How Data Optimization Increases Distribution Performance
Apparently, we should blame Hans Jakob Christoffel von Grimmelshausen for the offense.
A satirical novelist in 17th Century Germany, Hans wrote the now-timeless work, Simplicissimus. This book included the first use in print of the derogatory term erbsenzähler, a German word that translates to “bean counter.” Over the next 450+ years, “bean counter” has been cemented in our minds as an image of a pedantic accountant so obsessed with pinching pennies, they miss opportunities to make millions.
All due respect to Herr Grimmelshausen, but 21st Century finance professionals do so much more than simply tally beans. These skilled analysts turn raw data into a strategic asset that empowers businesses to succeed. In the mid-market Distribution industry alone, a crack team of bean counters can make a significant impact that propels growth, corporate culture, and job creation in any economy. Here are three reasons why.
Reason 1: Analysts Deliver Reliability
The CEO Genome Project was a wide-reaching study of modern business management. Conducted over 10 years by consulting firm ghSmart, researchers collected a database of assessments of 17,000 C-suite executives, including more than 2,000 CEOs from all major industry sectors. They then assembled a team of psychologists, economists, statisticians, financial market experts, and data scientists to discover exactly which qualities were the definitive, measurable predictors of CEO success. When all was said and done, only four key abilities separated high-performing CEOs from the rest. At the top of that list was reliability. The research found that CEOs who scored high on reliability were dramatically more likely to be selected for the role and to succeed in it, far outpacing peers who excelled in other areas.
How did those successful CEOs reliably produce results for their companies? They depended on bean counters to aggregate and optimize their data for decision-making. According to researchers, high-performing CEOs established business management systems that included dashboards of metrics, clear accountability, and multiple channels for monitoring performance and making rapid course corrections. In short, they implemented daily use of data intelligence tools that measure critical KPIs in real time, inform strategic decision-making, provide actionable insight to ensure customer satisfaction, and guarantee reliability of leadership and operations.
So hail to the bean counters who keep data intelligence just a click away from their executive teams. Without those people, most CEOs would quickly falter and fall behind the competition.
Reason 2: Analysts Keep Product Flowing
Amidst all the instability caused by the 2020 Coronavirus pandemic, one lesson stood clear: when distribution lines are disrupted, Americans will hoard toilet paper.
It would be funny, except we all saw it happen, and not just with consumable household goods. In healthcare, manufacturing, retail, industrial services, and more, failures in inventory forecasting, issues awareness, and supply chain reliability thrust distribution companies into the harsh spotlight of national outrage. We the People, it seems, have been spoiled by the superlative systems our distributors have created. When one of those systems hits a roadblock, it also hits the fan.
This is why bean counters are so critical to mid-market business, particularly in distribution. From supply chain to fulfillment to service-level management, these analysts use data-driven accountability to facilitate better control over every stage in the shipment lifecycle. Every day, for every industry, they track relevant metrics such as fill rates and service levels against forecasted demand and other benchmarks, making it possible for customers to get what they need without ever thinking about how it got there.
Not only that, distribution companies are using data to get even better. Dr. Matt Dunn, director of the project management office at Blue Margin, reports that current data strategies can significantly impact a distributor’s ability to track and optimize product flow. He explains:
An inventory-aging report, whereby all products in the organization’s possession are aggregated, is essential. It can separate product into aging categories and identify slow-moving and “graveyard” inventory. Metrics can be built around most profitable items calculated by gross margins and inventory turns. Built-in top 20 lists can show at a glance what product is moving at various rates, and what’s sitting, with those items sorted by largest sunk cost.
Dr. Matt Dunn, Director, Project Management Office, Blue Margin
The time to prepare for a national emergency is not when the pandemic hits. It is months and years before. So, hail to the bean counters who are, right now, tracking and acting on data related to inventory aging and velocity, supply and demand, product mix, stock forecasting, and all the other necessary metrics to keep products within arm’s reach of any customer who needs them.
Reason 3: Analysts Drive Sales
“Float like a butterfly, sting like a bee. His hands can’t hit what his eyes can’t see.”
Legendary heavyweight boxer Muhammad Ali made that pronouncement in 1974, before his unforgettable “Rumble in the Jungle” against the previously unbeaten George Foreman. With history behind us and his successful career in the books, it is no surprise today that Ali bested Foreman, knocking him out in the eighth round. What is surprising is that some mid-market companies have yet to learn the truth that Ali so brashly delivered in 1974: your sales team can’t hit targets that they can’t see.
Lack of visibility into key metrics that impact sales success is more than just a frustrating obstacle. It is a potential knockout punch that can doom a sales team to failure despite everyone’s best intentions.
Jon Thompson, author of The Dashboard Effect, a foundational work in business intelligence, points out: “Product information is not enough to support your sales effort. Sales teams also need real-time insight to promote products that are available, high-margin, and the best fit for customer needs. They need easy access to customer history, buying patterns, and satisfaction measures.”
Using accessible analytic tools like Microsoft Power BI, your analysts put key performance metrics up in lights for everyone, from the Sales VP down to territory reps and inbound call center staff. With that knowledge front and center, the sales conversation changes. A rep can note that a customer has bought a particular product before and offer to increase the quantity. Another can identify complementary products that high-value customers typically combine. A third can surface a product with a near-perfect satisfaction rating among industrial clients and offer it as an upsell. Sales revenue ticks up, the company gains better financial footing, employees keep jobs, and customers are thrilled with the service.
So today, let’s shrug off the von Grimmelshausen fallacy once and for all. When data-driven bean counters get involved in distribution operations, everyone benefits. Hail to the bean counters.
Three Key Thoughts
“The CEO Genome Project found that reliability was the single most powerful predictor of CEO success, and high-performing CEOs built it on systems of real-time metrics and clear accountability.”
“We the People, it seems, have been spoiled by the superlative systems our distributors have created. When one of those systems hits a roadblock, it also hits the fan.”
“What is surprising is that some mid-market companies have yet to learn the truth that Muhammad Ali so brashly delivered in 1974: your sales team can’t hit targets that they can’t see.”
Ready to put data to work in your distribution operation? Talk to Blue Margin about building the visibility your team needs.
