Tag Archives: Analytics

Baselining Your Realized Value and Learning From Other Companies

Richard Sharpe Analytics & Big Data

Blog33_ValueHardToSee

Gartner estimates that companies will spend $18.3 Billion on analytics and big data initiatives in 2017, an increase of 7% over 2016.  That number is expected to grow to $22.8 Billion by 2020 as executives are becoming more cognizant of the importance of gaining sustainable value from big data analytical capabilities.  Earlier this year Dun & Bradstreet and Forbes Insights explored this question through a survey of over 300 executives across multiple industries and regions.  Here is a link to a recently released report sponsored by Dun & Bradstreet summarizing the results that is well worth the read.

How much has your company spent (internally and externally) over the last 18 months on analytics and big data initiatives?  What are your Executive Team’s expectations of ROI?  Have you come anywhere near meeting these expectations?

As I mentioned in my last posting, we hear two very different responses when talking with companies about their success in mastering growing volumes of supply chain data and gaining sustainable value from business user analytics. The first is a public ally declared answer of success and progress while the second one, once the door is shut, typically offers various degrees of frustration and minimal progress. To understand the real progress of other companies’ big data analytical efforts, you need a non-speculative way to measure your progress versus your peer companies.  You need the ability to have a better understanding of peer companies’ challenges, the benefits they have realized, and their focus for future analytics and big data investments.

I am pleased to announce that the global survey conducted by  a team comprised of CSCMP’s Supply Chain Quarterly, Arizona State University, Colorado State University, Competitive Insights LLC, and lharrington group LLC has successfully captured the information required to establish this supply chain industry baseline for big data analytics.  The outcome of this survey supports the identification of  true challenges and benefits that companies have experienced as well as what they expect to gain from future big data analytics investments.  These results serve as a starting point to measure and track each year the progress that companies have made in realizing the value from big data analytics. This year’s survey results will  be presented at the annual Council of Supply Chain Management Professionals (CSCMP) Conference and published in various articles in both the CSCMP’s Supply Chain Quarterly and DC Velocity.

So when the door is shut and you are having internal discussions on your successes and frustrations in deriving value from your big data analytics investments, you now have a way to move from speculation to fact.

Where are other companies breaking through the challenges ot rapidly accessing the right data, in solving quality and timing issues and their ability to continually gain meaningful analytical answers to prioritized business problems?

What are their next set of prioritized areas of focus?

One interesting early discovery from the survey results is that some technologies used for big data analytics do offer limited benefits but fall short in providing the true overall business value that can be gained from successful analytical efforts.

Naturally, this surveying effort will only get stronger as we learn from you what is beneficial and what is needed to get more insightful information. If you did not participate this year, please take the time to complete next year’s survey.  It will only take a few minutes but the impact can be significant. Participants of this year’s survey represent over 20 industries around the world.

This year’s results are clearly statistically sound.  Lets make next years participation a blowout!

All the best,

Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.

Are Your Omni-Channel / E-Commerce Sales Really Profitable? Part 4

Richard Sharpe Analytics & Big Data

 

This is the final posting of this series focused on Omni-Channel / E-Commerce profitability.  The focus of this posting is on the impact of product returns.

We have defined the four components of the Total Cost To Serve (TCTS) for Omni-Channel / E-Commerce orders to be:

  1. The cost to purchase or manufacture the products, often referred to as the product’s Standard cost
  2. The costs to position inventory to be ready for order fulfillment activities
  3. The costs to actually fulfill the Omni-Channel consumer order, and
  4. The cost of product returns

After defining these costs, we offered the straight forward profitability equation of:

Omni-Channel Order Profit = Net Revenue – (A+B+C+D)

Today, we are going to specifically focus on the cost category D above.

The problem

When consumers buy a product sight unseen, there is often a level of uncertainty about whether the product will be what they actually want. Retailers often offer free returns for customer satisfaction, an offer that consumers use to their fullest advantage. But how does that affect the overall profitability for the retailer?  Seem simple?  The answer is often not so obvious.

Let’s start with the revenue part of the equation.  A returned product turns a positive into a negative because the actual revenue received for the transaction has been returned to the consumer.  The loss associated with the order also has to account for all of the costs associated with the returns process.  These returned product costs can be more significant than most people realize.  Let’s break down product return costs in more detail.

Original Order Fulfillment Costs (sunk costs) – since the product(s) are being returned, the original order fulfillment costs are now not being covered by the revenues associated with the order.  Therefore, these are now sunk costs that need to be absorbed.

Inventory Carrying Costs – the length of time that a consumers holds the product can have a significant impact on inventory carrying costs.  When an initial order is filled, the typical inventory replenishment process applies which can mean that new replacement inventories have been ordered.  Therefore, in reality the seller of the product now has working capital tied up in inventory sitting at the consumer’s location, inventory in-transit as it is being shipped back to the seller’s receiving locations as well as new replenishment inventory.  This can significantly increase the levels of working capital tied up in product inventories.  Forecasting returns can help but most companies end up replenishing inventory to ensure there are no lost sales, given their lack of confidence in their data.

Return Transportation Costs – this category of cost is dependent upon whether the consumer pays the shipping fee to return the product.  If not, then return transportation costs can add significant increases to profit losses.

Secondary Handling Costs – assuming the returned product is placed back into storage or on the shelf, there are costs associated with the receiving, inspecting and put-a-way activities for the returned product.

Disposal Costs – if the product is not going to be placed back in general inventory and it is to be discarded or destroyed, then there may be a disposition cost associated with the returned product.

All of these costs are demonstrated in the visual below and can have a significant impact on the profitability of an Omni-Channel / E-Commerce channel.

Blog026_diagram_ecommerce_return

The solution

So how do retailers selling in the Omni-Channel / E-Commerce tackle this issue?  The solution starts by again recognizing the wisdom in the adage “one size does not fit all”.  Treating all customer product returns the same way is simply a formula for failure.

The solution starts by segmenting Omni-Channel / E-Commerce customers by understanding their overall net profit contributions over time.  This requires having specific and accurate facts regarding exact profit performance for Omni-Channel / E-Commerce customers including the frequency and impact of their product returns.

This form of segmentation enables the creation of tailored product return policies that help manage the negative impact on profitability.  Informed policies regarding how products are returned, if there are shipping fees, if charges apply for returned products or if there are defined time windows for products to be returned.

Of course this may drive some customers to shop with another retailer.  But that may not be such a bad thing from a competitive advantage perspective!

I would love to hear your thoughts.

All the best,

Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.

Are Your Omni-Channel / E-Commerce Sales Really Profitable? Part 2

Richard Sharpe Analytics & Big Data

 

Determining if you are making money through your Omni-Channel / E-Commerce sales is a complicated issue.  Today, the Consumer is clearly in control and many companies are actively seeking solutions which go beyond having an online presence and are focused on supporting smart strategies that create sustainable Omni-Channel / E-Commerce profits.

This posting is the second part of a multi-series blog focusing on Omni-Channel / E-Commerce profitability.   We started the series by defining the four components of the Total Cost To Serve (TCTS) for Omni-Channel / E-Commerce orders:

  1. The cost to purchase or manufacture the products, often referred to as the product’s Standard cost
  2. The costs to position inventory to be ready for order fulfillment activities
  3. The costs to actually fulfill the Omni-Channel consumer order, and
  4. The cost of product returns

After defining these costs we offered the straight forward profitability equation of:  Omni-Channel Order Profit = Net Revenue – (A+B+C+D)

Today, we are going to specifically focus on the cost category B above.

 

The problem

The cost to position inventory to be ready to fulfill orders is made up of three main categories; the transportation costs to get the products to the order fulfillment facility (both inbound and inter-facility related), the inventory carrying costs associated with the products (both in-transit and stationary inventories), and the storage and handling costs associated with the facility.  What is different about Omni-Channel / E-Commerce inventory positioning activities?  Simply said, it is the sheer number of configurations of inventory positioning that can be used to support Omni-Channel E-Commerce activity coupled with the need to be positioned closer to an exponential number of delivery locations.

Consumers have a growing expectation that ordered products should be delivered quickly and often at no cost. Since you can’t just “teleport” products from one place to another, the laws of physics kickin.

Blog024_teleporting

Supply chain translation – what should our order fulfillment network look like to serve a growing Omni-Channel / E-Commerce business?  What makes the most sense regarding the number and combination of roles for the facilities that are required to support this channel (centralized distribution, local area fulfillment, sortation to support the “last mile” delivery, additional “click & collect” options)?  In addition, how do we justify the additional investments in the people, processes and technology needed to operate these facilities?  All very good questions.  Each of these considerations can have significant impact on the ongoing cost to position inventory to be used for Omni-Channel / E-Commerce orders and the profitability of this channel.

Unfortunately, for many companies the focus has been to create an Omni-Channel / E-Commerce consumer interface with not as much attention being given to effective ways to fulfill these orders profitability.  We often hear the question “Are we really making money with our Omni-Channel / E-Commerce sales?”

 

The solution

Yes, determining the right answer is not easy and the answer will change over time.  However, it boils down to the same old adage “One size does not fit all”!

There will always be good arguments that certain investments have to be made to gain (or to not loose) market share.  However, it is a fact that not all of your Omni-Channel / E-Commerce consumers are the same as it relates to their contribution to your operating profits.  Patterns in order mix, quantities, discounts and the expected delivery timeframe can all create large swings in realized profits.  Segmenting consumer patterns to clearly understand different profit contributions is one step in tackling this problem.  This of course requires having accurate cost information for all four of the TCTS categories noted above.

Having these financial performance insights can then support the use of effective analytics to explore the best network configuration(s) and inventory positioning strategies to manage profitable Omni-Channel / E-Commerce orders.  One caution, this evaluation process should be treated as being very dynamic.  As your Omni-Channel / E-Commerce business grows, scalability considerations can significantly change the answer.

Gaining and maintaining Omni-Channel / E-Commerce profitability is a complicated issue.  Having fact based insights regarding the actual true Total Cost To Serve (TCTS) and the Omni-Channel / E-Commerce order profit must be considered table stakes!

I would love to hear your thoughts.

All the best,

Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.

Are Your Omni-Channel / E-Commerce Sales Really Profitable? Part 2

Richard Sharpe Analytics & Big Data

 

Determining if you are making money through your Omni-Channel / E-Commerce sales is a complicated issue.  Today, the Consumer is clearly in control and many companies are actively seeking solutions which go beyond having an online presence and are focused on supporting smart strategies that create sustainable Omni-Channel / E-Commerce profits.

This posting is the second part of a multi-series blog focusing on Omni-Channel / E-Commerce profitability.   We started the series by defining the four components of the Total Cost To Serve (TCTS) for Omni-Channel / E-Commerce orders:

  1. The cost to purchase or manufacture the products, often referred to as the product’s Standard cost
  2. The costs to position inventory to be ready for order fulfillment activities
  3. The costs to actually fulfill the Omni-Channel consumer order, and
  4. The cost of product returns

After defining these costs we offered the straight forward profitability equation of:  Omni-Channel Order Profit = Net Revenue – (A+B+C+D)

Today, we are going to specifically focus on the cost category B above.

 

The problem

The cost to position inventory to be ready to fulfill orders is made up of three main categories; the transportation costs to get the products to the order fulfillment facility (both inbound and inter-facility related), the inventory carrying costs associated with the products (both in-transit and stationary inventories), and the storage and handling costs associated with the facility.  What is different about Omni-Channel / E-Commerce inventory positioning activities?  Simply said, it is the sheer number of configurations of inventory positioning that can be used to support Omni-Channel E-Commerce activity coupled with the need to be positioned closer to an exponential number of delivery locations.

Consumers have a growing expectation that ordered products should be delivered quickly and often at no cost. Since you can’t just “teleport” products from one place to another, the laws of physics kickin.

Blog024_teleporting

Supply chain translation – what should our order fulfillment network look like to serve a growing Omni-Channel / E-Commerce business?  What makes the most sense regarding the number and combination of roles for the facilities that are required to support this channel (centralized distribution, local area fulfillment, sortation to support the “last mile” delivery, additional “click & collect” options)?  In addition, how do we justify the additional investments in the people, processes and technology needed to operate these facilities?  All very good questions.  Each of these considerations can have significant impact on the ongoing cost to position inventory to be used for Omni-Channel / E-Commerce orders and the profitability of this channel.

Unfortunately, for many companies the focus has been to create an Omni-Channel / E-Commerce consumer interface with not as much attention being given to effective ways to fulfill these orders profitability.  We often hear the question “Are we really making money with our Omni-Channel / E-Commerce sales?”

 

The solution

Yes, determining the right answer is not easy and the answer will change over time.  However, it boils down to the same old adage “One size does not fit all”!

There will always be good arguments that certain investments have to be made to gain (or to not loose) market share.  However, it is a fact that not all of your Omni-Channel / E-Commerce consumers are the same as it relates to their contribution to your operating profits.  Patterns in order mix, quantities, discounts and the expected delivery timeframe can all create large swings in realized profits.  Segmenting consumer patterns to clearly understand different profit contributions is one step in tackling this problem.  This of course requires having accurate cost information for all four of the TCTS categories noted above.

Having these financial performance insights can then support the use of effective analytics to explore the best network configuration(s) and inventory positioning strategies to manage profitable Omni-Channel / E-Commerce orders.  One caution, this evaluation process should be treated as being very dynamic.  As your Omni-Channel / E-Commerce business grows, scalability considerations can significantly change the answer.

Gaining and maintaining Omni-Channel / E-Commerce profitability is a complicated issue.  Having fact based insights regarding the actual true Total Cost To Serve (TCTS) and the Omni-Channel / E-Commerce order profit must be considered table stakes!

I would love to hear your thoughts.

All the best,

Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.

Are Your Omni-Channel / E-Commerce Sales Really Profitable? Part 1

Richard Sharpe Analytics & Big Data

Blog023_ecommerce
The shift of power to the consumer is turning much of the E-Commerce world upside down.  Consumers expect to be able to easily access specific product details, including product reviews, comparative pricing and multiple options for how to obtain the product and the speed with which they can have it delivered.

Consumer expectations are rapidly driving Omni-Channels supply chains to become “pull” systems on steroids.  For many industries, it is changing the dynamics between manufacturers and retailers with many manufacturers and distributors building an E-Commerce presence.

Everyone is trying to figure out the Omni-Channel puzzle.  The overarching question is how to satisfy rapidly growing Omni-Channel demands in a way that generates sustainable profits?   My conversations with supply chain leaders on this topic always lead to the same question:

“Are we really making money with our Omni-Channel / E-Commerce sales?”

This question naturally needs to address the revenue and cost considerations for Omni-Channel sales.  A future blog series will address the revenue considerations.  This posting is the first of a four part series on Omni-Channel / E-Commerce costs specifically focusing on the Total Cost To Serve consumer demands.

We will break these costs into four categories:

  1. The cost to purchase or manufacture the product, often referred to as the product’s Standard cost
  2. The costs to position inventory to be ready to be used in order fulfillment activities
  3. The costs to actually fulfill the Omni-Channel consumer order, and
  4. The cost of product returns

So naturally we have the straight forward profitability equation of:

Omni-Channel Order Profit = Net Revenue – (A+B+C+D)

It is a simple equation but not so simple to calculate on a consumer order by order basis.

There is a lot of attention being given to Cost To Serve models today. The key to success is to capture as much exact and verified data (Big Data) for each cost component and to use an analytical approach (Analytics) to tie these cost components together. Critical to this effort is to ensure that the approach builds organizational confidence and consensus in the cost calculations.

To keep the length of this posting reasonable, I will not devote time on the costs in the “A” bucket since this should be the easiest part of the equation.  Every company should know the cost to purchase and/or to manufacture the products they sell.  In the next three postings, I will devote specific and detailed attention to each of the other cost components and their direct impact on profitability.

The goal is to help answer that puzzling question “Are we really making money with our Omni-Channel / E-Commerce sales?”

I would love to hear your thoughts.

All the best,

Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.

The Twelve Days of Christmas

Richard Sharpe Analytics & Big Data

 

One of the most well loved Christmas carols is The Twelve Days of Christmas. This popular song actually originated in England in 1780 as a rhyme.  The lyrics are based on a “cumulative” theme with each verse building on the previous one.  Are you starting to sing it?

“On the first day of Christmas my true love gave to me____”

 

Blog021_12DaysOfXmas

 

What does this have to do with analytics and big data?

Nothing more than an analogy to my favorite part “FIVE GOLDEN RINGS!”

Just like the song, there are five golden rings that offer real business value in applying analytics on large volumes of data.  The gold lies in effectively using different forms of analytics by recognizing that each serves a specific role in improving the financial performance of products, customers and channels.

To achieve the most benefit, the use of analytics should also be focused using a cumulative mindset.  Starting with Descriptive Analytics, the insights and knowledge gained should be used to help build a strong foundation for the next use of analytics.  If all of the analytics are tightly integrated for business users, the following can become true gold for an organization:

  • Descriptive Analytics – what exactly happened? (precise and specific)
  • Diagnostic Analytics – why did it happen? (getting to the root cause)
  • Predictive Analytics – what would happen? (if we Do or Do Not change specific drivers)
  • Prescriptive Analytics – what are the results of specific new operating scenarios?
  • Cognitive Analytics – what insights can be gained using machine learnings or, more practically today, adding specific fact based insights from the first four rings above to Senior Management’s cumulative knowledge?

Santa may not be real but the results obtained through effective analytics are!  So please excuse this Holiday theme but just chalk it up to someone who is very grateful for the many blessings that I have received over the course of my career.

I wish each and every one of you a wonderful Holiday and I look forward to an exciting New Year filled with success stories of business value being realized through analytics and big data.

All the best,

Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.

You Are Going To Have a Heart Attack!

Richard Sharpe Analytics & Big Data

 

Recent research that I have read suggests that there is still a lot of confusion and questions about Integrated Business Planning (IBP) analytics.  Questions like “what does predictive analytics really mean and what is its actual business value?”  This is completely understandable given the amount of attention this subject is getting in the media.  Let’s demystify the industry buzz using an analogy, your health!

 

There are multiple forms of IBP analytics: Descriptive, Diagnostic, Predictive and Prescriptive.  Here are two situations that are offered to help explain the purpose and value of each one:

  • Doctor – you go to your Doctor because you have had a sharp pain in your left arm several times this month.  We will label this situation with the abbreviation (DR).
  • Business – you have a problem with the profits being generated by a business unit.  Sales (top line) growth is up but profits are down.  We will label this situation (BU) for Business User.

The following compares how each form of analytics can be sequentially used to support your personal health as well as the profitability of your business:

 

 Descriptive Analytics (what is the problem)

  • (DR) – Analysis of the test results shows that you have a 50% blockage in part of your left coronary artery
  • (BU) – Analytics show that for the last 4 quarters over 22% of your customers have consistently been unprofitable

 

Diagnostic Analytics (what caused the problem)

  • (DR) – The reason for this extensive blockage is a buildup of plaque in the circumflex artery that is a result of a lack of exercise and a poor diet
  • (BU) – These customers have been consistently unprofitable because of the discounts they receive and the cost to service their orders

Predictive Analytics (what impact will continue if the problem is not addressed)

  • (DR) – If you don’t exercise and change your diet, then there is a 90% chance you will have a heart attack in the next two years
  • (BU) – If a changes are not made to these customers’ discount structures and how we handle their expedited orders, profits will continue to plunge next quarter

Prescriptive Analytics (what solution steps need to be taken to address the problem)

  • (DR) – Based on current research of different scenario results, your best option is to do aerobic exercises for one hour, 3 times a week and to reduce the amount of fat in your diet by one half
  • (BU) – Looking at different options considering the various order mix patterns for these and other similar customers, the best strategy is to implement a revised discount structure and different guaranteed service commitments to make these customers profitable

Monitoring Analytics (what were the results of implementing these solution steps)

  • (DR) – The new test results indicate that your artery blockage is almost completely gone!
  • (BU) – This quarter’s performance shows a reduction of total unprofitable customers to a level under 7% and a quarterly earnings increase of over 9%!

Most companies do some form of analytics today and I hope that the analogies offered above bring clarity as to how you might expand your current and/or future applications to help drive performance improvements.  Regardless of where your company is in the “analytics journey”, three things are very certain:

  1. There will be an ever increasing amount of data that can be used to add value if you learn how to master that data to create “One Version of the Truth”
  2. The sequence of how you apply your IBP Analytics is critical and will determine how you build knowledge and reduce “analysis paralysis” to drive meaningful results as quickly as possible
  3. Your IBP analytics should be designed for cross-functional business use to maximize the value you gain from those insights

Integrating these considerations in your analytical plans will minimize the possibility of having an organizational heart attack.  Your business will be stronger and healthier and your shareholders will be continually pleased with a positive growth in quarterly earnings!

I would love to hear your thoughts.

All the best,

Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.

Where’s the beef?

Richard Sharpe Analytics & Big Data
 

Where’s the beef?

With all of the attention being given to analytics and big data, the question that I often hear is:

“How are companies really solving specific business problems using analytics and big data?  Talk to me about the real and sustainable value that companies are finding by investing in analytics and big data capabilities.”

To coin a phrase made popular years ago by a fast food chain “Where’s the beef?”

In earlier blog postings, I explained how analytics, coupled with accurate and specific data, can be used to facilitate cross functional decision making that is based on facts, not allocations, estimates or opinions.  Moving beyond “siloed’ data and decision making processes can create a real advantage in driving increased financial performance.  This advantage becomes a competitive differentiation that is based on factual insights across the entire enterprise versus departmental decisions that are based on isolated operating metrics.

Navigating in today’s complex business environments requires the ability to make smarter, pinpointed decisions.  The myriad of systems with segregated data often make it difficult to have the right information that is needed.  Better decisions are driven by having complete visibility across the enterprise.  With that visibility, very specific strategies by region, individual customers, product categories, SKU’s or channels can be tested, deployed and monitored.  This avoids the trap of trying to force a 'one size fits all' policy decision based on incomplete data both before and after the decision.

So assume for a moment that your company has defined very specific profit improvement goals that are not being met.  You have a cross functional team assembled.  You have all of the data you need, not just from one system but from EVERY system.  The data is accurate and complete.  There is no organizational anxiety about its source or validity.  With the proper analytics and data, you would want to simply and quickly answer the following questions:

  • What are the specific and detailed facts that offer insights regarding this current lack of performance?  (Descriptive Analytics)
  • Considering the end to end operation, what caused this performance to happen, i.e. the root cause that drove this performance? (Diagnostic Analytics)
  • What would be the financial impact if we make these very specific cross functional changes? (Predictive Analytics)
  • What other options do we have that the team has not considered or that are too complicated to completely define currently?  (Prescriptive Analytics)

It might be utopia for your company, but not for companies that have successfully developed Integrated Business Planning (IBP) solutions through the proper alignment of analytical and data capabilities.  Having this organizational capability provides immediate and sustainable value.  Value that drives competitive advantage by showing “Here’s the beef”!

I would appreciate hearing your thoughts and comments.

All the best, Richard

Richard Sharpe

Richard Sharpe is CEO of Competitive Insights, LLC (CI), a founding officer of the American Logistics Aid Network(ALAN) and designated by DC Velocityas a Rainmaker in the industry. For the last 25 years, Richard has been passionate about driving business value through the adoption of process and technology innovations. His current focus is to support CI’s mission to enable companies to gain maximum value through specific, precise and actionable insights across the organization for smarter growth. CI delivers Enterprise Profit Insights (EPI) solutions that enable cross-functional users to increase and protect profitability. Prior to his current role, Richard was President of CAPS Logistics, the forerunner of supply chain optimization. Richard is a frequent speaker at national conferences and leading academic institutions. His current focus is to challenge executives to improve their company’s competitive position by turning enterprise wide data from a liability to an asset through the use of applied business analytics.