Business Intelligence and Reporting

by Jim B. Cantrell,   This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Business intelligence (BI) is a broad category of applications and technologies for gathering, providing access to, and analyzing data for the purpose of helping users make better business decisions. The term implies having a deep knowledge of all of the factors affecting your business.  Selling to a retail group or groups just adds to the pile of information you have to deal with.  You are not only on the hook for how you run your business, but in many instances, you are on the hook for how your retail partner is managing your product as well.  It is critical that you have an in depth knowledge about factors such as your retail clients, competitors, suppliers, the economic environment, and internal operations to make effective and good quality business decisions.  Some information is more important that others – some at different times.  A good BI solution can help you decide what kind of advertising to run, whether to negotiate for higher prices, remove a product from sales or manufacture more.  Business intelligence enables you to make these kinds of decisions more effectively, with greater speed – and even automatically sometimes.  For decades now managers have been making more and more decisions as they gain experience within an industry.  The “gut instinct” you ran your business with yesterday is not as fast or accurate as a pushing a button to open up a report.  Of course, your gut instinct didn’t have to track orders across an ocean or contend with charge backs, EDI or today’s fuel prices.  In today’s business climate, the decisions you will be forced to make, must be made quickly.  To help with this, put some simple cost-effective reporting solutions to work for you! 

The term Business intelligence refers to the collection, analysis, and presentation of business information and also sometimes to the raw data itself (Although data by definition is NOT intelligence, nor can it be).  BI commonly describes a set of methods and concepts to improve business decision making by using fact-based support systems.  The term BI is sometimes used interchangeably with reporting and query tools and executive information systems.   Most major software providers (i.e. Oracle, SAP, and Microsoft) and many niche industry developers are very much aware of BI and it has become a very hot topic in recent years.   

Business intelligence is a hot topic?  As of late 2008, BI system acquisition is still on top of the purchasing and development stack for many companies.  Unfortunately, too many users are not utilizing the information and systems to capacity or (worse yet) are not getting the reports they need regardless of whether their company just spent $2,000 or $500,000 on new systems to support BI initiatives!  In many cases the systems purchased are discovered too late to be nothing more than silos or in other instances users are not comfortable with accessing or using the data provided.  This can be due to either the user not giving credibility to the reports or not understanding how reports are compiled (Or built) and therefore can’t relate enough to apply it.  Ask yourself this question and rate the answer on a scale of 1-10: “Am I getting all the reports I need when I need them?”  If the answer is or has any combination of “no” in it, then there is work to be done. 

BI systems can provide historical, current, or predictive views of business operations, most often using data that has been gathered into a data warehouse or working from operational data. Software elements support the use of this information by assisting in the extraction, analysis, and reporting of information.  Applications tackle sales, production, financial, and many other sources of business data for purposes that include, notably, business performance management.  Information may be gathered to do such things as measure performance of product sales, manufacturing efficiency, timeliness and or accuracy of customer service, inventory optimization and so on.  

The Need for Reporting

Everyday people from multiple roles in the retail supply chain make decisions based on hunches, memory, old data etc.  Very often as a result of this type of decision process bad things happen such as lost sales, out-stocks, charge backs, wasted advertising spend and so on.  In a marketplace where consumers can find the same product (Even the same brands) in multiple outlets, coverage is essential to help manufacturers and retailers develop the right marketing and sales programs to help understand competitive positions in addition to other uses.  Using a BI solution tempered with an experienced gut feel will often prove to be the most accurate method.  There are lots of people who push back the idea of *Gut* instincts and rely solely on reports – but I will always consider BOTH an experienced instinct AND a solid report over simply one or the other.  Business Intelligence (BI) solutions can bring together information from several data sources to provide accurate, decision-ready reporting and coverage of a broad array of retail channels (Brick and mortar as well as Online), including:

• Sporting goods
• Supermarkets
• Drug stores & pharmacies
• Pet stores
• Mass merchandisers
• Military commissaries
• Warehouse-clubs 

By combining individual-based decision making with reinforced, validated reports based on hard evidence, the goal of business intelligence is to give business owners better tools with which to make their decisions. 

Comprehensive reporting coverage permits management to examine key business trends by product, category, store, chain, or market for one brand or an entire competitive set across the food, household, health and beauty, and durable product industries. Being able drill down to the desired level of detail enables executives to make strategic decisions faster based on more accurate and timely information. 

BI reports can help companies gauge penetration, product performance, distribution, promotional effectiveness, and other critical areas.  Even simple BI tools measure and track sales volume, selling price, observed promotion and merchandising execution, encompassing an organization’s own brands across all channels.  From category-level all retail sales volume to single item performance in one store, BI tools can provide retail manufacturers a more complete view of their business across all supply and trading channels.   Below are some common questions which can often be easily answered with a halfway decent reporting solution.

Provides insight into:

• What channels and markets represent the greatest sales growth opportunities for my brand?
• How does my brand’s current distribution compare to last year’s or projected performance?
• What is the base and incremental sales performance of my brand?
• How does my brand’s everyday price point compare to promotional efforts?
• How much lift does a display generate versus an ad?
• Are feature and display efforts contributing effectively?
• Am I getting my fair share of the category at an account?
• How can I build volume through category management?
• What impact do my in-store promotions have on product sales, and how does this differ across retailers and across markets?
• How effective was the POP (Point of Purchase) display I produced last month in support of my new product introduction?
• Which chains in a market represent opportunities to increase distribution?
• At which stores do my brands perform the best?  

Comments people have given me in the past for why they don’t invest in reporting: “My retailers already send this to me.”  Many retailers (Many, not all) DO provide some sales data, sell-through or other metrics to their suppliers.  But do they all provide the same data points – NO!  A good reporting solution allows the demand and supply items across all clients (Big and small retailers) as well as your vendors to be measured using the same criteria.  What’s more since very few retailers order using the same item information, descriptions or critical information, it is extremely beneficial to have a solution which can represent your reports heterogeneously across all channels and customers – regardless of their niche, location, procurement nuances, etc.  Some benefits of this method may include: 

• Identify profitable vs. unprofitable retail trading partners
• Improve marketing initiatives - building demographic models based on historical trends:         
• Retailer sales by region/Zip and/or store class
• Seasonal sales
• Positioning by retailer and product type
• Store demographics (Economic, weather, etc.)
• Compare sales from one period against another to identify trends.
• Identify most economical shipping points.
• Develop more accurate sales and marketing plans.
• Snapshot views of product sales by retailer over specific periods
• Measure new item or new market success by retailer, region or other criteria.
• Differentiate yourself by using reporting tools to interact with customers.
• Leverage your sales data to order size, change frequency, add stores or gain other points.
• Adjust Co-op marketing efforts  
• Identify stocking problems within a retail locations
• What day you should go fishing :)

Report Types and Categories

Limitless reports can be arrived at with a good reporting solution, but we should take a moment to break down some common categories and their functions.  If we start by saying all report categories or types can be cross functional e.g. used by your Sales department as well as Finance we can remove a lot of redundancies but that doesn’t help us with the categories so let’s look at these to start things off: Historical and predictive are the types of buckets we will be filling and you can place the following categories into each:

• Sales (Demand)
• Spend (Supply)
• Inventory (Localization and optimization, generally)
• Score card (Service, compliance) 

Most of the reports we talk about can be considered ‘score cards’ for different business areas because they capture and represent various metrics.  This doesn’t make them score cards in same sense as the vendor performance score card you get from your clients or one which accurately measures their satisfaction with you or the report you issue your vendors doing the same.  Do you have a score card from a client or does your company score your department on deliverables?  If not, I would suggest thinking about one.  The “Perfect Order” is something we should all be working towards, but aside from getting all “A’s” on doing your job, score cards help track corporate objectives.