Empower logistics and supply chain knowledge workers with real-time knowledge management tools. Few would debate that logistics and supply chain management may be the most important element of business performance.
Today’s logistics knowledge workers represent the critical gear required that protects a company’s security and bottom line performance. This paper examines this premise and outlines why real-time analytic and dashboard tools should have the highest IT investment and return on investment.
Logistics workers are required for all aspects of the supply chain ranging from transportation, warehousing, inventory management, sales and customer service. They clearly are key to assisting the IT organization define the data and application integration requirements.
Delay Between Awareness and Resolution
Many company executives are placed in a reactive mode delayed by the flow of critical decision-making information. The reasons for these delays include:
- Data transfer delays for large volumes of batch data
- Assimilating and putting data into presentation format
- Defining and developing data analysis and data warehouse applications
- Lack of integrated data from other parts of the organization
- Lack of real-time data analysis
While current executive management reports and decision management tools are essential to the strategic and business management of the enterprise, they provide little support to successful hour-by-hour and day to day operations.
Business Reality
In this dynamic environment, stored information has a shelf life value. The older the information, the less value it has to support the critical decision making of supply chain management.
Premise: Industry analysts believe that the company’s key logistics and supply chain knowledge workers will prevent or minimize cost, customer impact or security breaches when they are provided with real-time analysis and report tools designed to support this dynamic and fast moving support service.
Logistics and Supply Chain management is risk management. Many of the supplier and shipper relationships developed to support JIT business models must constantly be re-examined to insure logistics support in changing markets. Driving forces include the cost to cover new security related support, expansion of inventory management and delays created by new customs and border management procedures.
The integration of data from each partner of a supply chain needs to be captured in real-time to insure that the shipper and suppliers can execute pro-active decision support procedures. End user plant and production managers must rely on this real time data to maintain the best course of action for their business to stay on schedule and control costs.
When the supply chain environment is dynamic, it also follows that the key knowledge workers, who must make the flow and control of logistics work, must have dynamic and real-time analysis tools. These key knowledge workers enable companies to protect bottom line costs, customer satisfaction and internal best practices. Logistics and supply chain knowledge workers have an extensive list of dynamic issues to manage. The outlook for 2002 and beyond brings significant upside cost pressure to logistics and supply chain management. Knowledge workers will manage the impact of these critical factors including:
- Fuel Costs
- Build up of "Just in Case" Inventories
- Interest Rates
- Dynamic Customs and Import/Export Changes
- The Cost of New Security Requirements
- Shipping Delays, Credit and Order Management
Real-time Analytic and Reporting Technology
The preceding background provides a basis for discussing the value of investing in real-time analytic tools for a company’s key logistics and supply chain knowledge workers.
We start this discussion by presenting a technology and business prediction given by a respected technology and industry analyst, David McCoy, a senior editor at Gartner, a Stamford, Connecticut based research firm. “Business Activity Monitoring (BAM) is a Gartner term that defines the concept of providing real-time access to critical business performance indicators to improve the speed and effectiveness of business operations. At its broadest level, BAM is the convergence of operational business intelligence (BI) and real-time application integration aimed at business goals, but enabled through advances in IT.” This quote is from a Quantive LLC application case study published by Gartner in May 2002.
Gartner further asserts, “Business activity monitoring stands to penetrate the market psyche to the same extent as customer relationship management, wireless, and other world-moving concepts.”
“Business Intelligence” tools and applications are already in use or planned by the IT organizations. However, to provide the knowledge workers as defined in our premise with the tools required to address current business issues, additional integration functionality is required.
Software vendors and internal company developers are now creating new middleware and applications that address the issues of supply chain management in this new security aware environment. Logistics and Supply Chain Managers need to research these software solutions and should consider development of a business plan to adopt them into their business as soon as possible. Gartner predicts the following: “The ROI for BAM will be clear in many implementations. In fact, enterprises will be more adept at determining ROI cases for BAM than the vendor community. BAM can be considered viral: As enterprises experiment in one area, BAM opportunities will arise across the entire process spectrum.” Given the critical factors outlined above, implementation of a BAM real-time solution would have significant ROI benefits.
What are the key elements of a useful real-time logistics and supply chain knowledge worker tool?
How should new Business Intelligence and Business Activity Monitoring tools be evaluated?
A solution should be measurable in 5 critical areas:
- The ability to monitor logistics and supply chain events and transactions
in real-time across the entire domain of the enterprise. This involves the
ability to gather information from disparate sources both inside and external
to the enterprise that are critical to assisting the knowledge workers to
complete their objective.
- The flexibility of the analytical tools to interpret the information and
the tool's ability to fit into established corporate processes, business rules
and measures.
- Presentation element of the tool to be flexible and powerful enough to
provide the knowledge workers and key management with the ability to create
a powerful user friendly dashboard interface or spreadsheet and reports for
other levels of management. Provide the internet/intranet capabilities for
the presentation tools online access.
- Application flexibility to adapt to each department, each business problem
by knowledge worker based requirements. Each knowledge worker understands
the business problem and what processes and information is required to track
and solve the issue. The most effective solution is one that allows the solution
to be tailored at the knowledge worker level. With streamlined requirements
and an updated support plan with the IT organization, the knowledge worker
and vendor should be able to create and modify requirements in this dynamic
environment. The modifications should include the ability to address the following
steps:
Capture and track events
Analyse the data in the full context of the overall operation according to business rules defined by management and the key knowledge workers.
Compare actual performance to planned performance
Sense exception conditions and raise alerts to defined management tree.
Present results in close to real-time for both performance based measurements and QC
Information sharing with supply chain partners
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The application should not require any significant changes to existing infrastructure. A good measurement tool will not impact the performance of the system or process being measured.
Summary
When extraordinary events such as the 9/11 terrorist attack happen, it serves as a magnifying glass that puts a spotlight on logistics and supply chain processes that are working well and those that are clearly marginal. More often than not, a company’s key knowledge worker is the first to recognize the problems and initiate the task to mitigate the issue.
A real-time solution that has been defined by these key knowledge workers provide the resolution of these issues and reduce a company’s risk dramatically by identifying potential problems early, and resolving these issues before significant financial loss, customer satisfaction and security breaches can escalate to corporate and stockholder equity problems.
This paper presents a technology approach to implement real-time analytic tools that implement Business Activity Monitoring BAM to address the current issues facing the global logistics and supply chain knowledge workers. This analyst agrees with Gartner’s assessment that “Every industry is going to be affected by BAM: Some enterprises will have to adopt it for survival, while others for competitive advantage. This will be because of the deepening of the inseparable relationship between IT and business processes.”
Software technology is available today to implement real-time supply chain solutions as described in Part I. Part II of this article will provide a review of implementing real-time analytic technology in the supply chain.
About the Author:
Les Imada is an independent industry analyst and President and CEO of eCOMvergence. The firm provides technology, business process and business development consulting services to the Transportation Industries. Contact the author at: mailto:limada@ecomvergence.com Author: Les Imada , President and CEO , eCOMvergence
