Business Intelligence – Top 5 Data characteristics

Most of the companies now have good enterprise resource planning, supply chain planning, revenue management systems etc.in place. In addition to these packages, companies also tend to have many in-house developed solutions. While IT groups in many companies are now busy developing business intelligence capabilities, it is very important to understand that we give due importance to the data itself.

Following are top 5 characteristics that are important to keep in mind about the data itself:

1. Data Availability / Integration: As data sources will be in multiple systems (BTW: spreadsheet is not a system), ability to receive and integrate data from these multiple sources is critical. We in IT call it ETL (extraction transformation & loading).

2. Data Integrity / Trustworthiness: Otherwise, don’t even bother starting with the project.

3. Timeliness: Stale data is of no use. Frequency at which fresh/updated data will be available should be carefully planned.

4. Security: Obvious point…

5. Granularity: Once users see high level graphs and charts, they want to drill down into details.

Last but not the least, those of you who are implementing new ERP systems and plan toimplement business intelligence/reporting "later"; think again

Leadership - Effectively managing globally distributed teams

In today’s day and age, when companies want access to globally available, highly skilled resources at lowest possible costs (from anywhere in the world), it is not uncommon to find that teams have become geographically distributed.

Yes, productivity can suffer due to team members not being at the same location, but then instead of complaining and sulking about these situations, smarter firms work on continuously improving the productivity of their distributed teams.

Effectiveness of geographically distributed teams can be improved by using a combination of modular team structure, technology (collaboration tools), well-defined team goals, better availability and sharing of contextual information , more frequent face to face team interactions and a strong organizational culture.

For globally distributed teams, a modular team structure results in higher level of performance. This is because collocated teams work on similar items and there are clearly defined handoffs from one team to another team (in a different location). This structure helps eliminate the lack of social interactions needed for teams to perform.

However, for modular structure to work effectively, using strong project management methods is a key criterion for ensuring success.

Having common goals ensures that the entire team, irrespective of the geographic location, is marching towards the same target. Goals also need to be tied with the business strategy. One of the reasons teams put in greater effort into achieving common goals is because they clearly understand how their individual efforts can help impact company’s strategy. It means a lot to the team members and they emotionally feel part of the family!

Collaborative technologies (e.g. Skype, Cisco's unified collaboration platforms, Microsoft's Lync etc.) are an enabler for improving team performance. However, in the absence of other characteristics (e.g. modular structure, common goals, strong culture etc.), technology on its own can’t help much.

While face to face meetings definitely help teams to gel together, this may not be possible in certain situations (due to need to keep travel costs down). In such cases, clear criteria should be established based on which travel costs for face to face meetings can be approved.

Teams can greatly improve group performance by effectively cultivating an enabling culture. Some of the guiding principle like customer is #1, high service levels at low costs, and being able to provide best-in-class services should be built in group’s DNA. The team needs to be motivated and should be strongly behind the culture. With the right culture, teams can achieve high performance targets.

Additional reading material:

• http://en.wikipedia.org/wiki/Virtual_team#Advantages_of_virtual_teams
• http://en.wikipedia.org/wiki/Virtual_team
• http://www.teced.com/PDFs/ipcc98la.pdf
• Brett, J., K. Behfar and M. Kern, “Managing Multicultural Teams,” Harvard Business Review, November 2006
• Cramton, C. “Finding Common Ground in Dispersed Collaboration,” · http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6W6S-45N816C-1&_user=145269&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000012078&_version=1&_urlVersion=0&_userid=145269&md5=98c7a24dddbf91a527aeb95a87779af8
• Kiesler, S. & J. Cummings, “What Do We Know about Proximity & Distance in Work Groups?” Kiesler & Hinds, eds., Distributed Work, 2002. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.61.1651&rep=rep1&type=pdf

Forecasting - Supply chain management (Part I)

I have been recently studying Production and Operations Analysis at Stanford University. Also, since forecasting was the first module implemented at my workplace. I would like to share some key insights gleaned from the class and the implementation of the system.

The description below will give you a 50000 ft view of the various business topics related to forecasts that you need to consider before implementing forecasting module (of any supply chain system).

(1) Forecasts are always going to be wrong (are you surpised ?)
(2) Forecasting aggregate units is generally easier than forecasting individual units, so spend your time wisely.
(3) Forecasts made further out into the future are less accurate. (common sense, duh)
(4) Forecasting technique should not be used to the exclusion of known (means human are still needed in addition to machines)
(5) A good forecast also gives some measure of error (see below for various metrics used)
(6) Better forecasts will result in lower inventory costs (for same service levels), so why wouldn't you want to improve forecasting accuracy.

Forecasts can be subjective or objective. Subjective forecasts are developed using customer surveys, sales force composites and Delphi methods etc.

Objective forecasting is generally done using Causal, Time series based methods. One needs to considers trends, seasonalities, cycles & randomness in the time-series forecasts.

Following metrics are generally used to evaluate forecasts:

(1) MAD: Mean absolute deviation

(2) MSE: Mean Squared Error

(3) MAPE: Mean Absolute Percent Error


There are two widely used methods for forecasting stationary series:

(1) Moving averages
(2) Exponential Smoothing

So, following questions naturally come to mind:

- At what level of the product hierarchy should you evaluate forecasts and for what horizon?
- What is the recommended statistical forecasting model?
- What is the big deal about S&OP process?


To be continued...

Agile Supply Chain Systems

How agile is your supply chain management system?

Dr. Hau L. Lee* describes objective of an agile system to be able to "handle short-term changes in demand or supply quickly;handle external disruptions smoothly". You can get Dr. Lee's paper (Triple-A Supply Chain as published in Harvard Business Review) at the following link:

http://harvardbusiness.org/product/triple-a-supply-chain/an/R0410F-PDF-ENG

Why do we need Supply chain system to be agile?

SCP (supply chain planning) engine should be able to reflect changes in supply picture as soon as possible. If engine can't reflect supply changes quickly enough, your planners will schedule orders manually leaving you to figure out : why no one is using the system?

There are many factors that can result in supply changes, for example,

- Yield rates
- Procurement of additional capacity
- Unscheduled disruptions at your suppliers' sites
- Delays in shipments
- etc.

Dr. Lee advises following six rules of thumb to improve supply chain agility:

1. Provide demand data to your suppliers so that they can respond quickly.
2. Develop collaborative relationships with suppliers. so that any changes in supply are received quickly and electronically.
3. Use inventory postponement concept effectively.
4. Keep an inventory of small and bulky components that are often the cause of bottlenecks.
5. Build a dependable logistics system that can enable the company to regroup quickly in response to unexpected needs.
6. Put together a team that knows how to invoke backup plans.


Agility is a key attribute of any supply chain system. Here is what i2 has to say about it.

http://www.i2.com/supplychainleader/issue1/html/SCL1_7princ_suppchainagility.cfm

i2 promotes 7 Principles of Supply Chain Agility": agile organization, closed-loop plan management, demand management, supply management, fulfillment management, rapid business reconfiguration and agile IT systems. A common theme across these principles is closed-loop management with speed.


Your supply chain system may be best of the breed, cost-effective, scalable etc., but if it is not agile (supply and demand is not reflected quickly), then you better watch out!


* Dr. Hau Lee is the Thoma Professor of Operations, Information, and Technology at the Graduate School of Business, Stanford University.

Business value of IT

What is the value of IT in a business. Does IT matter as someone had asked sometime back?

My theory is that IT has been a greatly misunderstood and mismanaged function. Functions like manufacturing/supply chain, finance etc. are taught in schools, people receive some level of training and are expected to learn some frameworks/principals before they start work. Whereas in IT, any Tom/Dick/Harry with whatever background can jump in, learn how to manage a server or write few lines of code and become an IT expert.

The picture is not that bad everywhere, of course, there are some very good IT groups. Some CIOs have done exceptionally well in using IT to enable business etc. but I think that is only about 10%. The rest struggle....

Some schools do offer courses in MIS but the focus is more on technology. How would you expect them to become business savvy? How can they bring change using technology?

I strongly think there should be formal education on Information Management, not from technology but from business standpoint. What we have seen in IT is only tip of the ice-berg. There is a great potential in what IT can do for a business but for that IT needs to learn the business...

New Age of Innovation

Today I got my copy of the book titled "the new age of innovation" by Prahalad and Krishnan. I was quite excited to read the first chapter. Authors talk about how legacy business models have changed, battle-fields for competitive differentiation have been altered by technology, globalization, Web 2.0 etc.

Using the N(user experience)=1(unique) and R(resources)=G(global) model, authors argue that companies need to use global resources and co-create (with users) value for personalized user experience to survive in this new age of innovation. IT leaders and strategists can find this concept very compelling and even base their future IT frameworks (architectures) to support growth and innovation on this model. I am looking forward to read the chapter on "IT matters".

I will post my analysis and insights after I finish reading the book...so stay tuned.

User-led Innovation - IT Training

We don't need IT training to use www.amazon.com site to purchase books. The application is simple enough to use. Also, one can easily purchase airline tickets on the web without need for an intensive IT training. However, same is not true for corporate business applications.

Until IT application vendors can come out with Amazon-like "ease of use" in their applications, there is always going to be a need for IT training for end users. With shrinking IT budgets and resources for IT training activities, how can one cope up with this challenge. We all know that without appropriate training, companies can't get total benefits out of their investments (in systems & applications).

IT always get challenged with this problem (training) and good news is that the latest web 2.0 technologies now offer new hope (and solutions).

Why not involve users in their own training? "Train the trainer" approach needs to be replaced by "user trains the user" and here is how.

Using the Wikipedia approach, companies can develop their own collaborative Wiki sites (internal) that can be used as training platforms. This approach requires end-users who are "willing and able" and ready to share and train (assuming initial baseline training/documentation has been completed).

As users might have very limited time (and sometimes lack of interest), companies should find innovative ways of encouraging this new collaborative training approach. This form of user-led innovation (IT training) is open to all the users of the systems and can be further expanded to improve process efficiencies and ensure that companies can reap the "promised" ROIs.