[TYPE THE COMPANY NAME]

BUSINESS INTELLIGENCE (BI): A CASE STUDY OF ACHIEVING OPERATIONAL EXCELLENCE IN CHEMICAL AND KAOLIN MANUFACTURING

MOIS 508
Summer 2010 7/24/2010 [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract of the document here. The abstract is typically a short summary of the contents of the document.]

Name: Ahmed Mamdouh Coucha SID:800090353

How did the vast improvements to information systems and technology enhancements change the global economy?1
The advancement in the Information and communication technology (ICT) has changed the face of the economy. A new kind of economy the information economy is emerging where trade and investment are global and firms compete with knowledge, networking and agility on a global basis. The technological advancement led to the improvement in efficiency and the rise in the productivity of companies through the reduction of production cycles and the better use of entrepreneurial resources through the use of better technology more efficient production tools. Therefore ICT enables the production of goods in a short amount of time with the assistance of computerized systems as a result more products are available driving prices down and leading to a wide range of new products. Meanwhile the availability of the technology for different nations at low cost has introduced more players in the field. This raised the revelry in the market and ended the era of monopoly and market domination. Now you can find the same core product produced in china or India with the same features as the one produced in US or Europe. The emergence of the internet decreased the distance between countries and removed barriers between markets, with the rise of virtual mobility concept that renders the distance less important, as a result consumers are spending less on transportation; they are saving money, which could be added to their disposable income. It also contributed in the availability of the knowledge and knowhow that companies in china and India can use to produce copy-paste products as those produced in Europe at lower cost. Also the internet helped in the development of new terms like ecommerce which is the buying and selling of products or services over the Internet and other computer networks. Both individuals and corporate can use the internet to buy and sell products and services irrespective of their location.
1
http://www.labs-associados.org/docs/OCDE_TIC.PDF

Also the development of ICT led to the development of virtual products in term of applications and services that can be sold over the internet. The most pronounced example is the call centers and contact centers. A company selling its product in USA can have its call center in India operating 24/7 using the VOIP technology because the labor cost in India is cheaper than that in the USA. In addition to software that is sold over the internet, you dont need to have a setup C.D, instead you pay and receive the software on line, or you can pay for using software as a service e.g. the sales.com sales management application, in addition to the emergence of on line freeware and sharewares and other applications. The internet enhanced globalization, you can be using a program or paying for a service or buying a product without knowing the country that is offering this service. The world is becoming a small village. Also you can find a Chinese company competing with a US company in the USA. In response to all that, big companies found that it had to respond to these IT enhanced global changes. Big companies are doing merges and acquisitions becoming multinational giants with roots in every big emerging economy (India and china).Also they are using the model of outsourcing to do business at competitive cost. Companies now are using the internet to reach their potential customers wherever they are through online marketing campaigns. Also big companies are reorganizing their structures to be more competitive and have more maneuvering abilities in this dynamic economy .Applying ERP for coordination between its branches and functional units and applying a real time application models and business intelligence models to be more competitive. Due to the information revolution security has become a top priority for companies to keep the integrity and competencies of its product. A corresponding new society is also emerging with pervasive information capabilities that make it substantially different from an industrial society: more competitive, more democratic, less centralized, less stable, better able to address individual needs, and friendlier to the environment. These changes dictate, for all countries, a major adjustment to harness information for economic and social development. This adjustment requires urgent new policies, regulatory and institutional reforms, and investments. Through this adjustment, countries must achieve macro-economic balance, political stability, and growth amidst global information flows, competition, trade and investment. Advanced countries are rapidly adjusting. Developing countries in Africa must also adjust or risk exclusion from the global economy and severe competitive disadvantage for their goods and services.

What is the difference between Knowledge management and Business intelligences and their impact on the competitiveness of business?2 3 4 5 6
The term data refers to groups of information that represent the qualitative or quantitative attributes of a variable or set of variables. Data are typically the results of measurements and can be the basis of graphs, images, or observations of a set of variables. Data are often viewed as the lowest level of abstraction from which information and knowledge are derived. Knowledge (information) is defined by the Oxford English Dictionary as (i) expertise, and skills acquired by a person through experience or education; the theoretical or practical understanding of a subject; (ii) what is known in a particular field or in total; facts and information; or (iii) awareness or familiarity gained by experience of a fact or situation. Intelligence is an umbrella term describing a property of the mind including related abilities, such as the capacities for abstract thought, understanding, communication, reasoning, learning and learning from the experience, planning, and problem solving. From these three definitions we can conclude that the three terms are related to each other starting from the data that represents attributes found around us, and when we get to know and practice these data it turns into knowledge. Intelligence on the other hand is a higher level of knowledge where we start processing the knowledge we have through using logical functions of the brain to reach an action at the end that adds value which wasnt there before.
2 3 4 5 6
http://en.wikipedia.org/wiki/Data http://en.wikipedia.org/wiki/Knowledge http://en.wikipedia.org/wiki/Intelligence
http://en.wikipedia.org/wiki/Knowledge_management http://en.wikipedia.org/wiki/Business_intelligence

Knowledge Management (KM) comprises a range of strategies and practices used in an organization to identify, create, represent, distribute, and enable adoption of insights and experiences. Such insights and experiences comprise knowledge, either embodied in individuals or embedded in organizational processes or practice. Business Intelligence (BI) refers to techniques used in spotting, digging-out, and analyzing business data, such as sales revenue or associated costs and incomes. BI technologies provide historical, current, and predictive views of business operations. Common functions of Business Intelligence technologies are reporting, online analytical processing, analytics, data mining, business performance management, benchmarking, text mining, and predictive analytics. Business Intelligence often aims to support better business decision-making. Thus a BI system can be called a decision support system (DSS). Fundamentally both terms have a lot of embedded similarities. They both focus on gathering, and analyzing Data and disseminating information for the sake of improving business performance. Yet the Knowledge management effort is typically directed toward the internal data of the company such as revenue, sales inventory turnover.. With main objective of improving the efficiency of the company, enhancing its competitive advantage, aiding innovation. Nutshell KM efforts intersects with the of the organizational desires to learn, reduce redundant work, avoid reinventing the wheel per se, to reduce training time for new employees, to retain intellectual capital as employees turnover in an organization, and to adapt to changing environments and markets. On the other hand Business intelligence is directed more toward the external environment focusing on the Customer, Competitor and Market. Business intelligence (sometimes called competitive intelligence) is to support strategic decision-making, grow the business and monitor the organizations competitors. Business intelligence (BI) is a broad category of applications and technologies for gathering, storing, analyzing, and providing access to data to help enterprise users make better business decisions. BI applications include the activities of decision support systems, query and

reporting, online analytical processing (OLAP), statistical analysis, forecasting, and data mining. Business intelligence applications can be: Mission-critical and integral to an enterprise's operations or occasional to meet a special requirement Enterprise-wide or local to one division, department, or project Centrally initiated or driven by user demand

The value of Business Intelligence and its product, opportunity analysis, is found in its usefulness as a decision making tool which aid the company in getting higher revenues. The value of Knowledge Management lies in the ability of the organization to identify, capture and reuse knowledge and in particular best practices in such a manner that it saves the organization time, effort and resources -translated and measured in cost.

How can a business innovation model achieve operational excellence?7 8

Business Model Innovation (BMI) refers to the creation, or reinvention, of a business itself. Whereas innovation is more typically seen in the form of a new product or service offering, a business model innovation results in an entirely different type of company that competes not only on the value proposition of its offerings, but aligns its profit formula, resources and processes to enhance that value proposition, capture new market segments and alienate competitors. This is one of the successful models to use to sustain a long term competitive edge specially a commodity product like Kaolin. In commodity market the core product doesnt offer a big space for a company to differentiate, differentiation is offered in the actual and augmented product which include the offer, payment way, after sales service, support, transportation, delivery time, purity, availability..In addition to the structure of the company and its ability to effectively reach their customers and satisfy their needs.

Even in any other market other than the commodity market, differentiation and competitive edges cant be maintained based on the core product and the brand because there will be a time when this product become outdated by another one which is very frequent specially in a dynamic industry like the IT; a phenomena known as disruptive innovation. This requires the implementation of the BMI concept, where the Business model becomes the core product. Business model innovation pursue new business opportunities, new competencies and new alliances, creating value not just for the company but also for the industry as a whole.

7 http://en.wikipedia.org/wiki/Business_model_innovation 8 http://www-935.ibm.com/services/hk/cio/pdf/enflex_wp-business-model-innovation.pdf

BMI is applied to the companys very core, to the way it does business and drives revenue creating new and differentiating value for the company. Companies that can substantially change how they add value to their own or other industries can differentiate themselves and gain a competitive edge.

According to A 2008 IBM survey of corporate CEOs: Business model innovation: the new route to competitive advantage; Business model innovation resulted in the highest rate of % compound average growth rate over 5 years. In addition to that, Business model innovations result in other benefits, including cost reduction and strategic flexibility to respond efficiently to market changes and operational demands. In addition, it offers a high maneuver ability to lower the operating costs, while providing new opportunities for revenue generation.

Examples of BMI where the business model is the core value proposition: AppleiTunes Store + iPod iTunes is a proprietary digital media player application, used for playing and organizing digital music and video files. The application is also an interface to manage the contents on Apple's popular iPod and other digital media players such as the iPhone and iPad. Additionally, iTunes can connect to the iTunes Store via the Internet to

purchase and download music, music videos, television shows, iPod games, audiobooks, podcasts, feature length films and movie rentals (not available in all countries), and ringtones (only used for iPhone). It is also used to download applications for the iPhone, iPod touch and iPad running iOS 2.0 or later. Wal-MartDiscount retailing Wal-Mart Stores, Inc. (formerly branded as Wal-Mart, branded as Wal-Mart since 2008) (NYSE: WMT) is an American public corporation that runs a chain of large discount department stores and a chain of membership required warehouse stores. FedExGuaranteed overnight delivery originally known as FDX Corporation is a logistics services company, based in the United States with headquarters in Memphis, Tennessee. The name "FedEx" is a syllabic abbreviation of the name of the company's original air division, Federal Express, which was used from 1973 until 2000. SouthwestLow-cost regional air travel is an American low-cost airline. Southwest is the largest airline in the world by number of passengers carried per year (as of 2009). Southwest maintains the third-largest passenger fleet of aircraft among all of the world's commercial airlines. As of May 3, 2009, Southwest operates approximately 3,510 flights daily.

What are meant by Lean manufacturing and six sigma methodologies and how can they contribute to operational excellence?9 10

Lean manufacturing or lean production, often simply, "Lean," is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. In this regard value is defined from the perspective of customers who consumes a product or service, "value" is defined as any action or process that a customer would be willing to pay for. Bottom line, LEAN concept is all about preserving value with less work i.e. increasing efficiency and effectively of the manufacturing process. Lean manufacturing was derived mostly from the Toyota Production System (TPS) and identified as "Lean" only in the 1990s. The core of this was to reduce the seven wastes of Toyota meanwhile increase the overall customer value. Based on Toyota classification, wastes are classified into: muda, muri and mura; muri focuses on the preparation and planning of the process, or what work can be avoided proactively by design and preparation. Next, mura then focuses on how the work design is implemented and the elimination of fluctuation at the scheduling or operations level, such as quality and volume. Muda is then discovered after the process is in place and is dealt with reactively. It is seen through variation in output. The original seven muda are: Transportation (moving products that is not actually required to perform the processing) Inventory (all components, work in process and finished product not being processed)

9 http://en.wikipedia.org/wiki/Six_Sigma 10 http://en.wikipedia.org/wiki/Lean_manufacturing

Motion (people or equipment moving or walking more than is required to perform the processing) Waiting (waiting for the next production step) Overproduction (production ahead of demand) Over Processing (resulting from poor tool or product design creating activity) Defects (the effort involved in inspecting for and fixing defects) [17] Later an eighth waste was defined by Womack et al. (2003); it was described as manufacturing goods or services that do not meet customer demand or specifications. Many others have added the "waste of unused human talent" to the original seven wastes.

On the other hand, Six Sigma is a business management strategy originally developed by Motorola, USA in 1981. Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts", "Green Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified targets. These targets can be financial (cost reduction or profit increase) or whatever is critical to the customer of that process (cycle time, safety, delivery, etc.). The term six sigma is derived from the statistical modeling of manufacturing process. In statistics 6 sigma include 99.99966% of any normally distributed variables. Applying this to the industry, a six-sigma process is one in which 99.99966% of the manufactured products are free of defects, compared to a one-sigma process in which only 31% are free of defects. This concept applies in manufacturing process as well as in management activities. Six Sigma projects follow two project methodologies. These methodologies, composed of five phases each, bear the acronyms DMAIC and DMADV.

DMAIC is used for projects aimed at improving an existing business process; it is composed of 5 phases: Define the problem, the voice of the customer, and the project goals, specifically. Measure key aspects of the current process and collect relevant data. Analyze the data to investigate and verify cause-and-effect relationships. Determine what the relationships are, and attempt to ensure that all factors have been considered. Seek out root cause of the defect under investigation. Improve or optimize the current process based upon data analysis using techniques such as design of experiments, poka yoke or mistake proofing, and standard work to create a new, future state process. Set up pilot runs to establish process capability. Control the future state process to ensure that any deviations from target are corrected before they result in defects. Control systems are implemented such as statistical process control, production boards, and visual workplaces and the process is continuously monitored.

DMADV is used for projects aimed at creating new product or process designs, the DMADV project methodology, also known as DFSS features five phases:

Define design goals that are consistent with customer demands and the enterprise strategy. Measure and identify CTQs (characteristics that are Critical to Quality), product capabilities, production process capability, and risks. Analyze to develop and design alternatives, create a high-level design and evaluate design capability to select the best design. Design details, optimize the design, and plan for design verification. This phase may require simulations. Verify the design, set up pilot runs, implement the production process and hand it over to the process owner(s).

Lean concept is broader than the six sigma methodology yet both concepts are interrelated to each other they both are targeting increasing

the efficiency and effectiveness of the company in terms of eliminating any non value added activities and focusing on decreasing the defect rates. Both concepts should be deep rooted in all company operations both the technical and the administrative functions-starting from the production planning and raw materials selection and purchasing to avoid stock ruptures or over stocking and poor quality raw materials which affect the final product, managing production line to eliminate fluctuation in terms of quality or volume at the scheduling or operations level eliminating any customer dissatisfaction, in addition to managing inventory to achieve Just in time principle. All this accumulate to reduce COGS, operating and none operating expenses which increases the profitability of the company.

Business Intelligence Overview with special focus on chemical and pharmaceutical companies:11 12 13
What is Business Intelligence?

Conceptually, business intelligence is the ability of an organisation to understand and use information to its gainful operation. Enterprise BI is a way that brings synergies to business processes and new efficiencies across business areas. BI offers to enterprises one version of truth, providing consistent and harmonised data to every department in an organisation. Technically, Business Intelligence is an array of applications or technologies designed for storing, gathering, analyzing, and processing information in addition to providing the ability of in depth analysis and data mining of detailed business data to provide real and significant information to users. In todays turbulent economy with rising competition and shrinking of the landscape, it is important to make business decisions based on complete data. With the proper Business Intelligent implementation, you are provided with proper tools needed to make the most effective decisions for your organization. Business Intelligence enables the company to track a wide scope of unruly data, such as demographic trends, product line profitability, fine tuning of pricing options, identifying of top customers, and tracking product trends. Also it includes the ability to access data in a common format from multiple sources and it offers ways to measure goals and analyze crossdepartmental data. BI can differentiate good customers from bad ones and track customer behavior for enhancing CRM process. This software can also enhance supply chain management through tracking specific product sales and distributors to improve supply and production, as well as tracking

11 http://en.wikipedia.org/wiki/Business_intelligence 12 http://www.exforsys.com/tutorials/business-intelligence/business-intelligenceoverview.html 13 http://www.nature.com/nbt/journal/v18/n10s/full/nbt1000_IT5.html

external trends to improve processes, tracking market trends to improve an organizations competitiveness, and fine tune pricing and marketing policies. To get a good business intelligence aided decision support, data should be consistent across the different units in the company. There are three important goals that need to be accomplished in order to achieve data consistency: Timeliness: the data within system should be synchronised with all other applications; Accuracy: the data should encompasses every data from any other application; Acceptance: the users should be able to actively use the system as support for decision making.

Are there different types of Business intelligence?

There are two different types of Business Intelligence, each serves the main purpose of providing large quantities of information in an easy to view and digest manner.
The first type is Traditional Business Intelligence:

Traditional Business Intelligence deals with past data using cubes and graphs to normally track a businesss performance in the past and to predict the organizations future performance based on the past data. The one drawback to Traditional Business Intelligence is that the present or real-time data is not usually being observed.
The Second type is Operational Business Intelligence:

Operational Business Intelligence is a real time application that offers immediate and updated results. It deals with operational data, such as the data used by inventory managers or even truck drivers.

The most widely used business intelligence enabling technologies are: data warehousing (DW), on-line analytical processing (OLAP), and data mining (DM). Data Warehousing

A data warehouse (DW) is an integrated collection of historic detailed and summarised data from internal and external data sources. It is organized by business areas (subject oriented) and is user-friendly, especially for a manager and business analyst. Benefits of the data warehouses are most obvious in companies with several computer platforms and versions and with many different data sources. The most important benefits organisations seek from their DW efforts are: better business intelligence (39%), reduced time to locate access and analyse information (21%), consolidation of disparate information sources (20%), strategic advantage over competitors (11%), faster time-tomarket (5%), and replacement of older decision support systems (3%).
OLAP The best known knowledge discovery techniques are online analytical processing (OLAP) and data mining (DM) techniques. OLAP provide users with the means to explore and analyse large amounts of data, involving complex computations, their relationships, and visually present results in different perspectives. OLAP tools are a combination of analytical processing procedures

and graphical user interface. The key features of an OLAP application are: multidimensional views of data, calculation intensive capabilities and time intelligence. A multidimensional view of data that is usually used in OLAP applications provides quick and flexible access to data and information. Typical applications performed on multidimensional data views are: roll-up (data is summarized with increasing generalization), drill-down (increasing levels of detail are revealed), slice and dice (performing projection operations on the dimensions), and pivoting (cross tabulation is performed). Complex analyses are possible, such as time series (sequence of events) and model charting, forecasting, modelling, statistical, and what-if analysis. Analytical processing procedures represent methods of detecting different forms of information needed in the decision process. The OLAP technology potentially provides several benefits to an organisation: increases the productivity of business managers, analysts, and whole organisation by the inherit flexibility and timely access to strategic

information; leverages IT developers to deliver solutions to business users faster; and it provides the ability to model real business problems and to respond more quickly to market demands.
Data Mining

In contrast to OLAP being retrospective in nature, data mining provides prospective knowledge discovery. Data mining is a process of discovering meaningful new correlations, patterns, and trends by sifting through large amounts of data stored in repositories, using recognition technologies as well as statistical and mathematical techniques. Data mining technology discovers hidden trends and patterns in large volumes of data. A significant distinction between data mining and other analytical tools is in the approach they use in exploring the relationships among the data. The analytical tools usually support a verification approach, in which the user hypotheses about data interrelationships are verified or refuted. This approach relies on the intuition of the analyst to pose the question and his or her ability to refine the analysis based on the results of potentially complex queries against a database. Data mining uses discovery-based approaches in which pattern matching, clustering, neural networks, genetic, and other algorithms are used to determine the significant relationships and correlation among data. Data mining algorithms can look at numerous multidimensional data relationships concurrently, highlighting those that are dominant or exceptional. Data mining enables users to discover knowledge and provides them with greater depth and understanding of data than ad hoc querying and using of OLAP applications.
BI in Chemical and pharmaceutical industries:

In the biotechnology industry, leverage is everything: people, financial resources, technology, and patents are all leveraged for success. A key contributor to successful leverage efforts is typically; whoever knows more in advance and responds to that knowledge quickly wins. This is where competitive business intelligence systems come in. One interesting aspect of such technology assessment offices or functions is that they often report on pre-defined triggers or "hot" events that have been identified as preambles to scenarios that require immediate responses. One example of a trigger event is the reporting of successful

phase II or III clinical trial results by biotech companies. This means that there is a very high probability that a product will follow, which is a good time for a marketing alliance from the perspective of a pharmaceutical company. Hence, foreknowledge or anticipation of successful phase II or III results is a key trigger event in the biopharmaceutical sector, and is a key deliverable by competitive intelligence systems in the field, together with patents issuing, major scientific announcements in the literature or at conferences, and even personnel changes. Another unique application of the BI principles is the Pharmaceutical Documentation Ring (PDR). Many of the top pharmaceutical companies participate in the so-called Pharmaceutical Documentation Ring (PDR), first established in 1958, and with a total of 29 members as of July 1999. This network was established in part to enable its members to exchange nonconfidential information about information gathering and analysis methods. The PDR holds regular conferences where issues including archiving, data mining, document searching,

What is ERP?

14

ERP is the acronym of Enterprise Resource Planning. It is an integrated computer-based system used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholder improving the performance of organizations' resource planning, management control and operational control. It is multi-module application software that includes application modules for the finance, accounting and human resources aspects of a business.

ERP vs. CRM and SCM

CRM (Customer Relationship Management) and SCM (Supply Chain Management) are two other categories of enterprise software that are widely implemented in corporations and non-profit organizations. While the primary goal of ERP is to improve and streamline internal business processes, CRM attempts to enhance the relationship with customers and SCM aims to facilitate the collaboration between the organization, its suppliers, the manufacturers, the distributors and the partners.

ERP modules
Transactional Backbone Financials Distribution Human Resources Product lifecycle management Advanced Applications Customer Relationship Management (CRM) Supply chain management Purchasing Manufacturing Distribution Warehouse Management System Management Portal/Dashboard Decision Support System

14 http://en.wikipedia.org/wiki/Enterprise_resource_planning

History and Evolution of ERP

ERP (Enterprise Resource Planning) is the evolution of Manufacturing Requirements Planning (MRP) II. From business perspective, ERP has expanded from coordination of manufacturing processes to the integration of enterprise-wide backend processes. From technological aspect, ERP has evolved from legacy implementation to more flexible tiered client-server architecture.

The following table summarizes the evolution of ERP from 1960s to 1990s.

The effective implementation of an ERP system across the different units in the company is essential for a successful execution of BI model.
The ERP system improves coordination of companys process into one streamlined process where everything can be accessed through one enterprise wide information network. ERP reduces operating costs through controlling inventory costs, lowering production and marketing costs, and helping lower help desk support. ERP systems can also benefit the company by facilitating day-to-day management activities. It encourages the establishment of backbone data warehouses and allows employees to access the information in real time. This helps with research, decision making, and managerial control. It tracks actual cost of the daily activities and can perform activity based costing functions. ERP system is designed to support the strategic planning process. With real time capabilities and the ability to be able to see what is going on with your company as it happens, ERP systems are allows a better abilities for inventory management based on JIT principles