Business Intelligence (BI) is more important than most people realize. Every day businesses conduct daily processes such as purchasing, selling, producing, and shipping but if none of that information has been captured in a way that it can then be analyzed, only part of the work has truly been completed.
We’ve analyzed our top 5 most important (non-accounting) analytics that Business Intelligence should offer you.
Having the ability to analyze current product costs such as: the raw material price including add-ons like duty and freight, the labour costs including burden, and the overhead costs, means that product margins are available on a day-to-day basis. True Business Intelligence is taking that information one-step further. Users should know what their strawberry ice cream will cost to produce if there is a shortage of strawberries during the next season. Business Intelligence allows the user to create reasonable predictions based on historical and current information.
Production yields tell the story about what is happening on the floor each day. Specifying what the actual yield of each product is at the end of the production day should do more than simply update inventory, it should allow production managers to understand where the inefficiencies are. For example, if certain yields are lower than average for a common product, perhaps the training or instructions to prepare the item are not clear. Another example would be abnormally low yields for a less common product, perhaps the item calls for a piece of machinery that is not used as often and needs maintenance work.
Sales managers should always know their most lucrative accounts and products. This information should be easily found and thoroughly broken down for intensive analysis in any Business Intelligence tool. Understanding the products that are selling out and those that are only ordered once a year allow marketing efforts to be focused properly.
Some products are extremely profitable while others may actually cost the company more money to produce than they bring in. Checking product margins is not something that should be done once a year, but rather on a weekly or bi-weekly basis to ensure price changes, shortages in the industry, and new contracts have not created unfavorable margins. Strong business intelligence tools will give the user access to simple and detailed product margins instantly.
Every production facility is constantly purchasing raw materials. Depending on the production type, some materials will be purchased daily, weekly, monthly or somewhere in between. If purchasing managers are only review contracts and supplier pricing yearly, they may be missing important changes or patterns that could be very costly to the company. Business intelligence tools should be able to analyze information such as the most expensive raw materials, raw material price change percentages, supplier purchasing data, etc. Managers will be able to instantly see major issues and spot costly mistakes.