Business Intelligence: Let the Numbers do the Talking - Tire Review Magazine

Business Intelligence: Let the Numbers do the Talking

Too often, business owners in the tire industry review their successes and failures long after it is too late to do anything about them.

Every month, they patiently wait for ‘the numbers’ from the accounting department, hoping they are up over the previous month or the same month the previous year. Unfortunately, they look at this information from an historical point of view.

Wouldn’t it be nice if they could see where these successes and failures are occurring in real time and make the appropriate adjustments ‘on the fly?’ With the power to immediately affect results, those month-end numbers might look significantly more appealing.

Why don’t more businesses do this? Generally, there are two reasons: technology and time. Either they don’t have the technology to gain instant access to the information and view it in a meaningful way or they don’t have the time to take the information their system gives them and transfer it into a format that allows them to view it that way.  What do I mean? Read on to find out.

Every day, you and your staff use your computer system to enter sales orders, work orders, purchase orders, inventory receipts and transfers, cash receipts, vendor invoices, and more. A wealth of information builds up in your operational systems just through the normal course of operating your business. While many systems are fine at recording this information, most do not allow you to easily use this information to make decisions in a timely manner.

In some cases, if they have time, your staff may spend time and effort maintaining and generating reports. Getting at information through report writers requires technical expertise and time. Furthermore, these reports generally provide simple snapshots of information at a given point in time and don’t really give you the information you’re looking for in a way you can use it. Wouldn’t it be great if that information was always up to date, easily accessible and presented to you in a way that help you better run your business, improve the bottom line and improve cash flow?

With business intelligence (BI) systems, it can be done.

BI systems give you executive or summary views that tell you how you are doing and let you drill into any level of detail to explore the reasons why. You can examine the numbers daily, weekly or monthly, spot changes or trends in different aspects of your business and compare different locations to understand why one is performing better than another.

Ensuring that your BI system interacts seamlessly with your core business applications is just as important. If you have to extract data manually just to get at the information, you are not operating in a true BI environment. Not only are you counting on perhaps the one technical person in your organization that is able to do this, but if this is not done every day, the results can be skewed.

Imagine it is the fifth day of the month. You turn on your computer and click your mouse on your “personal daily review.” While viewing unit and dollar sales and profitability by location, you notice that one store is down a bit in profitability. You click on that location to review sales by manufacturer and then drill down to find the item, group of items or person that is the problem. Perhaps it is an item priced incorrectly or a salesperson who is giving away the store. No matter, you have the information and can act on it immediately, not 10 or 15 days into the next month after having gotten ‘the numbers.’

With a BI system, you can set revenue goals for your locations on a monthly basis and track the progress of those goals on a daily basis. This results in the system providing you with vital information to make key business decisions before it’s too late. BI systems deliver information organized and consolidated in ways that mirror how you think about your business.

They also allow you to choose which areas to explore and act on. They deliver the information instantly, so it is always up to date, and because it automatically comes from your operational systems, it is always accurate.

In short, here are just a few of the advantages you can gain from a BI system:

• Increase sales and profits by analyzing sales by customer, product, sales rep or location
• Get answers to questions, such as:
Are your largest customers the most profitable?
Which customers are showing the largest increases or decreases in business?
Which products have the highest margins or are showing declining margins over time?
• Control expenses and increase profits by analyzing expenses, comparing them across locations and then acting on the anomalies
• Shorten your cash conversion cycle to improve cash flow
• Access all of the tools you need to analyze inventory to increase inventory turns and accounts receivable to lower the days sale outstanding (DSO).

Turning your inventory and accounts receivable into cash more quickly gives you more working capital to build your business.

Most companies in the tire industry have thousands, if not millions, of transactions flowing through their systems. These transactions make up a rich set of data that is just waiting to be ‘mined’ by you.

BI systems are powerful tools that clarify what ‘the numbers’ are saying. When used effectively, BI systems can positively impact the bottom line and often pay for themselves many times over.

If your primary concerns are increasing profits, increasing productivity, controlling expenses, or improving cash flow, BI is an invaluable tool you can’t afford not to have.

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