Not long ago, a distributor’s operations were optimized on past performance alone. Now, with analytic models, a business can fine-tune its operations to maximize efficiency in ways that simply weren’t possible in the past. If you’re not putting those analytic models to work for your business, you’ll miss tremendous opportunities and potentially fall behind the competition.
Today, distributors need to leverage four types of analytics:
Descriptive. Descriptive analytics is what we mean when we talk about “reporting,” or summarizing existing data on what’s already happened for insight. New visualization tools like Power BI make the data more accessible and interesting, even actionable. Seeing data on a map or with easy-to-use filtering and drill-down capabilities provides insight that may be difficult to grasp from a big report. This represents the vast majority of analytics.
Diagnostic. Diagnostic analytics answer the question “why” by identifying patterns and relationships between data. For example, you may find a correlation between weather and sales.
Predictive. Data in the past is known and can be measured. Data in the future can only be estimated. Predictive analytics use algorithms to estimate unknown data. Common examples include weather forecasting and demand forecasting. When we predict what is going to happen, we can make decisions about how to respond. For example, if we predict there will be higher demand for a product, we may increase our inventory.
Prescriptive. Prescriptive analytics take it one step further and recommend action based on the prediction to optimize a business outcome. The most common form of prescriptive analytics in our daily lives is GPS. Based on descriptive analytics (what are the roads and the speed limits), diagnostic analytics (what is causing the backup at a location), predictive analytics (what will the traffic flow be by the time you get there), GPS recommends the most efficient route. Distributors can put prescriptive analytics to work for them by using available data to determine which delinquent accounts collection agents should be calling based on the likelihood that they will pay, or which clients a salesperson should be calling on based on the likelihood they will buy.
Together, these analytics models will guide your company to making the best decisions for distribution models, pricing solutions, promotion planning and long-term strategies. And thanks to the increased adoption of cloud-based technology, we’ll see more and more distributors growing their bottom lines as a result.
Give me a call at 815-575-2957 to discuss your analytics strategy and set your priorities for 2019.
Matt has a Bachelor's Degree in Economics from the University of Illinois in Urbana - Champaign and a Certificate in Distribution Management from Texas A&M as well as a Certification from INSEAD in Business Strategy and Financial Acumen.