Question:
How to identify the need of storing data and analyzing the same to gain business insights for operational decision making for an organization?
This report identifies the need of storing data and analyzing the same to gain business insights for operational decision making for an organization that currently runs manual processes and does not maintain operational data records. The report is prepared after studying the business model of a manufacturer of sugar and related products called Zucchero Pty. Ltd. The report would analyze operations of the business to identify scope for improvement of its operational productivity. Excel has been used for modeling the data obtained from the company operations so as to develop insights that can be used by the organization for decision making. The idea is to illustrate the importance of using Business Intelligence in the business to achieve results.
Zucchero Pty. Ltd., a company founded by Luigi Dolce in 1959 in Grafton was a sugar mill refinery that generated its products from sugar cane produced by local farmers. In the following years, the company turned into a multi-million-dollar organization and penetrated Australian market with its exports. Today, the company has a large range of sugar products including raw, white, brown, icing sugar and so on.
The company however faces issues in handling its operations as most of its processes are manual and operational data such as sales trends, distribution information, promotion details, etc. are not documented making it difficult for the General Manager, Franka Spencer to analysis business performance and make appropriate decisions that can help the organization improve its operational processes.
In the face of changing technologies and modernizing businesses, companies face some contemporary challenges when adopting technology such as development of communication capabilities and ability to train the staff on the use of technology. As technology has to be learnt, companies used to manual processes may face huge resistance from employee who may be unwilling to adopt to the new technbolo0gy as this would demand hard work through learning. Another contemporary challenges that company can face with the use of technology is that they must know how to actual use the data obtained with the use of technolo9gy to develop right insights and not take decisions without proper analysis w3hich can both be time consuming and complicated to understand (Vaughan, 2000).
Certain business issues that are specifically faced by the organizations while amalgamation technology with their systems are concerns of business ethics, reputation management., and an understanding of practical implications of using technology on business operations.
Knowledge management drives innovation which is why most modern organizations re adopting it. The consequence of not having a proper knowledge management in place can leads to failures in big projects generating a vast pool of knowledge and data. Knowledge management practice simplifies the presentation of data in a way such that the company is able to achieve its business objectives through the use of the knowledge. Some of the benefits that company can achieve with this include minimization of mistakes and improvement in the service qualityInvalid source specified..
Knowledge Management generates intellectual capital for an organization and the value is realized with ability to share the information with employees, partners and customers. This knowledge is stored in databases of an organization which can be connected to a platform that can be assessed by these stakeholders to obtain knowledge about products, processes and so on. Knowledge has to be gathered organized and presented in such a manner that it is understandable to employees such that they can take appropriate managerial decisions based on it. However, in case of Zucchero, the storage of knowledge is lacking in the systems and employees have to depend on their own memories to understand processes and figures such that they can take appropriate decisions. This can be very challenging when they have to depend on a large amount of data and have to do things manually (Jelenic, 2011).
With knowledge management adopted by Zucchero Pty. Ltd., the information that about sales and other operations would get captured and the management, customers and staff of the organization would be able to make use of it through a single seamless platform. This knowledge can be used for making critical decisions for the organization.
Further, use of business intelligence would allow company to make use of the collected data through the knowledge management solution to develop insights that would be useful for making decisions about operations that are critical to the organization. How this can be done is presented through an example in the next section in which a sample data of the company is taken and mathematical modeling is used to derive information that can be used by Zucchero Pty. Ltd., for making important operational decision. Here, Microsoft Excel is being used as a BI tool but there are many other tools available in market that can be used by the organization for business intelligence gathering.
Data forecasts are done using Excel as BI tool which can help managers take appropriate operational decisions for Zucchero.
As the forecast data about overheads above suggest that with every subsequent year, overheads are increasing along with the per unit cost price. In such case, if the per unit selling price also increases appropriately to be able to sustain profits, the respective product categories could be considered a profitable while for those leading to losses, the managers would have to take appropriate decisions on whether to continue with the production of the category or increase selling price of the product in the market.
To understand if the variations in costs and selling prices are helping products sustain profits or incur losses, the variation in volume sales may be explored as increased sales would mean balancing of costs and attaining profits while decrease in sales can lead to losses for the organization. In the current case, Icing Sugar is giving most profits with growth of 41% in one year. Other products that are helping company see growth in revenues include Raw Sugar, White Sugar, White Sugar cubes, and Golden syrup. On the other side, demand for Brown Sugar, Caster Sugar and Treacle is reducing which suggests that company should not spend much of its revenues on these products.
When calculating revenues for each product categories for three subsequent years, further insights are revealed. Revenues gained from most products including Raw Sugar, White Sugar, Icing Sugar, White Sugar Cubes, and Golden syrup are on increase but revenues obtained from Brown Sugar and Teacle have significantly reduced again suggesting loss of sales.
To explore if only revenues are decreasing or the trend is lower also on the side of profits, it would be appropriate to calculate net profit and net loss data which is plotted in the chart below:
The Chart clearly shows rise in profits for Raw Sugar, White Sugar, Icing Sugar, and White sugar cubes but reduction of profits in case of Brown Sugar and Treacle. The net loss in case of Treacle is small but Brown sugar is showing significant losses in revenues.
As the demand for brown sugar is reducing as well as it is incurring loss of revenues, the management may take a decision to stop producing brown sugar. However, the product still has a significant amount of consumers and thus, it may not be discontinued completely. However, the company can increase the price to balance the gains. Consumers who are in need of brown sugar may still make purchases at higher costs and the revenues would be improved. However, this has a risk of losing on some of the consumers who may shift to the competition selling the product at lower price. However, the figures of losses analyzed in the graph above would still justify the move.
BI can also help company take decisions on marketing such that most marketing efforts are put in for products selling most in the market. Thus, a comparison of average, minimum and maximum selling products would be helpful here.
It has been found from the analysis that Treacle has been providing minimum profits among all categories consistently during three years while Caster Sugar has been profiting on an average level throughout. Brown sugar sees a continuous increase in losses. The contribution of Treacle to overall sales is so less that a decision can be taken to discontinue the product altogether.
Five prominent market forces are being defined by Michael porter that can affect the strategic positioning and decisions of an organization and these include bargaining power of buyers and suppliers, competitive rivalry, threat from new entrants and substitutes. For the purpose of this study, the bargaining power of suppliers would be explored in this section as they are the key to working of this organization. The decisions they take on pricing directly affect the final; pricing that the company can offer to its customers. The bargaining power of suppliers in case of sugar products is moderate as the suppliers are mainly farmers who have to sell their products to companies like Zucchero with only aim to get best pricing. They can decide on which company to sell based on the pricing they get and thus, they have some bargaining power. However, at the same time, there are limited organizations with huge requirements of sugar as raw material and those are able to pay suppliers well and thus, they have only moderate power of bargaining with these organizations.
Social Media has been used by almost all organizations promoting their brand in the digital space. Social media is used to engage consumers with a brand and create awareness about it by reaching out to more and more people through the digital spread. Use of SEO makes the website of a company searchable in the online space such that people using social media can search and get to the brand when they search for a specific category sold by the company, Social media platform can build upon more traffic to this website thereby allowing people to share the pages over the media with others. Voice of consumers can spread fast over social media.
When considering knowledge management, the data about the company and its operations including its customers is stored which may also include some personal identifiable information which if leaked can be of dangerous consequences. When the company uses a knowledge management system connected to a portal, the company has to ensure that the personal information is not revealed besides the need for login and personal exploration by the users. When the company would have the personal data of customers, besides having the threat of leakage, the company itself can misuse the data through employees. Thus, code of ethics should be followed by organization such that customers can trust them on their privacy.
The main business of Zucchero is sale of sugar products. If the company has to adopt technology for promoting their business online through establishing digital presence, the company may be faced with some data related security threats. The data about the company sales, revenues, profits, customers, sales, etc. can get leaked to the world. IF the information about the business and marketing strategies get leaked out to competitors while it is being shared online, it can lead to business losses.
Thus, data systems have to be prevented from such losses and thefts thereby stopping unauthorized access. Infection through malware or other techniques used by cyber criminals can lead to disclosure of such data to public or to those who can misuse the data. Several other types of attacks have been observed to be happening on knowledge databases such as Distributed Denial of Services that can cause convenience to internal people and the customers of the organization. Most of the customers of the organization are other business customers who can get affected in turn.
A prominent threat that can affect Zucchero is zero-day-attack as the company would be starting to adopt technology solutions and develop knowledge management and BI tools for fresh use. With less experience, there are chances that attackers can identify vulnerabilities and bugs to compromise network and machines of the organization.
To prevent systems from getting attacked, the company must take licenses for installation of antivirus in all connected machines. Additionally, the company must follow certain internal security policies and implement firewalls to prevent critical data from getting outside the intranet of office. A strong security architecture would further be require to prevent machines from getting affected by major attacks like Bots. Email security is another measure that company may take in order to prevent data from getting leaked or lost in the transit while employees share the same over emailInvalid source specified.
When coordinating physical logistics processes, information is generated and the same is shared with the people across supply chain to be able to coordinate physical movement of goods. When the raw materials are received, converted to final products and transferred to customers, the information flows through different departments. This information is accessed and shared by all parties into the supply chain. For instance, when a customer orders a product, the information reaches sales people who in turn transfer the same to manufacturing department who propel the same to suppliers for procurement and thereafter the actual operational processes begin. Throughout the journey of product in the system, customer would like to know when the goods are ready, when are they shipped and when they would be reaching them. All this information would be generated at each stage of the supply chain and can be made available to customers through an appropriate supply chain management system in place. A supply chain system of today is thus, more of a management of information than actual physical movement of goods.
The information that is captured, generated and maintained for the use of customers, employees and management for decision making about supply chain networks can be huge and can be about shortages, plant capacity, inventory, sourcing, manufacturing, distribution plans, schedules, forecasts, shipments, deliveries, and so on. Each of this information can be used by management for taking decisions at various stages.
For instance, if it is found through the information that there is a shortage of highest selling product which in this case is Raw sugar, the management would take a decision of replenishment through fresh purchases in case the demand increases. In the same way, if the company realizes that the demand for certain product is expected to be low in near future, the procurement orders may be reduced for the case.
Supply chain systems are established using technology that can help organization in management of inventory, transportation, procurement, material handling, order processing, customer service, production planning, sales forecasting and so on (Zigiaris, 2000).
Conclusions & Recommendations
This report was constructed with an aim to understand the business processes and challenges of a real organization and make recommendations on potential for improvement through the sue technology in the organization. The chosen organization was a food organization called Zucchero Pty. Ltd. that was producing sugar based products. It was found that the major challenge before the company was maintenance of the information generated in day to day operations that was maintained only manually and thus, top management could not keep track of the same. It was found that if the company had a knowledge management system along with BI capabilities in place then many of the business decisions could be simplified. The same was illustrated using an example through the use of Excel for BI. The study also suggested use of supply chain management technology for simplification of their processes and to capture information that would be used for BI for bettering supply chain capabilities of Zucchero Pty. Ltd.
References
Jelenic, D. (2011). THE IMPORTANCE OF KNOWLEDGE MANAGEMENT IN ORGANIZATIONS – WITH EMPHASIS ON THE BALANCED SCORECARD LEARNING AND GROWTH PERSPECTIVE. Management Knowledge and learning International Conference (pp. 33-43). Serbia : ISSBS.
Vaughan, P. J. (2000). System Implementation Success Factors; It’s not just the Technology . University of Colorado.
Zigiaris, S. (2000). Supply Chain: dissemination of innovation and knowledge management techniques. INNOREGIO.
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