Two manufacturing firms - one in the US and one in Canada - were merged to provide a strategic advantage in the market. Their blend of capabilities allowed them to provide distinct value to multiple industries such as construction, materials handling, agriculture, and transportation.
With multiple IT systems resulting from earlier acquisitions and mergers, it was a challenge to consolidate information for analysis and decision making. There was growing pressure to remain competitive and profitable while serving customers in Europe and Asia as well as the Americas.
Further compounding the problem was a disparity in business models of the merged entities. Dealing with multiple systems was causing confusion and tremendous overhead on their employees. Not to mention the reduction in quality of service provided to their customers.
Bridge and Gasket Comes to the Rescue
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.
This provided dynamic ad-hoc analysis capabilities that they needed to gain visibility into their complex mix of product and service offerings. It also reduced the backlog of IT reports and accelerated the process of delivering solutions to end users - the 'gasket'.
Poor Forecasting and the China Syndrome
A business analyst found a drain on profits by being able to dig into the datacubes from multiple perspectives and found that that Customers ordering online always paid the full product price but Customers placing orders via the call center typically received a discount, so a decision was made to minimize the discounts on certain items. This simple change reduced the volume of incoming calls as more customers ordered online while improving margins in the call center.
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.
Today the company sources roughly one third of its supply from North America and up to two thirds internationally. Of about a dozen suppliers, as many as half might be Chinese. And going forward, four of those suppliers might be replaced by three, four or five different Chinese suppliers which provide similar but not identical products to be sold.
Over time the business model had changed. It was becoming more product driven and less customer driven. Price and quality options resulted in more competition and supplier substitution. The forecasting model was now obsolete.
The BI Bridge and Gasket approach provides the means to identify and understand problems caused by a transition from customer-driven to product-driven forecasts. This is another example of how rapidly deployed solutions based on current and focused business drivers help companies in competitive industries.
Author Resource:-
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