How Business Intelligence-based Analytics Help You Navigate an Uncertain Economy

Part I: Effective Inventory Management

Well . . . it’s here.

Regardless of your politics, there’s no question that we’re in what’s politely referred to as “an uncertain economy”. While some clients report ‘business as usual’ or even economic growth, many others are experiencing a drop in revenues. And still other businesses have used the uncertainty over international trade to press the ‘pause’ button in terms of expenditures and growth.

The situation is both understandable and unnerving. And it’s the latter of these feelings – those of nervousness – that are most difficult to deal with. What will happen tomorrow . . . next week . . . next month . . . and next year? If only we could look into the future, see what’s coming, and plan accordingly.

As unpredictable as an economy may be, there are always ‘signs’ of what’s to come and what you can do about it – if you know where to look.

The “Where” is Business Intelligence-based Analytics.

Being able to make informed decisions is more important than ever – and business intelligence-based analytics have the unique ability to use a business’ past and current activities to predict future business behavior – as well as reveal to an organization what steps to take in response.

This article series will show how the utilization of BI-based analytics can help various parts of an organization better deal with the vagaries of an uncertain economy.

Part I focuses on an organization’s inventory.

Optimizing Inventory Levels & Transactions

In an uncertain economy, you can’t afford waste; but neither can you afford to be so conservative as to be unable to fulfill obligations to clients. Like a tightrope walker, you need to tread carefully, considering prospective sales on one side, and the appropriate purchasing of stock on the other. A delicate – and ever-changing – balance is key.

BI-based analytics (as found in an Inventory Planning & Projection dashboard) look beyond the traditional on-hand, on order, and sold amounts to predict future needs and corresponding actions. These analytics dive into historical performances on a weekly, monthly, quarterly, and yearly basis to derive both current and future needs.

“Days of stock” calculations (balancing sales, purchase orders, and anticipated growth or decline), is one of many key inventory metrics that grows in importance during times of economic uncertainty. And in such times, it’s the stock anomalies that a business must be particularly vigilant about. Whether it’s “more than ‘x’ units on backorder,” or “more than ‘y’ dollars in standing stock”, it’s exceptions like these that become a major liability – and must be detected and conveyed in inventory reports and dashboards.

And it’s not just inventory reports that need to be considered and consulted. Although item utilization reports show totals regarding stock in and out, they don’t show who is buying what and whether certain buyers (particularly repeat buyers) are trending up or down. Standard utilization reports that appear to show a consistent demand for certain items may in fact be hiding variances and anomalies that can be detected only via client, regional, or seasonal analytics.

Additional inventory metrics available via BI-based analytics include the history of stock lost to spoilage, expiration, or other factors; these KPIs are essential in terms of improving purchasing habits to minimize or eliminate losses. Even if spoilage or lot expiration isn’t an issue, knowing whether you’re carrying an exceedingly high value of stock is critical, as it enlightens you to available capital that could be better used elsewhere in your business.

At the same time, stock shortages (from low on-hand levels or an excess of backorders) need to be figured into the stock projection calculations to reduce situations which could cause clients to cancel their orders and/or shop elsewhere for the products they need.

BI-based Analytics Offer Valuable Inventory Insight

Although “just-in-time” inventory is the ultimate goal of any organization that maintains stock, optimizing that stock means more than just ensuring that you have enough on-hand to meet the immediate demand. Predicting future needs, identifying seasonal (or regional) anomalies, as well as supplier performance metrics (such as price increases, late deliveries, and damaged items) all come into play.

Although challenges like expired stock may be no more than a minor annoyance during a robust economy, an uncertain economy raises their impact – to the point where they can spell the difference between profit and loss, and success and failure.

BI-based analytics have the unique ability to look at all aspects of inventory management, tie them together, and give you the added insight you need to weather the ebbs and flows of the economies ahead.

What type of inventory insight will you find in a BI-based reporting application like DataSelf? Here are a few examples:

If you’re ready to discuss how DataSelf BI-based analytics can make your inventory process more efficient, contact us to schedule a demo.

How Business Intelligence-based Analytics Help You Navigate an Uncertain Economy