What is Business Intelligence (BI) ?
Business Intelligence is the process of using historical data from your business operations, to represent a meaningful illustration that could help you analyze and improvise business strategies to meet customer’s demand as well as out-perform the competitors.
Every business undergoes a challenging phase in this ever changing business environment. To sustain in the market one should continuously monitor customers’ behaviors and act accordingly. The BI software tool integrated with ERP provides real time accurate information about the business performance. Using these reports the managers can easily make sales predictions, improve operational efficiency and better productivity.
Let us consider a food delivery app. There are millions of customers who order food online everyday. To efficiently serve the customers and increase sales, the company uses a software tool that could collect data on user behavior, list of products ordered, at what time of the day, age group, restaurants, etc. This illustration helps the company to send more personalized notifications to the users to attract them for more orders. This applies to all the industries. Understanding consumers’ needs is the major operational improvement for a business.
Do Manufacturing Industries need BI ?
It’s obviously a “yes”. Manufacturing is a data driven industry, from sales, supply chain, inventory till delivery of the goods, they involve a large number of data values. These aren’t just numbers but the business values which need to be consumed efficiently for an enhanced productivity.
Manufacturing companies rely on real time data for their day to day activities. Gone are those days where the companies used N number of spreadsheets and manual reports for operations. Now everything has moved into an ERP system. The software pulls out clear reports and graphical representations of the data helping you get better clarity on what is going on with the business operations. But it is important to make use of these historical data in predicting the future sales, customers’ changing needs and productivity enhancements. Even though the ERP can provide you with constant forecasting, the BI tool can give more in-depth information.
Difference between ERP and BI :
The purpose of ERP and BI might sound the same but there are several fundamental differences between the two.
- ERP software handles various back office functions like sales, purchase, inventory, payroll, accounts and production, whereas BI is solely used for reporting and illustrations of business data.
- An ERP tool is used by all departments in an organization but a BI tool is used only by the marketing team to analyze business performances.
- ERP provides current real time information of the ongoing projects, under a single screen. It helps streamline the day to day activities and enhance business efficiency. Business Intelligence is used to predict the ups and downs in the business with help of historical data. Hence the marketing team can come up with different strategies to beat competitors and sustain loyal customers.
- A small scale business either can use one tool alone or both tools integrated together for best analyzing of business data.
Benefits of using BI in Manufacturing Industry :
Inventory Management :
Inventory control is the most important factor for the manufacturing industry. With BI you can keep track of inventory cost, product margins, minimum stock quantities. Thus it helps you avoid bottleneck moments of purchasing materials or production interruption due to materials shortage.
Supply Chain Management :
BI helps you maintain quality and timely delivery of goods with information on supplier details, quotation and negotiations done. Thus ensures a smooth transportation of goods with standard quality of materials. It also constantly tracks changes in supply and demand hence being proactive accordingly and reducing unnecessary costs.
Decision Making :
With ERP you can have a record of the database on business processes but keeping it idle is of no use. BI tools can interpret these data into reports that could be understood by the executives. This helps them to make concise decisions and be prepared to face business challenges.
Financial Management :
Since BI provides an accurate analysis of sales order-target vs actual, purchase costs and other expenses it is easy to predict the Return of Investment. Hence with all this data it is easier for the finance team to allocate appropriate budgets to each task avoiding more expenditure. This ensures a balanced and healthier cash flow in the organization.
Production Scheduling :
By having a clear record on machine capacities and the average time to complete a task, we can efficiently manage capacity planning and production scheduling accordingly. This eliminates bottleneck tasks which could lead to defective products.
Quality Assurance :
Quality is the major factor that decides the loyalty of customers. Even a single defective product could cause a great impact on customers’ feedback about the company. With BI it gives you better insights on factors that affect the product quality during the production phase. Thus avoiding such mistakes will ensure quality goods and customer satisfaction.