Business Intelligence Case Studies
The case studies below illustrate how companies improve efficiencies when they are able to view business processes in their entirety. Executives can scrutinize each stage in the value chain to ensure that it contributes in proportion to the money invested. In addition, executives can review the information on the flow of demand and supply to ensure roadblocks are spotted before they do damage and the needs of consumers are met as quickly as possible.
Toyota
The management of logistics for Toyota's distribution network in the USA is the fulcrum of business success since each day's delay in delivery costs $8 per car which is a total of $16 million for the annual sales. Toyota's extant database was replete with errors as there was no way to cross-check data; a ship could leave Japan with cargo but it was hard to confirm whether it reached the USA. In some cases, Toyota was billed in error when, for example, its cargo on a railcar was scanned twice. When it installed a data warehouse and a business intelligence system, Toyota was able to go over its processes with a toothcomb and eliminate inefficiencies. It realized substantial gains from dropping a port at Baltimore which it did not need. Overall, the ROI on the business intelligence system was 506%.
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Logitech
Logitech, a manufacturer of computer peripherals with a turnover of $1.3 billion, was hamstrung in its efforts to improve sales performance as its executives could not track the monthly shipments for each product such as a trackball device and cordless mice. The data was extracted each week on an Excel spreadsheet, after three hours of effort, and circulated to individual departments. Typically, product managers demanded a customized report; in all fifteen reports needed to be created. This kind of tedium was eliminated when a single data warehouse was installed and each department was free to create its own report. Customized information of this nature was useful to compare the performance in individual regions, channel and types of customers.
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Aspect Communications
Sales and finance departments rarely work in cohesion. Typically, salespeople are driven to achieve targets set for them and are oblivious to the expenses incurred to achieve them. Aspect Communications, a California based call center and contact Center Company, realized that it was running into a loss till 2002 even though it experienced robust growth in its sales. It recognized that budgeting could not remain the preserve of the Controller and the President and greater collaboration was required across the company to reign in costs. It purchased Enterprise Planning and Budgeting business intelligence software to monitor the costs of sales realizations. Since then, Aspect Communications co-ordinates its sales planning with cost estimations.
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Staples
Retail companies display myriad products even when they specialize in a group of products. The optimum product mix is hard to ascertain because company managers have to look at both the margins and a diversity of costs. Staples found out that appearances are deceptive when it realized that furniture was not as profitable as it seemed by reading only its gross margins. Business intelligence software enables Staples to drill down and allocate specific costs, such as rents, marketing and distribution, to individual products. When the cost of space and inventory turnover was taken into account, other products like chairs and filing cabinets were more profitable than furniture.
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Hilton
Strategy development, for most employees, has been an esoteric exercise far removed from the daily routine of business. Business intelligence software has brought about a paradigm shift by translating strategy into key performance indicators which are communicated to the entire company. A balanced scorecard keeps track of the extent to which goals have been achieved based on indicators which include the leading or the predictive numbers and the lagging indicators which are the measures of achievement. Employees are made aware of the impact of the performance numbers on the benefits customers realize and the management continually discusses the measures that could be taken to improve matters. Hilton's profit margins are higher by 3% over its competitors.
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