E-Supply Chain Technologies & Applications

EBC 6230 – Winter Session 2014

Title : Business Intelligence in Supply Chain Management

Submitted to:

Dr. Mohamed Baymout

Prepared by:

Conghui Chen (7455406)Kedi Zhao (7502703)

Majidah Sulaiman Alshudukhi (7258166) Zhengyang Lu (6780414)

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Agenda

Business Intelligence Introduction to Business Intelligence The basics of business intelligence Architecture of Business Intelligence

Supply Chain Management Key Issues and Challenges in SCM Bullwhip Effect

Business Intelligence in Supply Chain Management Business Intelligence in SCM Business Intelligence Technologies in SCM Business Intelligence Tools in SCM Taming Bullwhip Effect with Business Intelligence

Case Study -- Bosch Automotive Product

Conclusion

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Introduction to Business Intelligence

A broad category of technologies, applications, and processes for gathering, storing, accessing, and analyzing data to help its users make better decisions.

More than Software Tools and Technology

Becoming an "Intelligent Company"

Define Objectives

and Information

Needs

Collect the Right

Information

Analyze the Data and Gain

Insights

Present and Communicate

the Information

Make Evidence-

Based Decisions

IT Infrastructu

re and BI Applications as Enablers

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What is business intelligence used for

Organisations use Business Intelligence to:

Gain data-driven insights on anything related to business performance

To understand and improve their performance

Cut costs and identify new business opportunities.

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The basics of business intelligence

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Business Intelligence Tools

OLAP (On-line analytical processing)Advanced AnalyticsCorporate Performance Management

(Portals, Scorecards, Dashboards)Real time BIData Warehouse and data martsData Sources

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Business Intelligence Architecture

Kemper, H.-G., Baars, H., & Lasi, H. (2013). An Integrated Business Intelligence Framework. In Business Intelligence and Performance Management (pp. 13–26).

Springer.

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Key issues in SCM

Demand planning New or deleted products, competitors or market conditions,

the aggregate demand plans and associated revenue plans

Increased competition and price pressures: Reduce the cost: inventory management, logistics

operations, material management and manufacturing costs Value- added services:　 RFID • Labeling and packaging •

Drop shipping • Collaboration

Efficient PLC Share common operations, components or materials with other

products

Outsourcing (1) Superior supply chain network design (2)outsource partner in

the information chain (3) control mechanisms

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Bullwhip effect

http://www.youtube.com/watch?v=wLNdDSYqhNw

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Bullwhip effect

Causes Demand forecast： each player projects the

demand pattern based on what he or she observes.

Order batching: accumulating the demand; Periodic ordering

Price variations – special discounts and other cost changes

Rationing and shortage gaming: demand exceeds supply, a manufacturer often rations its product to customers.

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Bullwhip effect

Consequences :1. Inefficient production or excessive inventory2. Low utilization of the distribution channel.

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Business Intelligence in SCM

Nenad Stefanovic, Dusan Stefanovic. Supply Chain Business Intelligence: Technologies, Issues and Trends. 2009. Artificial Intelligence an International Perspective, pp 217-245

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Business Intelligence in SCM

Areas of application Activities

Logistics and Operations • Warehouse flows optimization • Inventory planning• Ordering and replenishment• Transportation network management

Demand Management • Forecasting demand • Price optimization & promotion

management • Bullwhip effect magnitude reduction

Procurement and Suppliers Management

• Supplier analysis• Information sharing with partners• Support in procurement decisions

Opportunity/Risk Management

• Identification of new opportunities • Uncertainty and risk management • Supply chain re-engineering• Enhancing relationships quality

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Business Intelligence Tools in SCM

Fall into three categories：Reporting

Display usable information in a scorecard format

Real-time dashboards Provide a quick, daily overview of what is happening

in their transportation or supply chain network

Benchmarking Compare data on factors against peers - Freight rates, etc.

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Taming Bullwhip Effect with Business Intelligence

Information Sharing in Supply Chain

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Taming Bullwhip Effect with Business Intelligence

Use Electronic Data Interchange (EDI) to share data with actors in all the Supply Chain

Set up models to assist decision making Price Variations models Order Batching model

Leverage BI tools to analyze data sources better

Predict the demand more successfully

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Light Tower Project

Bosch Automotive Products

(Suzhou)

Customer Logistics Planning (CLP)

Department

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Challenges

OEMs’ behaviour is not mature

Automotive Electronics (AE) department is

an upstream supplier

AE was suffered a lot from order fluctuation

Fluctuation is often amplified due to bullwhip

effect

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Objectives

Reduce negative impact caused by bullwhip

effect

- Increased GEZ (GesamtEindeckungsZeit

meaning “Total Coverage Time“)

- Over planned capacity

Improve reliability of forecast

- Predict future fluctuation trend

- Provide early warning

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Solution

Get data from different sources

Build a predictive model based on data

Implement the predictive model with a BI

system

Apply results to supply chain management

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Data sets

Actual Data Forecasting data

RBPartActualDelivery DirectCustomerForecast

OEMActualCarProduction

OEMCarProductionForecast

OEMActualCarSales OEMCarSalesForecast

RBPart_UsageRate

RBPN

Car

Usage

Rate

For each type of part: RBPartActualProductionVolume = ΣActualCarProductionVolume * Usage * Rate

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Data Relation

CarCarID

CarName

OEMID

DirectCustomerDirectCustomerID

DirectCustomerName

DirectCustomer_OEMDirectCustomerID

OEMID

DirectCustomerForecastPartID

DirectCustomerID

CustomerForecastMonth

CustomerForecastVolume

CustomerForecastVersion

OEMOEMID

OEMName

OEMActualCarProductionCarID

ActualCarProductionMonth

ActualCarProductionVolume

OEMActualCarSalesCarID

ActualCarSalesMonth

ActualCarSalesVolume

OEMCarProductionForecastCarID

CarProductionForecastMonth

CarProductionForecastVolume

CarProductionForecastVersion

OEMCarSalesForecastCarID

CarSalesForecastMonth

CarSalesForecastVolume

CarSalesForecastVersion

RBPartPartID

RBPN

MiFa

Product

RBPart_DirectCustomerPartID

DirectCustomerID

RBPart_UsageRatePartID

CarID

Usage

Rate

Price

RBPartActualDeliveryPartID

RBPartDeliveryMonth

RBPartDeliveryVolume

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Data Analysis and Predictive Modeling

R1 = f (RBPartActualSalesVolume, RBPartActualProductionVolume)

R2 = f (RBPartActualProductionVolume, RBPartDeliveryVolume)

R3 = f (RBPartSalesForecastVolume, RBPartProductionForecastVolume)

R4 = f(RBPartProductionForecastVolume, CustomerForecastVolume)

RWeigh

t

R1 4

R2 6

R2 1

R4 6

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Data Analysis and Predictive Modeling

R Score = f (R)

V = f (Score, Weight)

Increase =

f (R,V)Decrease

= f (R,V)

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Conclusion

BI upgrades the quality and timeliness of

data and helps in decision making process.

BI improves reliability of forecast and

reduces uncertainties in supply chain and

helps tame the bullwhip effect.

Implementation of BI system with effective

tools is critical in whole process of SCM.

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Thank you!

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References

Hau Lee, V Padmanabhan, and Seungjin Whang. 1997.The Bullwhip Effect In Supply Chains. Sloan Management Review

Six Key Trends Changing Supply Chain Management Today. 2009 .Hitachi Consulting Corporation . http://www.hitachiconsulting.com/files/pdfRepository/WP_SCMTrends.pdf

Isabella Maggioni, Francesca Ricciardi. Business Intelligence for Supply Chain Management: Trends from Scholarly Literature and from the World of Practice. 2012. Information Systems: Crossroads for Organization, Management, Accounting and Engineering, pp 287-294

Nenad Stefanovic, Dusan Stefanovic. Supply Chain Business Intelligence: Technologies, Issues and Trends. 2009. Artificial Intelligence an International Perspective, pp 217-245

Amy Roach Partridge. Business Intelligence in the Supply Chain. April 2013. Inbound Logistics. http://www.inboundlogistics.com/cms/article/business-intelligence-in-the-supply-chain/

Jeff Moad. BI Tools Boost Supply Chain Excellence, Study Finds. March 19, 2010. Managing Automation. http://www.managingautomation.com/maonline/exclusive/read/BI_Tools_Boost_Supply_Chain_Excellence__Study_Finds_27756148

What is the Bullwhip Effect? Understanding the concept & definition. April, 2, 2012. Logistics & Materials Handling Blog. http://www.aalhysterforklifts.com.au/index.php/about/blogpost/what_is_the_bullwhip_effect_understanding_the_concept_definition

Ranjan, J. (2009). Business intelligence: concepts, components, techniques and benefits. Journal of Theoretical and Applied Information Technology, 9(1), 60-70. www.jatit.org

Negash, S. (2004). Business intelligence. Communications of the Association for Information Systems, 13(1), 177-195.

Lönnqvist, A., & Pirttimäki, V. (2006). The measurement of business intelligence. Information Systems Management, 23(1), 32.