The spurt in logistics management organisations is affecting the bottom line of companies. In order to have a competitive edge over others, many logistics service providers are adopting business intelligence (BI) to improve their performance and meet the needs of their growing client base. An article by Dhiren Gala in Smart Logistics, December 2010 issue.

1. SMART STRATEGIES Business intelligence in logistics
Smart SolutionS For
EffEctivE managEmEnt
The spurt in logistics management organisations is affecting the bottom line of companies. In
order to have a competitive edge over others, many logistics service providers are adopting
business intelligence (BI) to improve their performance and meet the needs of their growing
client base.
48 • SMART LOGISTICS • DECEMBER 2010

2. LogIsTIcs is an important activity logistics management, thus leading many BuSinESS intElligEncE: a muSt
for economic development. However, companies to outsource their logistics for 3Pl BuSinESSES
cut-throat competition as a result of the activities to 3PL providers. Today, 3PL providers are viewed as strategic
increase in the number of organisations Today, 3PL plays a critical role in partners that can optimise the supply
offering logistics services has led to thin the supply chain. They are increasingly chain, reduce the cycle time and provide
margins, thus affecting the bottom line viewed as strategic partners that can play unprecedented customer responsiveness.
growth of organisations. a pivotal role in optimising the supply These services can be effectively provided
Companies today are leaving no chain, thereby providing a sustained by using information technology (IT).
stone unturned to cut costs and boost competitive advantage. In order to More advanced 3PL providers have
efficiencies. They have incorporated effectively manage supply chains, 3PL already embraced IT to enable better
automation in their operations, ranging need to constantly analyse data collected coordination of activities by providing
from enterprise resource planning (ERP) from various sources and convert it into tracing and tracking facility to clients. But
R
to transportation management system actionable information. Here, BI tools like this is not sufficient to ensure a sustained
(TMS). However, despite giving these data warehousing and online analytical competitive advantage. 3PL providers
organisations time for improvement, have to analyse all activities in the
these systems offer less scope for perfect logistics process to completely decimate
monitoring and control activities. This is ECOGnISInG ThE nEED inefficiency from the supply chain,
where business intelligence (BI) comes FOR An EFFECTIvE BI eliminate bottlenecks and continuously
to the rescue of these organisations by
proving to be an ideal programme for
SOLuTIOn IS juST ThE work towards process improvement.
The fundamental purpose of BI is to
exercising perfect monitoring and control. FIRST STEp. ThE REAL deliver fact-based information to improve
Adopting this program has transformed
the way organisations sense and respond
ChALLEnGE IS TO MAkE the efficiency of a business. The BI
tools need to be built to meet business
to changes in the market. IT An InTEGRAL pART OF requirements, and users must be able to
Logistics, which is a subset of a supply ThE DECISIOn-MAkInG use them. In today’s competitive global
chain, relies heavily on transportation for
achieving complete execution. In a supply
pROCESS. economy, having the right information at
the right time is crucial to an organisation’s
chain, transportation is an important link ability to make strategic, tactical and
connecting various entities. Moreover, processing (OLAP) can significantly help operational decisions.
transportation plays a significant role 3PL achieve this objective. By providing To better understand their business,
in managing inventory levels. Although a unified view of the entire supply chain, organisations need intuitive query and
manufacturers adopt the Total Cost of these tools can improve the functioning reporting tools to access critical business
Ownership model for managing their of basic 3PL services like transportation information, which will help both
logistics costs, transportation still plays a management, warehousing and inventory advanced and consumer-level users. BI
major role in determining the number of management. 3PL can also leverage is fast gaining recognition across most
facilities and their corresponding inventory BI tools to provide their clients with industries and among organisations that
levels for the associated stock keeping information specific to their supply want to leverage its capabilities to gain a
units (SKUs). Most organisations prefer chain, thereby increasing their market competitive advantage.
to outsource transportation due to its responsiveness. BI tools can thus, help BI can be grouped into the following
asset intensiveness and distinct nature of 3PL improve their internal organisational categories:
operations. functions including human resources and Business operations reporting: This
Manufacturers are dependent on third financial management. is the most common form of BI and
party logistics (3PL) for their transportation
needs. Most 3PL have matured from being
Key Performance IndIcaTors for 3PL
basic transportation service providers to
3PL Process Key Performance Indicators
providers of other value-added services
like pickups, storage and packing. Total order receipt time, order information accuracy,
Order receipt
revenue per order
3PL can be categorised depending
on the type of services they offer. The Planning accuracy, capacity utilisation, resource
Vehicle load planning
3PL providers are actually transportation utilisation, load balancing
service providers (TSPs), but have Route utilisation, scheduling accuracy, rate of route
Vehicle routing & scheduling
matured to provide other value-added addition/removal, vehicle availability
services often covering the entire logistics Vehicle loading time, on-time vehicle dispatch, order
Dispatch operations
need of an organisation. dispatch accuracy
Over the last few decades, the role Rate of update of location information, average
Goods in transit
of logistics management has undergone a transit time, cost of transportation per tonne
paradigm shift. It is now widely recognised On-time vehicle arrival, vehicle unloading time, order
Receiving operations
as an extremely important aspect of the receipt accuracy, percentage of damaged goods
overall business strategy. Also, various Total order delivery time, on-time deliveries, goods
Order delivery
factors have increased the complexity of delivery error rate
DECEMBER 2010 • SMART LOGISTICS • 49

3. I
Business intelligence in logistics, continued
often manifests itself in the standard • Analysis of the ebb and flow of
weekly or monthly reports that need to n TODAy’S COMpETITIvE businesses across services, regions,
be produced.
dashboard: The primary purpose of a
GLOBAL ECOnOMy, hAvInG clients, pricing, currencies, market
factors in time, etc.
dashboard is to convey information at a ThE RIGhT InFORMATIOn The indirect benefits include improvement
glance. Here, there is little, if any, need for AT ThE RIGhT TIME in:
drilling down on the data.
multidimensional analysis: This refers
IS CRuCIAL TO An • Sales performance
• Data quality
to the ‘slicing and dicing’ of data. It offers ORGAnISATIOn’S ABILITy TO • Productivity.
an insight into numbers at a more granular
level. To acquire the necessary data, a solid
MAkE STRATEGIC, TACTICAL Various KPIs can be defined by an
organisation in conjunction with its BI
data warehousing/data mart back-end and AnD OpERATIOnAL consultants to capitalise on BI technologies
business-savvy analysts are required. DECISIOnS. available in the market. Adopting BI in an
finding correlation among different organisation is now considered more a
factors: This entails diving deep into need than a luxury. 3PL can implement BI
BI. Most IT-enabled organisations hoc access to data on an as-needed basis. solutions covering either key operations
consider data as a wealth of information. These tools insulate users from the details or the operations covering their entire
Organisations are moving towards surrounding the retrieval of information organisation. Irrespective of the acceptance
adopting BI to obtain accurate information from the data warehouse. level and the kind of implementation, the
on its various stakeholders. Thus, BI can data visualisation tools: These tools benefits realised should be in totality.
be adopted and applied in the daily visually interpret complex relationships BI is here to stay, as the rate of
activities of organisations to make the in multidimensional data. Graphics tools adoption is increasing with organisations
most of the data generated by various are used to illustrate data relationships. looking at data as one of the key assets.
Online Transaction Processing (OLTP) Dashboards and scorecards help Data needs to be harvested in a beneficial
systems within an organisation. organisations work on data by providing an manner to gain an edge over competitors.
instrument for making decisions, delivering It must be harvested by using a proper BI
ovErviEW of Bi toolS on long-term plans, responding quickly solution that has a unique BI strategy. 3PL,
BI provides tools that deliver information to market changes, providing greater which adopt BI solutions, would be able to
to decision makers. The information control over the execution of strategy analyse present behaviour or market and
comes from relational data sources or and promoting accountability. Both are other related activities as well as predict
enterprise applications (eg, ERP, customer dynamic tools that enable organisations future behaviour and suggest actions.
relationship management, supply chain). BI respond to short-term market changes Thus, 3PL should embrace BI in its
includes the following tools: and support tactical decisions. nascent stages to stay competitive. It
Query tools: Standard query tools allow should encourage the organisation to use
users to view information by answering KEY PErformancE inDicatorS high-end BI solutions to remain successful
a series of predefined questions. These Key performance indicators (KPIs) are in the race for market leadership and
tools resolve the need for users to important for the implementation of BI, customer satisfaction.
combine, analyse and export information as KPIs defined for the various processes
from several sources by using a static would enable the data to be analysed and Bi SolutionS for EffEctivE
format. The standard query tool is an presented to the user. BI uses KPIs to functioning
excellent mechanism for segmenting the present the data in a dashboard. The 3PL industry is in a state of flux.
user population into groups. The groups Further, 3PL can use OLAP tools to Internet, supply chain management and
include users who need ad hoc query generate Management Information System globalisation have made sweeping changes
capabilities, prompted query capabilities (MIS) reports for evaluating operations in the existing business models of 3PL. To
and static query capabilities. performed in an organisation. Reporting compete in this market, a 3PL has to
reporting tools: Reporting tools tools significantly help 3PL in making continuously improve the existing services,
help present information in a clear decisions for managing daily operations. add new technology-based services and
format. These tools address the need 3PL can also use Data Mining make its internal organisational functions
for organisations to create permanent tools to evaluate internal and external more effective with the help of various
records representing the business at any strategic factors, and identify business BI tools.
point in time. The records then can be and operations behaviour patterns. Data Recognising the need for an effective
easily disseminated to others. Because of Mining tools thus, help 3PL take strategic BI solution is just the first step. The real
the formal nature of the information that as well as tactical decisions. challenge is to make it an integral part of
reporting tools represent, it is important the decision-making process. It is critical
to develop procedures to maintain and BEnEfitS of uSing Bi to set clear business objectives for the BI
update the data presented by them. The direct benefits of using BI include: solution, with total support from the top
oLaP tools: OLAP tools help users • Reduction in turnaround time for management.
who require intensive data analysis preparation of reports
capabilities to ‘drill’ seamlessly into • Direct and faster access to data needed Courtesy: Dhiren Gala, Manager – Operations
information. These provide users with ad to support decision making MAIA Intelligence
50 • SMART LOGISTICS • DECEMBER 2010