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The golden rule of business has always been to try something, optimize what works and rinse and repeat. In that sense, business analytics, the act of monitoring business fundamentals and optimizing outcomes, has existed for as long as man has done business. However, with the widespread adoption of technology in the business world, the discipline has taken a drastically different form. It’s estimated that about 2.5 billion gigabytes (GB) of data was generated just in 2012. This number has been sitting on an exponential curve in recent years and is set to continue into the future.
Businesses from Bangladesh to Brazil are realizing this and capturing, analyzing and acting on the data being generated. Companies in the recent past have used rudimentary analytics such as analyzing sales data to uncover products that the customers want, conduct product testing by making small modifications and monitoring and adjusting for change. But business analytics in the modern era consists of a lot more variety and seamlessly combines company and market data, synthesizes them and produces insights.
Company data can be broadly categorized into revenue/sales, operational and financial data. Revenue data consists of product-wise sales data categorized by parameters such as price, volume, markup, location of sale or any other parameters deemed important. Operations meanwhile consist of cost parameters such as indirect costs (marketing, admin, distribution and miscellaneous expenses). These help the company to minimize costs, while the revenue parameters work to maximize turnover, leading to higher spread and profits for the company. The financial aspect of business analytics involves optimizing cash flow cycles for smooth operations and analyzing and presenting business data to investors to minimize cost of funds and foster growth among other things.
The second part of the cog is market data, which involves capturing, analyzing and acting on data about consumer behavior, competitor actions and market trends. Consumer data comes from many points and consists of purchasing characteristics, payment patterns and various levels of cross-segment patterns such as inter-category preference characteristics (e.g. mobile phone preference vis-a-vis mobile telephony behavior). Data on competitors include operating dynamics, product characteristics and positioning in relation to one’s own firm. Finally, market trends include which products are currently in demand, which are projected to pick up and what fundamental changes are taking place in the industry.
These two sets of data are synthesized and actionable insights are extracted from them. Then, when sufficient time has passed and the company has access to repeated data on same factors (such as region-wise sales over 10 years) , it can move on to time series analysis and actually predict market behavior in advance and get ahead by adjusting for them before their competitors.
Businesses in Bangladesh are catching up to this trend and innovative CEOs of organizations ranging from large conglomerates to small, nimble startups are changing their operating models to fully utilize dividends from business analytics.
For instance, Fortuna Shoes, a subsidiary of one of the largest conglomerates in Bangladesh, utilizes the data it generates to optimize sales, reduce costs and design products that the consumers want. It uses its own version of an industrial internet to optimize lead times. Production speed and quality for instance is carefully managed by gathering data from each point in the system and synchronizing it with delivery schedules; both international and domestic. All this takes place in Fortuna’s proprietary business analytics platform. This allows bottlenecks in the production process to be dealt with quickly and shoes to be produced in a manner conforming to Just In Time (JIT) production. Similarly, textile mills that use real time monitoring of inputs, factory environment and output can rectify production issues ‘on the go’; helping them to minimize waste and ensure product quality.
For Fortuna Shoes, the system continues from the factory gate to the final sales point. Distribution spots communicate with point of sale (POS) terminals across Bangladesh and feed sales data into the company’s central analytics platform. This allows management to analyze sales patterns by parameters like location, timing, cross-sectional buying patterns and demographic wise preference characteristics such as age-shoe color, age-shoe type preferences and a whole host of other parameters. For example, when a certain type of shoe sells more in Sylhet, there can be interesting analysis made as to whether it’s something that’s in fashion in the UK (with the presence of a large Sylheti community in UK) so that upon validation, the company can bring in similar items and fill in latent demand which may otherwise have not been spotted.
Business analytics is being performed by emerging startups as well, especially in the domain of ecommerce. With commerce increasingly moving online, companies like Bikroy, Daraz, ZuumZuum and others have large amounts of data that they use to extract insights out of. This includes purchase and demographic data and various combinations of product preferences, stratified by age, gender, locations, income and many other metrics among other things. They can in turn use these bits of information to keep minimal levels of inventory and mitigate shortfalls at the same time, ensuring smooth operations and helping the business grow by effectively servicing existing customers, while accommodating for new ones.
In general, any business that has a presence online or keeps logs of transactions can apply business analytics to help their business grow. So firms ranging from traditional retailers to consumer goods producers to online businesses to institutions like hospitals or textile mills can use data to extract insights from their businesses operations and use the learnings to modify, evolve and better their business fundamentals and drive business growth.
Exciting times lie ahead of Bangladeshi businesses. In an increasingly competitive market with a target audience of 160 million, business analytics is going to be an increasingly valuable asset for companies to get ahead and stay there.
The article was co-authored by SM Shihab Siddique, an Associate at a consulting firm, and he can be reached at [email protected]. The article was primarily published at ICE Business Times and can be found here.
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