Manage your supply chain with your data warehouse

If it is true that today supply chains compete, rather than individual companies, then these supply chains need to be supported with every conceivable nugget of information. Knowledge Integration Dynamics MD, Aubrey van Aswegen, analyses the potential for improving supply chain management through the application of data warehousing.

There is not a single manufacturing organisation today that does not depend on its supply chain for its success and profitability. The supply chain is the driver of most corporate actions: what is bought, made, distributed and sold.

It centres to a large extent on inventory, most manufacturers` single greatest operational expense. Inventory`s management is predicated on quality forecasting and planning, which is the first indication that a data warehouse could be of use in improving the efficacy of the supply chain.

The supply chain is based on cause-and-effect principles, with any one action having the potential to impact positively or negatively on other, interdependent actions. The entire supply chain can be enhanced or hampered by these actions, a vital factor given the drive to just-in-time manufacturing, demand chains and collaborative commerce, to mention a few.

These industry trends mandate full visibility across the supply chain, a requirement that requires on the one hand the capturing of all data at all points, no matter how widely distributed the supply chain; and on the other the publishing of this data in easily interpreted form to all participants in the supply chain, where this makes sense and would add value.

It is for instance, a point worthy of debate that Cisco Systems, for one, could have prevented many of its woes a year ago with better supply chain management; effectively, better visibility into the supply chain. The cost of not having this capability has been extreme, running into the billions of dollars through excess, unsellable inventory and an incalculable amount in lost image and brand erosion and collapse in share price.

Many thousands of manufacturing organisations have turned to technology to help streamline the components of their supply chain functions: procurement, production planning and inventory management, for instance. However, integrating the various components can be a complex, costly and time-consuming process.

Companies have typically enlisted the services of an ERP (enterprise resource planning) system, aspects of which should integrate with the supply chain system. These include warehouse management and shop floor control. While ERP supports unified processes and transaction data capture, the scale of management performance key performance indicators to be optimised is beyond the ambit of the analysis hierarchy: identify, analyse and act. It is time for a balanced set of measures to allow management to understand how well the various components are interoperating.

The importance of this grows exponentially as companies expand to a global or multi-site situation. This exponentially increases the chance for and impact of supply chain inefficiencies. Detailed, comprehensive monitoring and reporting will allow management to identify inefficiencies ahead of time.

By populating the data warehouse with the appropriate data, management can have, in one central repository, all the measurement criteria needed to inform supply chain-wide decision-making. Note how this is an extension of the enterprise-wide data warehouse, and how it would augment that of the customer-facing data warehouse.

Functional areas you would want to address in the supply chain data warehouse include procurement (and eventually e-procurement), production, forecasting, scheduling and planning, capacity planning, raw material and finished goods inventory, order processing, quality control and labour. All of the data relating to these functional areas is or should be freely available.

The data warehouse will rapidly grow in size and scope of data, allowing the business to modify its rules on an ongoing basis, fine-tuning them and finding causal links between actions and consequential reactions.

The unified data warehouse, supported by appropriate analytic applications, can provide management with intriguing supply chain insights, such as customer and supplier performance; efficiencies, variances and quality issues in the manufacturing process; projected inventory excess or deficiencies; procurement irregularities (important in SA!); projected error rates; and inventory warehouse distribution issues, projected and actual, with variance.

The data warehouse can also serve as the underpinning for a manufacturer`s e-business strategy, and indeed it should, so as to ensure data continues to be integrated across the supply chain and across all business partners. This data warehouse should link front-office with back-office systems.

While supply chain optimisation as a discipline is in its infancy relative to other business aspects, it is clear that the next decade will see a major focus on this area to boost competitive advantage. The integration of the data warehouse as a strategic underpinning will be a key component of this, and the most successful supply chains will be those that do this proactively.