The key to sustainable implementation of BI tools in purchasing and supply chain
In theory, it would be simple: a BI solution (“Business Intelligence”) in purchasing and supply chain is dedicated to the goal of systematically creating transparency over demand, quantity, prices, supplier relationships and processes across sites and departments. A customized yet automated BI tool should replace manual processes for data collection, analysis and input. This should reduce lead times and result in lower costs and prices, or make certain information portayable in the first place.
This additional value for companies resulting from the use of BI tools was already addressed in our first BI article. However, one challenge that many companies face is the sustainable implementation of BI tools. Questions that arise are, for example, “How do I achieve measurable additional value through a BI tool (and portray it)?” or “How do I convince my team to work with the new tool?”. Therefore, this article deals with precisely such challenges and shows ways in which implementation can be facilitated.
Obstacles in the practical implementation of projects and use of new tools are nothing special in BI projects, but typical challenges in (project) management. Regarding the BME barometer “Electronic Procurement”, most interviewees agree with the statement that data-based analyses are generally qualified to make well-founded decisions, which subsequently lead to a process optimization (e.g. increase in efficiency through automation) in supply chain management. The usage behavior stands in stark contrast to this: depending on the use case, existing BI tools are only actively used by companies in a infinitesimally small number. Utilization rates tend to be even lower among small and medium-sized companies.
BI and its practical application also require a strategy that addresses technology, people and processes.
What are the reasons for the implementation and use of BI tools to fail?
Studies and our observations repeatedly reveal similar challenges in establishing BI tools in purchasing and supply chain – these ultimately break down into three domains: Technology, People and Processes. These three domains are the cornerstones of any business or project and the levers to successfully implement a plan. Thus, along these three domains, errors and problems also need to be looked for and proactively considered in order to set up a good game plan. Ultimately, BI and its practical application also require a strategy that addresses these three domains. Effort invested in advance – a good strategy – will always pay off in this case as well.
| Technology | People | Process |
|---|---|---|
| 1. Poor internal data transparency due to data structures having “grown historically
2. Insufficient system settings, so that the use of the BI tool does not bring any relief 3. Lack of automation, resulting in additional effort |
1. Shortage of training and introduction of the tool for the daily work routine
2. Lack of adaptation to end-user needs, with the aim of facilitating operational work 3. Absence of knowledge of structures, availability and limitations of existing data |
1. Hardly any existing standards for data handling and ERP use
2. No routine of intensive engagement with the BI tools 3. Lack of classification or data enhancement from the ERP systems, making them unprocessable and less meaningful |
Platzhalter
How can a sustainable implementation be realized?
The sustainable implementation of a BI tool requires a BI strategy with corresponding concepts for the three domains technology, people and processes in order to master the typical challenges. From our daily work with customers and solution providers, we have developed the following “best practices” for the introduction and effective use of BI tools:
Technology
In any case, the key factor with regard to the technological obstacles of a BI implementation is broad data access, and the connection of all data sources potentially relevant to the business.
Data access should take place in accordance with a suitable legal system (attention to the GDPR, for example!) in order to provide decision-makers from all corporate functions with relevant, up-to-date and, above all, consistent information. This subsequently provides a reliable basis for coordinating individual measures. When connecting all data sources relevant to the business, an undogmatic approach in terms of effectiveness and efficiency should be strived for. For example, initially an Excel sheet works fine in order to be able to act quickly instead of disrupting changes of the work systems, but shifting gradually to a consistent harmonization of all data sources and the automation of the connection.
People
In addition to data access, however, the development and use of data literacy (“Good Data Practice”) among the relevant employees should be highly prioritized in order to achieve maximum added value in the long term. By data literacy, we mean learning tools (almost always starts with Excel), regular examination but also further development of data models, and repeated data validation to enable agile use of the BI solution.
Processes
Finally, “BI governance” consisting of processes, guidelines, templates and documentation should be set up in order to achieve institutionalization and to successively eliminate additional expenses due to errors (which may even be beneficial for building data literacy in the beginning).
In order to take the ever-changing situation of companies into account, an agile development process, which goes beyond a one-time project character, is also recommended for the BI tool. To this end, the team for ongoing operations (“BI Operation Model”) should be defined in advance in order to offer a rapid solution in the event of problems and queries as well as changing data sources. Another important aspect on the human level of BI implementation is the cross-functional use of the tool – i.e., purchasing, demand drivers, top management, controlling and finance, but also IT – each in its appropriate format and channel.
An excellent and convenient BI tool – used correctly – inevitably leads to a measurable increase in value
In summary, one success factor for value-added implementation of a BI tool is to avoid a “single purpose” design, i.e., a one-time effort for an initial immediate problem or question. Rather, BI should be seen as building new capabilities and enabling adaptive, reusable analysis through a more strategic approach to work, providing answers to recurring or similar, future questions.
An optimal BI Tool, that …
- … is planned with a focus on measurable additional value, …
- … is set up efficiently, …
- … is well documented and trained …
- … is consistently used to measure and control internal company processes, …
will almost inevitably deliver value enhancement in the medium term. Thus set in motion, BI will help any company to evolve, to work more strategically and to continuously identify fact-based improvement potential. Identifying and tracking critical supply chain performance metrics and being able to quickly and easily obtain accurate background information on these metrics will help you as an expert or executive alike to successfully implement initiatives and set the right priorities.