Application of Business Intelligence in Transportation for a Transportation Service Provider

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Application of Business Intelligence in Transportation

for a Transportation Service Provider

Mohamed Sheriff

Business Analyst

Satyam Computer Services Ltd

Email:

mohameda_sheriff@satyam.com

,

mail2sheriff@sify.com

Abstract: Transportation is an important activity for economic development. This activity is carried out mostly by a TSP. Business Intelligence is a concept which helps organizations gain better insight into their business by leveraging data. This paper throws light into how a TSP can use BI to their advantage.

Keywords: Transportation Service Provider (TSP), Online Analytical Processing (OLAP), Transportation Life Cycle (TLC), Business Intelligence (BI), KPI

1.0 INTRODUCTION

Organizations offering Transportation services are facing cut throat competition. Increasing competitiveness in the market has led to wafer thin margins affecting the Bottom-line growth of the organization. The increasing number of players is one of the major reasons which can attribute to this situation. Organizations which provide Transportation services both nationally and globally are leaving no stone unturned to cut costs and boost efficiencies. They have bought in huge automation in their operations ranging from ERP systems to TMS systems. These new systems have given breathing time to these organizations for improvement, but provide less scope in exercising perfect monitoring and control. Business Intelligence is proving be an exciting for exercising perfect monitoring and control over the organizations value adding activities. This is a paradigm shift in the way organizations sense and respond to change in the market.

2.0 OVERVIEW OF TRANSPORTATION

In today’s global scenario supply chain and logistics have proven to more business sense than just being mere buzzwords. In a Supply Chain, Transportation is an important link connecting its various entities. Logistics which is a subset of a Supply Chain depends heavily on Transportation for achieving completeness in its execution. Transportation plays

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an important in managing inventory levels. Although manufacturers adopt the Total Cost of Ownership model for managing their logistic costs, Transportation still plays an important role in determining the number of facilities and their corresponding inventory levels for the SKUs associated. Transportation has always been a preferred activity to be outsourced for most organizations due to its asset intensiveness and its different nature of operations. Manufacturers are dependent on Transportation Service Provider(s) (TSP) in some way or the other for their Transportation needs. TSP are both asset based and non asset based. But then non asset based TSP depend on asset based TSP. TSP provide their transportation services both nationally and internationally. Most TSP have matured from being just basic transportation service providers to providers of other value added services like pickups, storage, packing etc. Therefore there are different types of TSP depending on the type of services they offer, which is depicted in the pyramid fig 1. TSP are also being termed as LSP (Logistics Service Provider) since the vast gamut of services they offer take care of the entire logistic activities. There are TSP called as 3PL (Third Party Logistics) providers who where basically TSP but have matured to provide other value added services often covering the entire logistic need of an organization. So a TSP is categorized and differentiated based on its service offering apart from its basic transportation service offering.

3.0 ROLE OF TRANSPORTATION SERVICE PROVIDER

A TSP provider has various Operations which it performs ranging from picking the material till it delivers the material and this also includes the support operations which are performed in conjunction with the main line operations. The Transportation Life Cycle (TLC) is associated with each and every TSP. The TLC explains various processes undertaken by a TSP to perform his services to his / her customer. The Customer is the Start point and the End point for the TLC. The intermediate steps in the TLC are Order Receipt, Vehicle Load Planning, Vehicle Routing & Scheduling, Dispatch Operations, Goods Movement, Receiving Operations and Order Delivery. Each intermediate step is a separate process by itself. The Customer contacts the TSP for transporting his / her goods

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The TSP then accepts and performs the Order Receipt by receiving the goods to be transported along with the order information like delivery address, goods content information etc. The TSP can collect the goods from the customer’s location or the customer can handover the goods at the TSP’s location or collection point. The TSP performs the Vehicle Load Planning based on the Load factor. They plan on the load to be carried by each and every vehicle operated from that Hub to other Hubs. The TSP performs the Vehicle Routing & Scheduling by mapping the vehicles with load to the various routes and sequencing the dispatch of those vehicles based on timing, distance, capacity and other related factors. The TSP performs the Dispatch Operations by allocating the respective dock to the vehicle, loading the vehicle with the goods and providing the vehicle crew with the documents for the goods carried. The “vehicle belonging to” or “in control of” the TSP moves the goods from the origin Hub to the destination Hub. The TSP performs the Receiving Operations by allocating the respective dock door, unloading the vehicle and validating the goods with their corresponding documentation. The TSP then performs the Order Delivery by delivering the goods which were transported along with the documentation. The TSP delivers the good at the customer’s location or the customer can collect it at the TSP’s location or delivery point.

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Thus the TLC process is cyclic in nature with the TSP begin the key enabler to this process which is initiated and completed by the customer. The other support operations include Fleet Management, Vendor Management, Facilities Management (which includes Warehouse Management if it offers warehousing as a value add), Human Resource Management, Financial Management and other related operations which may be specific to that TSP.

4.0 BUSINESS INTELLIGENCE AN INHERENT NEED

The fundamental purpose of business intelligence (BI) initiative is to deliver fact-based information to improve the efficiency and effectiveness of the business. It should be the responsibility of the business to define and drive the initiative content and goals because they know the information best; the BI initiative must be based on the business. The BI tools need to be built in support of the business needs, and the tools delivered must be something users can and will use. In today's competitive global economy, having the right information at the right time is crucial to an organization's ability to make the strategic, tactical and operational decisions that drive organizational goals forward. To better understand their business, organizations need intuitive query and reporting tools for advanced and consumer-level users to obtain access to critical business information that supports strategic and tactical decision making. Business intelligence (BI) is fast becoming recognized across most industries, among organizations that want to leverage its capabilities, to help them gain a competitive advantage in the market. Application of BI can be categorized into the following categories:

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4.1. Business operations reporting

The most common form of business intelligence is business operations reporting. This includes the actuals and how the actuals stack up against the goals. This type of business intelligence often manifests itself in the standard weekly or monthly reports that need to be produced.

4.2. Forecasting

Many of you have no doubt run into the needs for forecasting, and all of you would agree that forecasting is both a science and an art. It is an art because one can never be sure what the future holds. What if competitors decide to spend a large amount of money in advertising? What if the price of oil shoots up to $80 a barrel? At the same time, it is also a science because one can extrapolate from historical data, so it's not a total guess.

4.3. Dashboard

The primary purpose of a dashboard is to convey the information at a glance. For this audience, there is little, if any, need for drilling down on the data. At the same time, presentation and ease of use are very important for a dashboard to be useful.

4.4. Multidimensional analysis

Multidimensional analysis is the "slicing and dicing" of the data. It offers good insight into the numbers at a more granular level. This requires a solid data warehousing / data mart backend, as well as business-savvy analysts to get to the necessary data.

4.5. Finding correlation among different factors

This is diving very deep into business intelligence. Questions asked are like, "How do different factors correlate to one another?" and "Are there significant time trends that can be leveraged/anticipated?" Data is seen as a wealth of Information by most IT enabled organizations. Organizations are moving towards BI to tap and receive accurate information regarding its various stakeholders. Thus BI can be adopted and applied in the day to activities of the organization, for it to make the most of from the data generated by the organization’s various OLTP (Online Transaction Processing) systems.

5.0 OVERVIEW OF BI TOOLS

Business intelligence (BI) vendors provide tools and platforms enabling the delivery of information to decision makers. In most cases, the information delivered comes from relational data sources or enterprise applications (e.g., enterprise resource planning, customer relationship management, supply chain). Typical technologies include are as follows

5.1 Query Tools

Standard query tools allow the users to view information by answering a series of predefined questions. The business problem that query tools resolve is the need for users to combine, analyze and export information from several sources using a static format. The standard query tool is an excellent mechanism for segmenting the user population into groups: users who need ad hoc query capabilities, those who need prompted query capabilities and those who need static query capabilities.

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5.2 Reporting Tools

Reporting tools provide the capability for presenting information in a visually appealing format. The business problem that reporting tools address is the need for organizations to create permanent records representing the business at a specific point in time that can be easily disseminated to others. Because of the formal nature of the information that reporting tools represent, it is important to develop procedures for maintaining and updating the data that they present.

5.3 OLAP Tools

Online Analytical Processing (OLAP) tools are for users who require intensive data analysis capabilities. The business problem that OLAP tools solve is the need for users to "drill" seamlessly into information when additional details are required. OLAP tools provide users with ad hoc access to data on an as-needed basis. These tools insulate users from the details surrounding the retrieval of information from the data warehouse.

5.4 Data Visualization Tools

Data Visualization tools help in the visual interpretation of complex relationships in multidimensional data. Graphics tools are used to illustrate data relationships. Dashboards and scorecards have emerged as a means of helping organizations do just that by providing an instrument for making decisions, delivering on long-term plans, responding quickly to market changes, providing greater control over the execution of strategy and promoting accountability. Both are dynamic tools that make it possible for organizations to respond to short-term market changes, support tactical decisions and keep strategy on track.

5.5 Data Mining Tools

There are various technologies involved in the mining of data. Similarly, there are various formats by which data mining tools extract their results from databases. These Tools use Artificial Intelligence – Neural Networks, machine learning and genetic algorithms for sensing and reporting the various patterns of data behavior.

6.0 APPLICATION OF BI

The operations performed by a Transportation Service Provider are at a broader level is briefed in the Transportation Life Cycle. These individual processes which form the TLC can be a scope for application of BI. Key Performance Indicators (KPI) is important to any BI implementation so the KPI defined for the various TLC processes would enable the data to be analyzed and presented to the user. The Data Visualization Tools use KPI to present in a Dashboard or other graphic tools. Further the TSP can use OLAP Tools for generating MIS reports for evaluating the operations performed in the organization. Reporting Tools would be of a significant use for making daily operational decisions for managing TSP’s daily operations. The TSP can also use Data Mining Tools to evaluate strategic factors both internal and external to the organization and identify patterns of business and operation behavior. The TSP can be then able to take decisions which are of Strategic or sometimes of Tactical in nature using data mining tools.

The direct benefits of the usage of a BI solution are reduction in the Turnaround Time for preparation of reports, Direct and Faster access to data needed to support decision making, analyze the ebb and flow of businesses across services, regions, clients, pricing, currencies, and market factors in time etc. The indirect benefits are Improved sales performance, Improved Data Quality, Improved Productivity etc. The KPI discussed in this

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paper is just a drop in an ocean and there can be various KPI which can be defined by the organization in conjunction with its BI consultants to capitalize on and make the best of BI technologies available in the market.

Table 1. Key Performance Indicators for TLC

TLC Process Key Performance Indicators

Order Receipt Total Order Receipt Time, Order Information Accuracy, Revenue per Order

Vehicle Load Planning

Planning Accuracy, Capacity Utilization, Resource Utilization, Load Balancing

Vehicle Routing & Scheduling

Route Utilization, Scheduling Accuracy, Rate of Route Addition / Removal, Vehicle Availability

Dispatch Operations Vehicle Loading Time, On Time Vehicle Dispatch, Order Dispatch Accuracy

Goods In Transit Rate of update of Location Information, Average Transit Time, Cost of Transportation per Ton

Receiving Operations On Time Vehicle Arrival, Vehicle Unloading Time, Order Receipt Accuracy, Percentage of Goods Damage Order Delivery Total Order Delivery Time, On Time Deliveries, Goods

Delivery Error Rate

7.0 CONCLUSION

Transportation Service Providers need to adapt a BI solution according to their business needs, also BI solution is becoming seen as more of a need than a luxury. TSP can implement BI solutions covering either key operations or the operations covering their entire organization. Whatever would be the acceptance level and the kind of implementation but the benefits realized should be in totality. BI is here to stay as the rate of adoption is increasing as organizations are looking towards data as one of the key assets of the organization. Leveraging Data needs it to be harvested it in beneficial manner. Harvesting Data to gain an edge over the competition can be done with ease by using a well qualified BI Solution with a unique BI Strategy for the organization. TSP who adopt BI solutions which would exhibit only behavior would be moving to solutions in BI Analytics space. Such solutions would not only show present behavior or market and other related activities but also predict future behavior and suggestion actions. And the later is the future of BI in Transportation. Thus TSP should embrace BI in its nascent stages to stay competitive and also move the organization towards using high end BI solutions, to be successful in the race for market leadership and customer satisfaction.

8.0 REFERENCES

1. Elizabeth Vitt, Michael Luckevich, Stacia Misner, 2002, “Making Better Business Intelligence

Decisions Faster”. Prentice- Hall Eastern Economy Edition, First Edition, India

2. Wayne Eckerson and Cindi Howson, 2005, “Moving BI to the Enterprise”,

www.dmreview.com

3. Raja G. Kasilingam,1998, “Logistics and Transportation”, Kluwer Academic Publishers

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