Today’s supply chains are increasingly complex -- multiple suppliers located in multiple locations (perhaps different countries); support for lean process, JIT supply and manufacturing; and increasing pressure to reduce costs while maintaining quality and improving manufacturing flexibility to respond to an ever-changing demand.
Undeniably, optimal management of today’s supply chain demands clear visibility and direct information made available to the people who make daily, operational decisions. Today, the process is streamlined with the availability of Key Performance Indicators (KPIs) that align directly to corporate performance goals and support improvement methodologies. In order to be effective, KPIs must utilize information available in traditional ERP systems and also incorporate data from several other sources including those external to the company.
Proactive supply chain performance optimization requires:
- The adoption of an appropriate performance improvement methodology, typically based on lean process or Theory of Constraints (TOC);
- The ability to connect to multiple disparate data sources across the entire supply chain including from collaborating companies that are potentially located in different countries;
- The ability to extract metrics, calculate relevant KPIs and make these available immediately as the underlying data changes;
- The ability to be notified of events and alerts as they occur; and
- An intuitive, user-friendly interface to easily access, visualize and analyze performance and perform what-if scenario analysis in real-time.
The above requirements present some unique challenges given the complexity of today’s supply chains.
While performance improvement methodologies have been used within supply chains for a number of years (even decades), the target for analysis/improvement is typically a subset of the supply chain that resides entirely within a single corporation’s boundaries. This is a starting point, but with the interdependencies that exist across the various segments of the chain, optimizing one aspect in isolation may not improve the performance of the overall supply chain.
In the past, the difficulty in preventing this lie in the reluctance of partners within the supply chain to openly exchange relevant information and metrics to other partners -- particularly if it meant allowing access to information residing behind the corporate firewall.
This barrier is resolved when an independent third party hosts the necessary performance information and allows authorized access to relevant data to each partner in the supply chain. The third party can hold a “single version of the truth” repository of all related performance metrics and each partner can not only contribute but also access the relevant data once authorized to do so.
The complexity of today’s supply chain introduces the issue of where the operational and business data resides. Except in highly unusual cases, the systems used by the supply chain partners will consist of multiple vendors’ offerings, in-house developed applications and specialized implementations, some of which are legacy with minimal support.
Extracting metrics from these disparate systems in a secure, automated fashion requires a very flexible platform approach. This method can be extended to support APIs, web services interfaces and handle transactional data, time-series metrics, database information, XML and data from other sources that include flat files, various repositories and even spreadsheets.
Timeliness of the metrics and KPIs is another important factor. If decision makers are to rapidly respond to performance issues, they need to be alerted immediately to situations requiring their attention as well as the ability to visualize and analyze relevant information as soon as the underlying data changes. This on-demand functionality requires a new approach to delivering information on a timely or “right-time” basis using real-time processing techniques rather than traditional, periodic OLAP (Online Analytical Processing) cube “crunches”.
Finally, decision makers must be able to quickly understand overall performance of the supply chain and then “drill into” the area that is causing the problems. Typically, these decision makers are neither business analysts nor computer technologists; hence the user interface has to be highly intuitive, present information in context, guide the decision maker through the analysis process and contain embedded knowledge and expertise regarding the KPIs, performance methodologies and suggested actions.
Other capabilities such as the ability to easily capture additional knowledge, for example annotating a particular KPI at a point in time as to the reason for a situation, and the ability to quickly perform “what-if” scenario analysis can add tremendous value to the decision makers as they attempt to identify the root cause of a situation and determine the most appropriate corrective action.
The new generation of operational performance management or operational intelligence solutions delivers all of the above capabilities to the supply chain via the Software as a Service (SaaS) delivery model, which is suitable for both gathering data from supply chain partners and then presenting back appropriate authorized information to those partners.
The SaaS vendor is responsible for ensuring data security as well as availability and performance of the software according to specified Service Level Agreements (SLAs). Combined with the SaaS model, a Services Oriented Architecture (SOA) enables multi-faceted integration between the various disparate systems across the entire supply chain.
With these back-end systems in place, rich, web-based user interfaces can then provide interactive visualization and analysis. As the supply chain expands, sophisticated rules engines can capture alerts that might be based on the concurrent condition of multiple metrics and KPIs and then forward those alerts to the most appropriate decision maker within the supply chain.
Finally, these new offerings provide the ability to capture and embed best practices and improvement methodologies with predefined KPIs, alert conditions, diagnostic actions etc contained within reusable “intelligence modules”. These SaaS solutions also provide a cost effective and quickly deployed means to augment current supply chain practices so that widespread usage is viable and value is delivered quickly.
Supply chains benefit greatly from comprehensive, “right-time” metrics that can be used to identify the drivers of performance, understand current performance and determine the best approaches to improving operational performance.
myDIALS offers a hosted software solution that extracts real-time metrics and calculates KPIs and associated KPDs across all business roles, processes and value streams. In conjunction with its partner ecosystem, myDIALS delivers embedded vertical industry and value stream expertise, as well as improvement methodologies and guided diagnosis. Visit http://www.mydials.com for more information.