Everybody’s talking about Business Intelligence (BI). So what is it, and how can it help you?
In short, BI is using existing data to drive a desirable future outcome. Savvy BI programs know:
a) What significant data to capture
b) How to warehouse the data
c) Which specific figures to access
d) How to effectively access them…
…to guide their activities toward a desired outcome.
Let’s break that down even further, starting with the most important point first, which is, in this case, the end.
Stephen Covey has said that one of the habits of highly effective people is that they “start with the end in mind.” A highly effective plan for business is no different. What is it that you want your organization to do? Where do you want to end up? What outcome are you looking for?
Once you have a clear picture of your destination, survey your data. (It is important to note that all quality decision making begins and ends with quality data. Without accurate and meaningful data, it is virtually impossible to make quality business decisions. Thus, without sufficient data, it is highly likely that, at times, your company is making poor business decisions.)
What information have you kept? What should you be keeping? How can you analyze that information to help you predict whether or not you’ll reach your goals and objectives?
Anybody can get you “the numbers.” Running reports is not challenging. BI is not reporting. It isn’t even “fancy” reporting. BI is knowing specifically which numbers to run and how to use them to create a trajectory toward your goal.
The key to a successful BI initiative is tangible results.
Here are a couple of examples of BI applications that many of us have encountered:
• Netflix patterns the movies a member has rented and targets them with “Movies You’ll Love.”
• Amazon.com suggests “other items that a customer may want to consider” after making a purchase
• Facebook tailors its ads to individual accounts based on age, gender and other individual factors
The profiling of your historical purchasing into a pattern that in turn presents you with new purchasing opportunities targeting your preferences is standard practice in E-Commerce shopping. The ability to track if you did purchase the preferences presented is also common. It is also a Business Intelligence application. The process reviews historical data looking for patterns to suggest a positive future action for the business operation. Once again, the key is that the results are tangible.
Many Business Intelligence applications, including the consumer buying example above, drive revenue performance, repeat business and increased customer satisfaction. This has been the more common area of investment in Business Intelligence. Whereas now, companies are focusing on (with some challenges) applying Business Intelligence applications to increase the profitability of the business, not just the revenue. Here emerges the opportunity for Business Intelligence within the Transportation field.
The use for BI is complex for the transportation professional because much of the logistics function is a reaction to other initiatives within a business. For example, outbound freight is really an expense against sales and inbound freight is an expense against cost of goods sold. Therefore the framework for Business Intelligence has to work within the category that it relates to within the company.
If we simplify the goal of Business Intelligence to support better business decision-making, we can begin to craft Business Intelligence strategy for Transportation.
What do I need to do to incorporate Business Intelligence in the transportation field?
1. View transportation through a BI “lens.” The data itself has inherent value. Many companies spend time, dollars and resources having late packages tracked for the reclamation of shipping dollars with a parcel carrier. The $8.00 a shipper may get back in credits pales in comparison to the impact of a lost customer, repeat business from an existing customer or a cancelled order on the business. The view of this function needs to evolve. The current state of late packages is contentious with carriers because it is focused exclusively on the credit, not the business impact to the end recipient. The result? Carriers don’t want to share the data because of the credit focus and shippers don’t get data they may need for their BI strategy.
2. Carriers and vendors must be your partners in the Business Intelligence solution. They control the external data that completes the business cycle. As transportation professionals, you own the relationship with carriers and vendors and therefore by extension own the data relationship with the carriers as well. You need their support to build your BI solution.
3. You need to partner with the correct technology support. This could be internal through your companies developed products, a licensed Business Intelligence software application or through a Business Intelligence service. Whatever the course taken, the correct data infrastructure needs to exist to deliver the correct analytics.
4. Identify all the transportation touch points in the business process. These are all areas of opportunity and data collection.
5. Establish some initial Key Performance Metrics that the Business Intelligence solution can track and, in turn, provide direction. These metrics should be both impactful, but achievable to track.
6. Ensure that the BI initiative has a tangible benefit and return. This can include direct cost savings, increased customer retention, revenue or profit.
7. All data collected has to be “scrubbed” and refined to make useful. Underestimating this requirement can lead to results that are misleading and ultimately costly for your organization.
Typical Pitfalls in the Creation of a BI Solution
1. The Business Intelligence initiative is not well-defined with a specific tangible result that can be measured.
2. Data resides and is controlled within different departments throughout the organization, making collection too challenging to achieve desired results.
3. IT controls the Business Intelligence process and transportation initiatives are not recognized or even understood; therefore, they are not prioritized.
4. The Business Intelligence initiative is not actually Business Intelligence, but a series of reports showing historical patterns without the ability to project impact forward.
Beware of the Phantom BI Solution
Business Intelligence is not the delivery of reports or data. This will mislead you in your initiative and will result in your losing credibility within your organization. Viewing life through a Polaroid (static) view will limit the business applications for the information.
It is critical that you collaborate both internally and externally with partners and stakeholders who are committed to supporting your goals. This would include your carriers, other third parties and also your current system providers.
Many organizations, including your own, have data accessible to you. The biggest and most common challenge is that the data is in so many different places. Select the methodology and system to collect data and be sure that the data can be enriched.
Developing a Business Intelligence Program is a journey. Your journey has now begun and with the right plan will pay dividends for your organization.
Jonathan Shaver is President and Founder of IntraVex, a Transportation Business Intelligence company. He has his MBA from Northwestern’s Kellogg School of Management. He is a Board Member of the Transportation Logistics Council, an active member in the Council of Supply Chain Management Professionals and the Parcel Shippers Association.
In short, BI is using existing data to drive a desirable future outcome. Savvy BI programs know:
a) What significant data to capture
b) How to warehouse the data
c) Which specific figures to access
d) How to effectively access them…
…to guide their activities toward a desired outcome.
Let’s break that down even further, starting with the most important point first, which is, in this case, the end.
Stephen Covey has said that one of the habits of highly effective people is that they “start with the end in mind.” A highly effective plan for business is no different. What is it that you want your organization to do? Where do you want to end up? What outcome are you looking for?
Once you have a clear picture of your destination, survey your data. (It is important to note that all quality decision making begins and ends with quality data. Without accurate and meaningful data, it is virtually impossible to make quality business decisions. Thus, without sufficient data, it is highly likely that, at times, your company is making poor business decisions.)
What information have you kept? What should you be keeping? How can you analyze that information to help you predict whether or not you’ll reach your goals and objectives?
Anybody can get you “the numbers.” Running reports is not challenging. BI is not reporting. It isn’t even “fancy” reporting. BI is knowing specifically which numbers to run and how to use them to create a trajectory toward your goal.
The key to a successful BI initiative is tangible results.
Here are a couple of examples of BI applications that many of us have encountered:
• Netflix patterns the movies a member has rented and targets them with “Movies You’ll Love.”
• Amazon.com suggests “other items that a customer may want to consider” after making a purchase
• Facebook tailors its ads to individual accounts based on age, gender and other individual factors
The profiling of your historical purchasing into a pattern that in turn presents you with new purchasing opportunities targeting your preferences is standard practice in E-Commerce shopping. The ability to track if you did purchase the preferences presented is also common. It is also a Business Intelligence application. The process reviews historical data looking for patterns to suggest a positive future action for the business operation. Once again, the key is that the results are tangible.
Many Business Intelligence applications, including the consumer buying example above, drive revenue performance, repeat business and increased customer satisfaction. This has been the more common area of investment in Business Intelligence. Whereas now, companies are focusing on (with some challenges) applying Business Intelligence applications to increase the profitability of the business, not just the revenue. Here emerges the opportunity for Business Intelligence within the Transportation field.
The use for BI is complex for the transportation professional because much of the logistics function is a reaction to other initiatives within a business. For example, outbound freight is really an expense against sales and inbound freight is an expense against cost of goods sold. Therefore the framework for Business Intelligence has to work within the category that it relates to within the company.
If we simplify the goal of Business Intelligence to support better business decision-making, we can begin to craft Business Intelligence strategy for Transportation.
What do I need to do to incorporate Business Intelligence in the transportation field?
1. View transportation through a BI “lens.” The data itself has inherent value. Many companies spend time, dollars and resources having late packages tracked for the reclamation of shipping dollars with a parcel carrier. The $8.00 a shipper may get back in credits pales in comparison to the impact of a lost customer, repeat business from an existing customer or a cancelled order on the business. The view of this function needs to evolve. The current state of late packages is contentious with carriers because it is focused exclusively on the credit, not the business impact to the end recipient. The result? Carriers don’t want to share the data because of the credit focus and shippers don’t get data they may need for their BI strategy.
2. Carriers and vendors must be your partners in the Business Intelligence solution. They control the external data that completes the business cycle. As transportation professionals, you own the relationship with carriers and vendors and therefore by extension own the data relationship with the carriers as well. You need their support to build your BI solution.
3. You need to partner with the correct technology support. This could be internal through your companies developed products, a licensed Business Intelligence software application or through a Business Intelligence service. Whatever the course taken, the correct data infrastructure needs to exist to deliver the correct analytics.
4. Identify all the transportation touch points in the business process. These are all areas of opportunity and data collection.
5. Establish some initial Key Performance Metrics that the Business Intelligence solution can track and, in turn, provide direction. These metrics should be both impactful, but achievable to track.
6. Ensure that the BI initiative has a tangible benefit and return. This can include direct cost savings, increased customer retention, revenue or profit.
7. All data collected has to be “scrubbed” and refined to make useful. Underestimating this requirement can lead to results that are misleading and ultimately costly for your organization.
Typical Pitfalls in the Creation of a BI Solution
1. The Business Intelligence initiative is not well-defined with a specific tangible result that can be measured.
2. Data resides and is controlled within different departments throughout the organization, making collection too challenging to achieve desired results.
3. IT controls the Business Intelligence process and transportation initiatives are not recognized or even understood; therefore, they are not prioritized.
4. The Business Intelligence initiative is not actually Business Intelligence, but a series of reports showing historical patterns without the ability to project impact forward.
Beware of the Phantom BI Solution
Business Intelligence is not the delivery of reports or data. This will mislead you in your initiative and will result in your losing credibility within your organization. Viewing life through a Polaroid (static) view will limit the business applications for the information.
It is critical that you collaborate both internally and externally with partners and stakeholders who are committed to supporting your goals. This would include your carriers, other third parties and also your current system providers.
Many organizations, including your own, have data accessible to you. The biggest and most common challenge is that the data is in so many different places. Select the methodology and system to collect data and be sure that the data can be enriched.
Developing a Business Intelligence Program is a journey. Your journey has now begun and with the right plan will pay dividends for your organization.
Jonathan Shaver is President and Founder of IntraVex, a Transportation Business Intelligence company. He has his MBA from Northwestern’s Kellogg School of Management. He is a Board Member of the Transportation Logistics Council, an active member in the Council of Supply Chain Management Professionals and the Parcel Shippers Association.
