It's that "Aha" moment. The time where you discover what you've been missing. This moment is coming sooner rather than later for many mid-market manufacturers in regards to the need and use of data insights. The realization that there's business and profits being lost through the lack of data insights.
What we mean by "data insights" is the impact of information and communication automation systems to predict and respond to customer behavior and market demands. In 1910, Scottish writer and poet Andrew Lang said, "He uses statistics as a drunken man uses lampposts — for support rather than illumination." Decades later, many modern businesses still do just that, using data to support rather than drive their decisions.
Why? After all, data really is valuable only if it helps a company make better decisions. Your organization might be sitting on the world's largest data pile, but it's useless unless you have the means to translate it into insights that drive your business. The problem is, many mid-market manufacturers lack the critical infrastructure to capture the right data, and the business acumen to effectively evaluate and utilize it.
Gaining successful insights means figuring out what you want from your data — finding its value. Consider what you want to do with the actual data. What are you trying to achieve? What business question are you trying to answer?
Building the best insights often come from looking not at singular data points but at trends, especially when they change direction. Examine different time ranges, are often the most powerful and insightful discoveries in data analysis are the relationships between variables.
Sounds simple, right? The challenge lies not in the tactics, but the strategy. Defining and understanding the critical business questions that can take an organization down a path to the enlightenment of "data insights".
Regrettably, too many companies are simply scratching the surface, with month-over-month sales trends or profit by product line percentages. Without deeper examination through data, these companies will never find and address root causes or new business opportunities.
There are 3 primary impacts of the Data Insights Threat:
1) Missed Cross-Sell/Up-Sell/New Business Opportunities will exponentially increase if purchasing behaviors and insights on customer business challenges aren't thoroughly understood and analyzed. The new business climate seeks business partners, not simply vendors. If your organization remains in the position of "vendor", it's a price race to the bottom. Using data insights to identify ways to reduce downtime, increase efficiency and improve performance of your customers' business, will increase cross-selling and up-selling opportunities, and in turn, increase bottom line profits.
2) Insights On New Market Trends will be overlooked, as companies remain focused on the micro-view of day-to-day business, versus overarching trends. New competitors in the advanced age of technology can come from anywhere - especially outside of your core industry and business. Advancements such as additive manufacturing can upset the apple cart of traditional, long-standing business models. Using data insights to understand how these technologies impact your business, and more importantly your customers' business, will provide companies the ability to be proactive with necessary organizational and operational changes to survive the long-term.
3) Intelligence On Profitability is often overlooked, and to many company's detriment. Understanding ordering and purchasing behavior, by regional, seasonal, or industry patterns just scratches the surface. Utilizing data insights to fully understand how the business makes and loses money in the micro sense is critical. Examining pricing strategies, understanding true costs of sales channels, identifying areas of financial losses, spotting duplicate investments, defining true operating costs, finding opportunities to increase sales of high-profit products - these are all areas where data insights can provide value. If you're still working on a cost-plus model, and adding a broad 25 percent cost of overhead, you're leaving money on the table by not digging into the numbers.
As mid-market manufacturers move to become more competitive, they will need to look beyond the traditional product enhancement/new product development channels. Indeed, data insights can also help bolster and hone these investments, but using data insights in a broader, more strategic business sense, will separate the men from the boys. Those that don't start understanding how to use and analyze data, will remain exactly that — a mid-market player at risk of being at best acquired, and at worst, out of business.
Andrea Olson's 19-year, field-tested background provides unique, applicable approaches to creating leaner, more effective, technology-driven, customer-facing operations. A 4-time ADDY award-winner, she began her career at a tech start-up and led the strategic marketing efforts at two global industrial manufacturers. She currently is the CEO of Prag'madik — an operational strategy consultancy, specializing in the industrial and manufacturing markets.