A merger occurred between two North American manufacturing companies. They were able to unite forces to bring unique value to the construction, transportation, materials handling, and agricultural industries in Canada and the United States.
This new multinational company had undergone mergers and acquisitions in the past and had several different IT systems. There were looking for ways to enable access to consolidated information to better serve customers across the globe.
Their staff was becoming overwhelmed with the number of systems and data sources. They needed a consistent, accurate data repository for reporting and analysis. The disparity in the sales and distribution models among the different business units were further complicating matters.
A ‘Bridge and Gasket’ Approach to Consolidated Business Intelligence
The client was surprised to learn how datacubes could be used to ‘bridge’ data from their various ERP systems and other sources including Excel. Business users would then have access to a consolidated view of sales and profits across divisions and regions.
The datacubes dramatically reduced the IT reports backlog and accelerated the ability to create complex one-off analysis required in competitive and dynamic international markets. This is the Gasket.
Poor Forecasting and the China Syndrome
The Business Intelligence solution provided other benefits. A user analyzing the datacubes discovered that customers that bought on-line were paying full price while phone orders were often discounted. A decision was made to restrict the discounts available for certain items. This immediately drove profits higher as on-line ordering increased and profit margins were restored.
China Sourcing and Business Model Reversal
In the good old days the company would ask the sales managers to forecast sales by key customers, customer groups, geographies, key products and product classes. This model began to break down as Chinese suppliers entered the market with comparable products of similar quality.
The current practice for the company was to source the majority of products from Asia and perhaps one-third from the US and Canada. About half of the suppliers were Chinese and even more of their business would be going to China in the future. Customers had more options and were more sensitive to price.
Customers took advantage of the competitive price and quality combinations. As supplier substitutions increased, sales forecasts based on the old model became less and less accurate. The business model was changing from customer driven to product driven.
A unique approach was adapted to their growing problem of dealing with product driven business models and forecasts. Yet another way a perspective-driven business intelligence approach increases margins and drives profits for companies in aggressive industries.
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