As a company moves through the evolutionary stages of data analysis, the value to the company
increases. If performed correctly, data-driven decisions can start to drive money to the bottom line.
As an example, let’s consider a company which sells a variety of products. Without data analysis, how do
they know which products are the most popular? If orders are taken over the phone by multiple people
or if orders come in through a variety of avenues like phone, fax, email and electronic data interchange
(EDI), no one person has the total picture of what’s being ordered when and how many. Data analysis
can help by consolidating this information into one place where it can begin to tell a story.
In this particular example, just this one data set can provide value to the organization in a variety of
ways. Knowing exactly when the orders were placed allows a company to adjust their staffing for phone
orders. If twice as many phone orders are received between the hours of 10am and noon, the company
can increase the number of people on the phones during those hours. The data essentially sets the
phone staffing guideline hour by hour. Without this data analysis, you could have too few staff manning
the lines resulting in customers hanging up (lost revenue) or too many staff manning the lines resulting
in spending more than you have to on salaries (increased expense). Either way, that’s money which
could have reached the bottom line.
Continuing with this example, let’s consider what the customers ordered. Knowing exactly what they order, how many and when will assist the manufacturing floor in their planning. Looking at this
information over a longer period of time can assist in being able to forecast what the orders are likely to
be. Now consider Supply Chain. If a forecast of expected orders were available to the Supply Chain staff,
they could use this information to better manage the inventory. Since inventory is an asset on the
books, decreasing the amount of extraneous inventory kept on the shelves frees up cash flow making it
available elsewhere in the organization.
From just one data set and one analysis, the ability to make better business decisions becomes evident. The number of examples which can be provided from the business world is vast and some of these will be presented in greater detail in the case study section of this book. These examples will allow you, the business owner, to know what is truly possible with the right data at the right time.
If you’re just now considering the linkage between data analysis and quality decision making, think of it as a way to link the business strategy to the business activities. The result is strategic advantage. If you are, however, last to the table on this subject, this technique may become more of a survival necessity.
Taken from Tracey Smith’s book which is in progress. Her book will show business owners the practical uses of data analysis and how it can drive value to the bottom line. Those interested in being on her distribution list for book updates can email publications@numericalinsights.com
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Copyright © 2012 Tracey Smith
