Abstract
Information is a key to success. For the purpose of this guide, information is meant as numerical data. Without the relevant data in business, likewise personal life, decision making process is kind of a guestimate or even a gambling. Hence, gathering the data and all relevant information is critical for a number of reasons, which will definitely support you in going in the right direction. On the other hand, lack of data will increase your uncertainty and risk. Why it is so important? This brief review will provide some key principle benefits from data.
Data as the critical path…
Collecting, formatting and interpreting data is essential and critical activity while running a business. Problem solving, decision making, assessing actual performance, planning, execution, continuous improvement and many more. It is all linked with information and data. Without this, a business is exposed towards a bigger risk and uncertainty. We just simply do not know how are we getting on, and where do we need to go, to achieve a sustainable success. For example, while driving a car we use numbers, information and data as indicators about our trip. Speed limits in the area we drive are compared to our actual speed, so decision if to go faster or to slow down can be made, either to avoid the accident or penalties. While planning the trip we are assessing the distance we need to drive so petrol’s input and time undertaken can be calculated. Thanks to this, we know how much do we need to spend and what time to leave. The same relates to business. Each day to day’s activity, regardless of function or department shall be supported with data. We would like to know where we are with our performance by analysing the data, for example units produced versus planned (forecasted), or actual sales versus planned (budgeted). Variations as a result of such comparison (planned v actual) could be further analysed to trigger to dig down to a factor causing such variations. Let say, we would like to sell 1,000 units of a product, and this is our plan. After analysing actual sales, we found that there were only 600 units sold. Why? Here is the story begins. Using this indicator we could start investigating what has caused such variance. Was there any production constrain identified, or supply issue. Maybe our forecast was too optimistic with errors and biases? This analysis will help us to identify where the problem comes from and solution might be found easier. Similarly assessing our suppliers, partners, employees can be done while using relevant data. Attending records and percentage of absence per employee, deliveries of goods by suppliers – are they delivered on time and in required quantity? Our margin, profitability from a business activity. They are all indicators supporting our business journey. Data also helps to scope the problem we face and supports us to understand and to prove that there is a problem.
How and where to collect the data from?
So where the data could be collected from? The answer is from everywhere. Our sales records, batch production records, customers, suppliers, partners. Data can be gathered manually or downloaded from the systems, which we use (ERP platforms, Databases). However in order to be effective and to provide value from data, some general principles must be observed.
- Data must be relevant – we shall collect data which is relevant to the area we would like to assess and measure.
- Data must be collected and used in timely manner. It should relate to a specific period. Such period should be easily identified among the data collected.
- Data must come from trusted sources, which means it is validated. We must be comfortable that sources are the trusted ones.
- Data must be accurate. Errors in data could cause massive errors in are actions and can pull us in the wrong direction.
- Data should be kept confidential and gathered as according to our rights for access the data.
Some benefits in a nutshell
- Decision making – selecting best option as according to data outcome
- Improvement and development – wherever the problem is identified (variation fromexpected outcome)
- Cost saving – how much do we spend v how much do we earn
- Assessment - plan v actual
- Motivation - by setting a realistic goals, based on factual data
Would you like to find out more about data processing, creating metrics and relevant tools?
Please watch this space for our further journey to explore the topic.
You are also more than welcome to get in touch with us on:
info@expementor.com
