Business intelligence (BI) is not just a buzzword. But for many companies, it is — and that’s a problem for their supply chains.

For the companies that use it, BI is a tool that provides clear and actionable insights leading to a range of business improvements throughout the supply chain. The functional areas that benefit can include parcel and freight shipping, inventory management, and demand planning. But, the positives extend to every part of the organization and ultimately lead to happier customers.

Data as the Building Blocks

Companies realizing the benefits of BI already know that data is at the core of an effective BI strategy. The good news is that almost no company lacks data. Many, however, either don’t know how to bring the data they have together in useful ways, or they are unsure of what to do with it once they have.

The data that are available (and necessary) to use for BI can include logistics-related systems (e.g., TMS or parcel shipping stations) and warehouse systems (such as WMS), as well as ERP, inventory management, production planning, sales order management, and finance systems. With most companies operating some or all of these technologies, it’s both easy to see how most already have the data, but also why it’s so challenging to bring it all together in a useful way.

Many conversations about BI start and end with the challenges of how data tends to be siloed within organizations. This means the data’s there, but it exists in a way that cannot be accessed or combined with other data to create meaningful conclusions. Data can’t be the building block of BI if the pieces are kept separate.

Siloed data isn’t the only challenge in getting started with BI. Any data integration is complex, and companies also often overlook the importance of data hygiene. For these reasons, many companies that successfully use BI first partner with experts experienced in making the proper data connections and overcoming these common (but manageable with help) hurdles.

With your BI foundation in place, experts in BI know one other key thing: For BI to work, you must ask the right questions.

What Do You Want to Accomplish with BI?

BI does not come with a set of standard reports or instructions out of the box. Companies design the output they want and shape it with the questions they ask of the data.

The list of questions can be endless, but here are a few examples.

If the objective is to reduce costs, a company can use BI to answer a series of questions that lead to real insights and assist in making the most informed business decisions for the supply chain.

· What percent of operating expenses are made up of supply chain costs? Does what we charge for shipping cover our costs to deliver?

· What are my inventory levels? Are they increasing or decreasing?

· How are our parcel shipping costs trending? In comparison to budget? By line item?

BI can help assess risks, too.

· Which vendors are not delivering on time? Not achieving a 100% fill rate?

· Are we in danger of stockouts? Overstock?

· Which customers are driving profit? Who is a collection risk?

· What changes to buying patterns are we seeing based on products and sales channels?

The outputs from BI answer many of the difficult questions business leaders must constantly ask.

These lists are just a beginning, but they illustrate how far-reaching BI can be regarding the blocks of data and the sources it is built on.

Sales and profitability are two other valuable areas BI can help illuminate:

· What were our sales yesterday? Last month? Last quarter?

· What is our projected revenue? Are we going to meet it? Where will we end the quarter? The year?

· Are we making our necessary margins? By customer? By product? Which customers are outside our parameters for profit? Are the bottom 20% affecting the top 80%?

Despite being sales-related, these examples are essential to the supply chain, since sales drive supply chain activity, and those costs impact company profitability.

Forward-Looking Answers

It’s important to remember that the outputs from BI (and the data it’s built on) are constantly changing. So, using BI is not a once-a-year or even once-a-quarter thing. BI is a management tool for use on an ongoing basis. It’s also not only able to look backward; it’s just as valuable as a forward-looking tool.

With the proper questions, multiple “‘what-if” scenarios can be considered to support strategic decision-making. For example, the cost impact on inbound freight costs of new suppliers can be compared, as can the difference in parcel shipping costs to service customers when considering the location of a new fulfillment center.

More advanced BI tools can provide insights further upstream in the supply chain, including helping to model customer demand simulations based on different scenarios. Or even identifying untapped customer groups, magnifying the possibility of acquiring new consumers and thus increasing sales — and therefore increasing the demands on your supply chain. Forecasting through algorithms enables more precision, leading to more accurate cost budgeting, sourcing, and labor management.

The Proper Foundation

Companies must recognize that data is the building block to start using BI. Success and actionable insights start with shaping your data into the best structure, leading to the most helpful answers.

Everyone on the path to implementing BI should expect challenges with siloed data and figuring out how to extract useful information from it. But with some trial and error and maybe some assistance from a BI expert partner, BI will quickly provide a measurable ROI through supply chain and other company-wide improvements.

Bringing over a decade of experience, innovative strategies, and a passion for driving business growth, Jey Yokeley, Senior Vice President of Sales & Marketing at TransImpact, shares invaluable insights in navigating the complex, evolving marketplace, positioning TransImpact on a trajectory of sustained success as an industry leader in Parcel Spend Management and Supply Chain Planning.

This article originally appeared in the January/February, 2024 issue of PARCEL.