Author: Yogi Schulz
Your management team has likely been pitched the potential benefits of business intelligence (BI) applications. Indeed, using BI to slice and dice sales data often reveals subtle sales trends that can be exploited to grow sales. For example, comparing sales in stores that serve customers with similar profiles reveals what’s hot and what’s not. That insight suggests opportunities to increase stock, to re-allocate shelf space and to change product mix.
Overall, the value of BI is to produce recommendations based on fact-based analysis rather than on experience-based hunches. Instead, consider these operational applications of BI and determine which can deliver tangible benefits to your company.
In sales analysis, BI typically produces business value by comparing, summarizing and graphing sales data to reveal real opportunities that are not visible in reams of table data.In addition, using BI to analyze inventory turn-over data typically identifies opportunities to increase inventory turn-over. For example, increasing inventory turn-over suggests a need to increase production or to transfer inventory from one location to another. Similarly, decreasing inventory turn-over suggests the need to tune promotions and to quickly mark down product that is not moving well.
In inventory analysis, BI typically produces business value by identifying over- and under-investment situations that are easily missed.
Using BI to analyze customer sales, returns and complaints determines how best to next engage a customer to build loyalty andrepeat business. For example, specific product sales suggest potential customer interest in related products or services. Similarly, customer returns or warranty claims are indicators of potential customer dissatisfaction or product shortcomings that should receive further attention.
In customer analysis, BI typically produces business value by bringing data together from disparate systems to identify critical customers who should receive more attention to address potential dissatisfaction or to build loyalty. In addition, using BI to analyze cost trends, including rising raw material and transportation costs, produces ideas to minimize the impact of escalating costs.
Rising material costs, for example, may lead to opportunities to reduce material waste through better design and improved scrap recycling. Also, it may be possible to move to an electricity supply contract that sets the unit price based time-of-day of consumption.
In cost trend analysis, BI typically produces business value by bringing cost data together with production data to produce cost reduction ideas.
Using BI to segment customers into various groups, including deadbeats, produces recommendations to help marginal customers shape up or not to renew their sales contracts. For example, slow-paying customers may be encouraged to accelerate payment or to provide a deposit with the next order. Similarly, a customer’s discount may be lowered for the upcoming year to improve customer profitability. In customer analysis, BI typically produces business value by segmenting customers by revenue and profitability value.
Using BI to segment suppliers into various groups, including poor performers, creates recommendations to help suppliers improve their performance or to terminate their contracts.
For example, suppliers who deliver marginal quality or miss schedule commitments may be encouraged to improve or be terminated. Similarly, some suppliers may not be considered to produce components for a new product line. In supplier analysis, BI typically produces business value by identifying problematic suppliers who produce more headaches than help.
Using BI to link internal and external data produces recommendations to improve company performance in response to external trends.
For example, the operations of some companies are highly influenced by regional weather patterns. Considering weather patterns in production planning will help control costs and improve quality. Similarly, benchmarking company performance against peers and competitors can provide ideas for continuous improvement.
In linking internal and external data, BI typically produces business value by identifying strategies to improve company performance.
Yogi Schulz is a Calgary, Alberta-based contributing writer to the Microsoft Midsize Business Center. His work has appeared in Computing Canada, EDGE, The Calgary Herald and Microsoft Ideas. He typically consults with CIO’s in the energy, government and real estate industries.