Businesses today collect tremendous amounts of data, and sometimes it is difficult to determine what to analyze. There are numerous areas where business leaders can utilize data analytics to impact the bottom line, increase profitability, or resolve workforce challenges.
The critical point to remember is that the value of analytics does not reside in the data. It is how you use that data to make more informed judgments and overcome business obstacles.
Utilize Analytics to Help You Reduce Your Physical Inventory
If you sell products to customers, you must maintain inventory balances. Inventory requires cash which means it is not available for other business opportunities. By decreasing your inventory, you are more able to generate cash flow. Lack of cash flow is the most common reason for small companies to fail, even when sales are expanding.
By analyzing client ordering trends over time, data analytics can help you determine how much inventory to maintain for each product stock. As an example, analytics can be used to identify which products are “high runners,” which have consistent order patterns, and which have variable order quantities.
Analyze Product Offers to Eliminate Non-viable ones
When a business grows, its product offering frequently expands as well. While product teams excel at focusing their efforts on the production of “the next great thing,” less time is often spent analyzing the product portfolio.
Product analytics is a subset of data analysis that enables businesses to concentrate their attention on the goods that earn the majority of their revenue. A clear examination of each product’s overall contribution to total earnings will suffice. This contribution is calculated by multiplying the profit margin on each product by the quantity of product ordered. Analytics can demonstrate which goods are increasing your bottom line, which are declining, and which are costing you more to administer than they are generating in profit.
Utilize Analytics to Determine Your Customer Service Levels
Most companies are focused on increasing their consumer base. However, the value of each customer fluctuates over time, and your most valuable customers five years ago may not be your most valuable customers today. This is where data analytics may assist you to make difficult decisions about the level of dedicated services offered to each customer.
Typically, the majority of your profit comes from a small number of very valuable consumers. As we work our way down a list of clients in decreasing order of profitability, we will eventually reach those who contribute very little to the bottom line.
We need to examine how much time and effort we are spending on customer assistance and account management. Are they profitable enough to justify the cost of continuing support? Could those hours of help be better spent on more worthwhile activities?
Utilize Analytics to Enhance Product Quality and Customer Service
Whether your business produces products, services, or a combination of the two, your company’s quality and customer service will set it apart from the competitors. These two subjects are inextricably linked and can swiftly make or damage your reputation.
When it comes to product quality, no buyer wants to acquire a product only to discover that it was defective or did not last as long as expected. When it comes to services, no one wants to purchase your service and then be disappointed with the outcome. Products and services can disappoint customers in a variety of ways, and the most common way for them to communicate their dissatisfaction is via email or phone call to the seller. While the volume of phone calls is occasionally tracked, the reason for the call is rarely noted. This is an area where analytics can be beneficial.
If you keep track of customer complaints, you can begin categorizing them to determine which types of complaints occur most frequently. You can determine the impact of each form of complaint on your bottom line. By combining these two pieces of data, you can select which complaint categories to handle first in order to swiftly improve your customer service reputation.
Assess Supplier Compliance Levels
Supplier data and contract agreements can be utilized to evaluate supplier performance across supplier types, location, and other characteristics. You can then use this data to benchmark new, potential providers. This enables more informed decision-making when it comes to selecting new or additional vendors.
Identify Essential Elements Impacting Safety
Each year, fines for safety violations increase in cost and can reach millions of dollars for certain businesses. Reducing accidents benefit your staff, your bottom line, and your company’s brand. With analytics, you can compile data from employee records, time sheets, locations, and ambient conditions, among other sources, to determine which variables most impact safety. Identifying the most critical elements will assist you in making the best option for reducing safety accidents in your firm.
Consider The Variety of Supplier Delivery
Beyond tracking your suppliers’ on-time delivery performance, conducting a time-series analysis of delivery timings and variance in delivery times, particularly for mission-critical supplies, helps establish whether supplier deliveries are meeting contractual shipping obligations. Have suppliers been consistently late in delivering items to you? If so, consider including penalty provisions in your supplier agreements to ensure that you are treated as a priority customer.
Human resources (HR) is often considered a cost centre that provides services to the company’s staff. In recent years, analytics has been used to focus the efforts of human resource professionals and to hold them accountable for delivering bottom-line results within the budget allotted to them. The following analytics project concepts are typically carried out inside the human resources department.
When Tackling Staff Turnover, Use Analytics to Direct Your Efforts
What are the “characteristics” of those who leave your organization? Where is the highest turnover? Lowest? Are the high-turnover areas in job roles strategic, specialized, or difficult-to-fill? Are you at risk of losing your best or worst performers? Knowing which parts of the business would be impacted the most by turnover enables HR to focus on those areas rather than wasting important resources attempting to resolve all turnover.
Determine Which Recruitment Channels Are the Most Effective for You
Which channels generate the majority of your top performers? Which channels are the most cost-effective in terms of delivering high performers? Is there a way to cut down on the number of channels you sponsor and reallocate your recruitment money to the most efficient channels?
Data analytics is an extremely helpful tool for assisting businesses in all aspects of the organization in making better decisions. Whether it’s managing inventories, product lines, customer accounts, or workforce difficulties, using data analytics to inform business decisions has become a required skill. Without this ability, businesses risk obsolescence.
Keep in mind that the key to success in analytics is to narrow your focus and prioritize business problems that are critical to your organization. A non-coherent approach to analytics will result in a significant loss of time and money.