Magazine article Management Today

The Latest Intelligence

Magazine article Management Today

The Latest Intelligence

Article excerpt

Monitoring sales in the market for fast-moving consumer goods is a bit like trying to keep track of individual grains of sand as they slip through your fingers. The more products you have, the harder it gets: add special offers and discount schemes and the sales monitoring task can quickly become a nightmare. It may be impossible to spot a flopped promotion until several weeks after its launch.

But at HP Bulmer, the UK's largest cider-maker, sales managers will soon know the precise profit position for some 200 products. Whether they want to find out how 440ml cans of Strongbow are doing at Tesco, or how bar sales of Woodpecker are matching up to anticipated demand in Whitbread pubs, the answer will be available via a few clicks of their computer mouse. Special offers that have failed to attract buyers will be clearly visible onscreen. The innovation is not so much in having the data as in being able to access it, says Martin Wynn, Bulmer's IT director. Many companies have this type of information somewhere within their organisation, but typically it is buried in someone's filing cabinet or on their PC, says Wynn. The problem is retrieving and making sense of it to spot trends and changes in your business.

Computer experts have long striven to develop software tools that would help users access hidden data, but so far most of their efforts have only appealed to a small number of managers. Decision-support systems and financial modelling packages, introduced in the 1970s and '80s, were too narrow and technical for general purpose use. Then, in the early '90s, the Executive Information System (EIS) appeared with its snazzy graphics, touch-sensitive screens and colourful highlighting. The EISs aimed to filter corporate data and present relevant information to busy non-technical senior executives. But they were still too inflexible for most managers and when Microsoft's Windows caught on, the graphical screens of EIS began to look old-hat.

The software industry's latest answer to the hidden data problem is On-Line Analytical Processing (OLAP). This time, experts believe, the technology could be capable of delivering what users have so long been waiting for. OLAP gives fast, friendly access to potentially colossal stores of data sliced and diced however you want. You can view and analyse your businesses in whatever way is most convenient, totting up totals as you wish. For example, sales can be aggregated for any period, product, customer, salesman, or invoice date. This lets you make comparisons between this year's output and last year's, your product and your rival's, or one factory's performance with another's. If you want to examine a specific area in more detail you can `drill down' to see how the figures are made up.

It is the tremendous power and sophistication of today's hardware and software that have made OLAP possible says Nigel Pendse, author of The OLAP Report, published by Business Intelligence. `In the past, there simply wasn't enough number-crunching power to handle all the variables.' Pioneering OLAP-users seem to agree, and sales are soaring. According to Pendse, the worldwide market for OLAP packages and consultancy this year will be around $700 million, an increase of 40% on last year. Commercial applications range from deciding whether to close down factories to spotting which products are so lucrative that they are vulnerable to attack from rivals. In the public sector, OLAP is being used for manpower and budget planning and to measure the effectiveness of products and services.

For companies in the consumer market, where there is a constant pressure to reduce margins, OLAP can provide a sharp focus on profitability. This has been its key role at Bulmer. `It gives us a greater understanding of shelf value, product positioning, and profitability by individual item,' says Wynn who is using an OLAP package from the US-based software house IRI. Sales managers can examine the profitability of individual product lines for each of the company's top 60 customers, that is, 80% of its business. …

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