for taking the time to speak with us today.
RA: Well, thank you, Lyndsay.