THE CREATIVE USE OF DATA

• November 16, 2023
• Adrienne Botha
• no comments

Using management information that is available to you for different application is unfortunately not a practice in businesses. The topic for this blog reveals hidden gems in data and how to maximize the data to its fullest potential. I believe that every medium to large size business should have a Data Champion – a person who knows the business intricately and who can make change across silos –   a tool to boost profits.

In line with my brand promise to you and to gain practical understanding as to various scenarios where this principle will apply, I provide you with real-life examples from personal experience.

Consider the vast amount of work done by software installers. Their process is usually, or should be, to process map existing processes to align with their product offering to that of their customers to ensure that the customer obtains full benefit of the product. Process mapping in this instance should also highlight a lack of vital controls in a business. I have never witnessed an IT department take an active stance in sharing this information with the various teams in the business.

Many businesses that I have worked with are not aware of the power of ‘hidden’ information contained in data. I have worked with companies who were in a state of chaos. This was evident from the fact that phones were ringing constantly, people were running around in a state of panic and other factors. After restructuring and by aligning processes to the IT offering, by automating certain procedures and by streamlining processes, the chaos dissipated, almost instantaneously. The sales team and customers were delighted with the ease of doing business and the improvement of customer service levels.

It was then possible to concentrate on working on the business and not in the business. Initially the owners thought that they were losing customers as the organized state was an unknown phenomenon to them.

An Accounts Receivable book contains powerful information. It reflects organizational reasons for non-payment of customers resulting from operational inefficiencies but does not include instances of financial mismanagement. After analyzing data for periods, I had to recommend to my client that they dismiss certain staff members. The analysis revealed that improper and fraudulent practices were taking place. Certain staff were working in collaboration with the sales team. They were crediting invoices on the same customer account and were re-invoicing the amount to hide the overdue status of accounts. This allowed them to continue to earn commission and to reach their sales targets. Often this ‘practice’ also hides the fact that they had not managed customer purchase orders. There are many areas where analysis of your debtors’ books can assist you in taking your business forward.

Customers utilize the principle of purchase orders for valid reasons – they control expenditure. It is also a mechanism used to ensure compliance with their Supplier Policy. Absent a purchase order, and should the supplier dispatch goods to the customer, the customer will simply not pay that invoice. It has become prevalent in recent times in big corporations to shift responsibility of trade compliance from their purchasing departments onto the supplier. Sadly, I have witnessed many smaller organizations fold because of attempting to deal with the bigger corporations. Apart from the fact that you need a large cash flow to fund their business, you also need to ensure that your systems are operating effectively and that they are aligned with the customers’ policies. Remember to check the fine print on purchase orders – I have had occasion to reject purchase orders as the terms and conditions were all one-sided, placing onerous and unreasonable duties upon the supplier. Certainly, I knew that the operations division of the business could not comply with all the stipulations contained therein.

The practice of utilizing manual delivery notebooks should be banned in every organization as they have the potential to promote malfeasant behavior and practices. A myriad of errors is hidden in these books. Take for example the situation of a factory producing bad quality or incorrect orders. Replacement stock is delivered to the customer on a manual delivery note to avoid a credit note being processed, which will reveal the errors. This results in wasted and unsaleable stockpiling up in a warehouse, with a business owner not being aware of the lack of quality control in the factory. I have also witnessed the sales team sending goods to customers whose accounts were on credit hold due to non-payment, by utilizing a manual system. These manual delivery notes have the effect of causing your internal controls to collapse.

Delivery Records – these need to be tracked to ensure that there are no instances of the same order being ‘dispatched’ on numerous occasions to the same customer. Whilst working with a company, I analyzed their records and ascertained that the truck drivers were recalcitrant in fulfilling their duties. There were no trackers on their vehicles which meant that I could not match the data to a tracker device. What transpired is that they were gadding about on personal errands instead of doing company deliveries – escalating the fuel and running costs of the fleet to unacceptable levels. They were also being paid overtime! This also had a negative impact on the customer service levels. Often, the same delivery was reflected in the reports as having been delivered six times.

After analysis of delivery notes for a medium-sized retail business, I ascertained that the same invoice was being used on multiple occasions to draw stock from the warehouse. The stock was then sold and invoiced under a different company’s name, for the staff’s personal gain. This practice had been ongoing for a long time. You are probably wondering where the stock system and the dispatch team were with this going on – well, they were all in on the scam.

I had the privilege of Chairing Disciplinary proceedings for a company who employed six hundred staff members. Because I knew the operations of the company, I was able to discern fact from fiction. My findings often exposed gaps in processes in various departments and lack of managerial ability. I would use this information to assist the relevant manager in implementing policies and procedures. Let us take a moment to consider the negative consequences that this had on staff members who were subject to this process!

The issue of unconverted quotes is an interesting one   – meaning that sales enquiries do not translate into a sale transaction. I analyzed unconverted quotes over a period and fortunately the information contained in this report greatly aided in increasing the sales value of the business. Valuing the business on an Earnings Basis will significantly give you bargaining power, as this reflects opportunity lost.

 A production supervisor was earning sales commission on certain deals. Apart from the obvious segregation of duties aspect, this person was adjusting pricing to customers without approval. On some occasions and in fear of losing business, he agreed to drop the price of product already delivered to customers over a period. He would then instruct the admin department to process credit notes – which they did without question. The value of the credits processed was significant. The one credit that comes to my mind was for an amount of R200k. How you measure people is how they behave. It is an unintended consequence of an ill-thought, good intention.

Management reports should be expanded to include operational reports. This is one of the most important tools of a business. The secret is knowing what reports to design to maximize results. I hope that this blog encourages you to view your data creatively.

Thank you for reading this blog. Stay tuned for more insightful discussions on boosting your business’s success. Join us next week, and let’s keep growing together! And don’t forget to listen to my podcasts for in-depth insights on leadership and related topics.