General Process Overview
There are six (6) steps in the recommended process of customer and product line analysis.
Step 1 - Introduction
Using a briefing/discussion format, you will received an overview of the steps needed to complete an analysis process. Many ideas that will "ring a bell", may/will be discussed and each step is outlined.
We will use the first step to discuss Gross Profit, and the process needed to change it into something called Adjusted Gross Profit. At the same time we will discuss searching for additional profit opportunity that may be unknown or undiscovered. It is important to understand that this is a tool, and not a panacea. We will us a flashlight metaphor, to look and identify specifics, however it will require turning on the lights to discover the entire situation.
In general, most businesses perform analysis of sales and marketing data to develop methods of improving profitability and cutting the cost for day-to-day operations. This is normally accomplished by using reports containing tabular data, the use of spreadsheets, and perhaps the use of charts to convey changes and trends. It is our intent to take this method of profitability determination a step further. In doing this additional analysis, you will get a clearer picture of where your profits and expenses are and which customers and product lines are most profitable.
Step 2 - Understanding your company.
While there is not a way to quickly/completely assimilate historical knowledge of the companies operations in a short period, we feel that we can become familiar enough to develop a profitability analysis model during a brief period of time. This step is really started when we first receive information about the company in written or verbal form. The more information we receive before arriving, the faster Step 2 is completed. We will need to receive from you, in writing, your major objectives of the analysis to be undertaken. In order for us to understand the day to day operation of the company we will need to observe sales, marketing, warehousing/inventory operations, and financial operations. During this phase we will read all material that you provide and will talk to senior management of the company that you provide.
Step 3 - Analysis of data(discovery).
The data warehouse/marts and data mining, what it means to you. Kept inside that pulsating mass of bits and bytes, commonly called the system is the answers to most of the perplexing problems facing any business today. Yes, if you have a system that is use for the daily operation of your business, in which inventory, orders and other sales information is entered, then the data necessary to provide problem solving information is more than likely available.
The use of the word discovery fits in well during this step. It has been my experience that discovery is not just for my understanding of a companies' data. Often we have found that a company or department has not been aware of data content as it pertains to transactions recorded during daily operations.
Step 3 and Step 5 are the longest steps or phases of this undertaking. In Step 3, working with the project POC (point of contact) and the MIS POC, we will capture available sales data. We will be looking for the elements needed to make up a profitability model. The more elements that currently exist, the quicker the discovery phase will be completed. We will also take an in-depth look at the necessary costs of running your business. While the wording necessary indicate they must be in place, some of these costs will be used in a profitability model discussed and/or developed in steps 4 and 5. We will need all sales data that pertain to your most important/complex customers.
The time needed to accomplish this undertaking will be determined, in part, by the data elements contained/available in your sales detail files. Specifically, we will analyze each entry that is a plus or minus to profits, by customer, by product.
Step 4 - Findings presentation.
We will deliver the findings, in a briefing type presentation. This is more than a presentation of findings. It is a review of what has been found and how this finding will be used to develop the genesis of a profit model for your customers and product offerings.
The evaluation of data discovery will be discussed in detail. This is the point where all recommend/required data is examined. Each item should be evaluated by making the following decisions concerning each data element. These decisions would first place each data item into one(1) of three(3) categories:
1. Those data items that must be present (without them, it's a show stopper), or
2. those data items, while not show stoppers, would however, improved business
operations, if they were included, or
3. while these data items would be nice to have, they will not contribute to the overall
performance of the business or a business unit.
The data is then broken into three other categories.
- -Data that is available, and can be obtained from existing data files.
- -Data that is available, however current data files do not produce this data.
- -The current data collection efforts do not produce the required data.
Step 5 - The prototype
The days of tabular reports and fixed questions are quickly becoming a trend of the past. Today the answer to a question (query) leads to the asking of another question. It is unreasonable to provide a single method of providing information. Today's business environment requires a replacement for the tabular report. Enter the EIS/SQL method of evaluating information.
This is generally the longest step or phase of the entire process. In this phase a personal computer (PC) based prototype will be developed, using the data that was developed in discovery (Step 3) and refined in presentation (Step 4).
This gathered information will allow for the construction of a Customer Report Card type report for each evaluated customer, sales location, sales person, or product line.
This prototype will also include all available elements of the profit model, and allow access via a 4GL interface, and a spreadsheet. This will include a Profitability Report Card for each customer. (NOTE: this can also be produced for a sales location, sales person, or product line)
Step 6 - Final briefing/follow-up
We will sum up the accomplishments of this process. This will consist of a written report explaining the steps that were taken, and steps that still need to be taken. While using the flashlight metaphor mentioned above, this should enable you to proceed as necessary. All findings, both positive and negative will be covered. A six month follow-up is also recommended and available if you desire it. We are also available via telephone, at most any time.
