Third party logistics (3PL) providers are under pressure to cut costs and boost efficiencies due to thin margins in the logistics industry. Business intelligence (BI) tools can help 3PLs optimize supply chain operations and provide strategic value to customers. BI involves collecting, analyzing and reporting data to improve decision making. It allows 3PLs to monitor key performance indicators, identify trends, and predict future business behaviors to stay competitive in a changing market.

1. < FEATURE
Shifting
Trends
With wafer thin margins, corporates are introducing business intelligence to
boost efficiencies reports Sanjay Mehta, CEO, MAIA Intelligence Pvt. Ltd
L
ogistics is an important controlling an organization’s value Analyzing Data
component of economic added activities. It is a paradigm To effectively manage the supply
development. Increasing shift in the way organizations chains of their customers, 3PLs need
competitiveness, however, respond to change in the market. to constantly analyze data collected
has led to wafer thin margins Over the last few decades the from various sources and convert it
which have affected the bottom role of logistics management has into actionable information. Busi-
line of various organizations. The undergone a paradigm shift. It is ness intelligence (BI) tools like data
increasing number of players in widely recognized as an extremely warehousing and OLAP (Online An-
the industry is one of the major important aspect of overall business alytical Processing) can significantly
reasons that one can attribute to strategy. At the same time, a number help 3PLs in achieving this objec-
this situation. These organizations of factors have increased the tive. By providing a unified view of
are leaving no stone unturned to complexity of logistics management. the entire supply chain, these tools
cut costs and boost efficiencies. This has led many companies to can help improve the functioning
They have brought in huge outsource their logistics activities of basic 3PL services like transpor-
automation into their operations to Third Party Logistics (3PL) tation management, warehousing,
ranging from ERP to TMS systems. providers. Today, 3PLs play a critical and inventory management. 3PLs
While these new systems will help role in the supply chains of their can leverage BI tools to provide their
organizations to improve, they will customers. They are increasingly clients with information specific to
not be able to monitor and control viewed as strategic partners who can their supply chain, thereby increas-
business activities. On the other play a pivotal role in optimizing the ing their market responsiveness.
hand, business intelligence is an supply chain and thereby providing BI tools can also help 3PLs improve
excellent means of monitoring and sustained competitive advantage. their own internal organizational
53 INDIA | October 2010 | www.logisticsweek.com 53

2. Multidimensional Analysis
Key Performance Indicators for 3PL Providers Multidimensional analysis is the
3PL process Key performance indicators “slicing and dicing” of data. It of-
Order receipt Total order receipt time, order information accuracy, fers good insight into numbers at a
revenue per order more granular level. This requires a
Vehicle load planning Planning accuracy, capacity utilization, resource utiliza- solid data warehousing / data mart
tion, load balancing backend, as well as business-savvy
Vehicle routing and scheduling Route utilization, scheduling accuracy, rate of route addi- analysts to extract the necessary in-
tion / removal, vehicle availability formation.
Dispatch operations Vehicle loading time, on time vehicle dispatch, order
dispatch accuracy Finding Correlation Among
Goods in transit Rate of update of location information, average transit Different Factors
time, cost of transportation per ton This is in effect analyzing business
Receiving operations On time vehicle arrival, vehicle unloading time, order intelligence deeply. The questions
receipt accuracy, percentage of goods damage asked are, “How do different factors
Order delivery Total order delivery time, on time deliveries, goods deliv- correlate to one another?” and “Are
ery error rate there significant time trends that
can be leveraged/anticipated?” Data
eliminate bottlenecks, the ability to is seen as a wealth of information by
analyze all activities in the logistics most IT enabled organizations. Cor-
The fundamental purpose of process is vital.
The fundamental purpose of
porates, in fact, are adopting BI to
receive accurate information regard-
business intelligence (BI) is to business intelligence (BI) is to deliver ing its various stakeholders. Thus
deliver fact-based information fact-based information to improve BI can be applied in the day-to-day
to improve the efficiency and the efficiency and effectiveness of
business. To better understand their
activities of an organization, for it to
extract the most from the data gen-
effectiveness of business. business, organizations need intuitive erated by the organization’s various
query and reporting tools for advanced OLTP (Online Transaction Process-
and consumer-level users to obtain ing) systems.
access to critical business information
functions like human resources and that supports strategic and tactical Providing Tools
financial management. decision making. BI can be classified Business intelligence (BI) provides
into the following categories: tools that enable the delivery of in-
Aiding 3PLs formation to decision makers. The
The 3PL industry is in a state of tran- Business Operations information delivered comes from
sition. Logistics providers are add- Reporting relational data sources or enterprise
ing more and more services to their The most common form of business applications (e.g., enterprise re-
portfolios as customers demand intelligence is business operations source planning, customer relation-
more integrated solutions. 3PLs are reporting. This includes the actuals ship management and supply chain).
viewed as strategic partners who can and how the actuals stack up against Business intelligence includes:
optimize the supply chain, reduce goals. This type of business intel-
the cycle time, and provide unprec- ligence often manifests itself in the Query Tools
edented customer responsiveness. standard weekly or monthly reports Standard query tools allow the users
One method to effectively provide that need to be produced. to view information by answering a
such services is information tech- series of predefined questions. The
nology. The more sophisticated 3PLs Dashboard business problem that query tools
have quickly embraced IT to enable The primary purpose of a dashboard resolve is the need for users to com-
better coordination of activities by is to convey information at a glance. bine, analyze and export information
providing tracing and tracking fa- For this audience, there is little, if from several sources using a static
cilities to its customers. But this is any, need to study data deeply. At the format. The standard query tool is an
hardly enough to ensure sustained same time, presentation and ease of excellent mechanism for segment-
competitive advantage. For total effi- use are very important for a dash- ing the user population into groups:
ciency in the supply chain and also to board to be useful. users who need ad hoc query
54 INDIA | October 2010 | www.logisticsweek.com

3. capabilities, prompted query capa- portant to any BI implementation, so strategies for the organization.
bilities and static query capabilities. the KPI defined for the various proc- The industry’s 3PL providers who
esses would enable the data to be an- adopt BI solutions which exhibit
Reporting Tools alyzed and presented to the user. BI only behavior would get solutions
Reporting tools provide the capabil- uses KPI to present in a dashboard. in BI analytics space. Such solu-
ity for presenting information in a Further, 3PL players can use OLAP tions would not only show present or
visually appealing format. The busi- tools for generating MIS reports for market behaviour and other related
ness problem that reporting tools ad- evaluating the operations performed activities, but also predict future be-
dress is the need for organizations to in the organization. Reporting tools havior and suggestions. This is also
create permanent records represent- would be of significant use for mak- the future of BI in transportation.
ing the business at a specific point in ing daily operational decisions for Thus 3PL providers should embrace
time that can be easily disseminated managing a 3PL’s daily operations. A BI to stay competitive and be suc-
to others. Due to the formal nature of 3PL can also use data mining tools cessful in the race for market leader-
the information that reporting tools to evaluate strategic factors both ship and customer satisfaction.
represent, it is important to develop internal and external to the organi- The 3PL industry is in a state
procedures for maintaining and up- zation and identify patterns of busi- of flux. The internet, supply chain
dating the data that they present. ness and operational behavior. A 3PL management and globalization have
can then take decisions which are made sweeping changes in the ex-
OLAP Tools strategic or tactical in nature using
Online Analytical Processing (OLAP) data mining tools.
tools are for users who require inten- The direct benefits of the usage
sive data analysis capabilities. The of a BI solution are reduction in the BI solutions are seen as more
business problem that OLAP tools turnaround time for preparation
solve is the need for users to “drill” of reports, direct and faster access
of a need than a luxury. 3PLs
seamlessly into information when to data needed to support decision can implement BI solutions
additional details are required. OLAP making, analyzing the ebb and covering either key operations
tools provide users with ad hoc access flow of businesses across services,
to data on an as-needed basis. These regions, clients, pricing, currencies,
or the operations covering their
tools insulate users from the details and market factors in time etc. entire organization.
surrounding the retrieval of informa- The indirect benefits are improved
tion from the data warehouse. sales performance, data quality,
productivity etc. This KPI is just a
Data Visualization Tools drop in the ocean and there can be isting business models of 3PLs. To
Data Visualization tools help in the various KPI which can be defined by compete in this market, a 3PL has
visual interpretation of complex rela- an organization in conjunction with to continuously improve its existing
tionships in multidimensional data. its BI consultants to capitalize on services, add new services based on
Graphics tools are used to illustrate and make the best of BI technologies technology and make its internal
data relationships. Dashboards and available in the market. functions more effective. BI tools
scorecards have emerged as a means BI solutions are seen as more like data warehousing can signifi-
of helping organizations do just that of a need than a luxury. 3PLs can cantly help a 3PL provider achieve
by providing instruments for mak- implement BI solutions covering these objectives.
ing decisions, delivering long-term either key operations or the Recognizing the need for an effec-
plans, responding quickly to market operations covering their entire tive business intelligence solution is
changes, providing greater control organization. BI is here to stay as just the first step. The real challenge
over the execution of strategy and the rate of adoption is increasing is to make it an integral part of the
promoting accountability. Both are because organizations are looking decision making process and to set
dynamic tools that make it possible towards data as one of the key assets clear objectives for business intel-
for organizations to respond to short- of the organization. Leveraging data ligence solutions with management
term market changes, support tactical means that it needs to be harvested in support so that the company achieves
decisions and keep strategy on track. a beneficial manner. Harvesting data complete success.
to gain an edge over the competition
Key Performance Indicators can be done with ease by using well- The author can be reached at sanjaymehta@
Key Performance Indicators are im- qualified BI solutions with unique BI maia-intelligence.com
INDIA | October 2010 | www.logisticsweek.com 55