How significant is Business Intelligence in food distribution industry?
Five years back, many organizations would have considered investing in their Enterprise Data Warehouse (EDW) as a more 'nice-to-have' rather than a 'must-to-have'. Even organizations who ventured into an EDW initiative had a mindset of creating a data repository and didn’t think of creating a Business Intelligence (BI) capability. There were lot of pitfalls in this approach where the IT organization didn’t have much idea of the usefulness of the data and the business users had no knowledge of the data in the EDW and how they could affect their decision making processes. In effect, EDW was not given the right focus till few years back.
Times have changed and there has been a paradigm shift in the thinking of organizations. From the days of creating an EDW, which was a monolithic dump of data, today companies are creating strong and robust business intelligence capabilities. BI is more a business driven initiative where the starting point is for business to identify the Key Performance Indicators (KPIs) which will help them make fact-based decisions and move away from gut-based decisions. In essence BI is the tool for performance management.
Compared to Retail or CPG industries, food distribution industry is lagging behind in terms of realizing the benefits of BI. The realization has dawned on them, particularly during the current economic crisis, since BI helps them realize the potential areas for reducing cost. BI has become a powerful tool to measure the business growth and also to rationalize cost.
The challenge doesn’t end when you realize the need for measuring your business. The biggest challenge is to identify the KPIs that need to be measured, tracked and reported. Gartner rightly puts it "To drive real business improvement, you have to keep score. But reaching consensus on what will be measured, how and when, is easier said than done".
A typical look at different functional areas in the food distribution industry will be sourcing/procurement, inbound and outbound transportation, warehouse operations, sales & marketing, and of course support functions such as HR and finance. Business intelligence can be used by companies in the food distribution industry to improve five key issues:
1. Improving customer satisfaction and profitability
2. Streamlining logistics/supply chain management to cut costs
3. Improving relationship with suppliers
4. Sharing corporate information across the company to help decision-making
5. Reducing reporting cycles and the burden on IT
I intend to cover the above 5 issues in detail in my subsequent blogs
