Based on McCormick’s industry environment, business drivers, strategies, goals, and business design, the following Business Intelligence (BI) opportunities can be idenitified. Each would help McCormick improve profit and performance.
- Product development BI. Examples include sales trends by consumer end product categories such as beverages and baked goods, sales trends by McCormick customer and by McCormick ingredient product, and gross margin and volume trends for McCormick products.
- Customer service BI. Examples include customer profitability trends by customer and by consumer end-product category, such as dairy products and baked goods, and customer-specific order history, including order line volumes, frequency of orders, frequency of order changes, and order fulfillment metrics.
- SCM BI. Examples include demand history by McCormick product and by customer, supplier scorecards for McCormick suppliers, inventory levels by McCormick product and by customer, and performance metrics such as order-tocash cycle time, order-to-ship cycle time, and percentage of perfect orders.
- Manufacturing BI. Examples include batch yield history by McCormick product and plant, batch cost history by McCormick product and plant, quality trends by McCormick product and plant, and batch setup and changeover time trends by McCormick product and plant.
- Financial planning and control BI. Examples include forecast versus actual order volume, prices, and mix by McCormick product and by customer; forecast versus actual revenues by McCormick region, product, customer, and salesperson; and forecast versus actual gross margin by McCormick product and plant.
By systematically working through the BI opportunity analysis framework, we have identified specific BI opportunities for McCormick. By investing in one or more of these BI opportunities, McCormick would have better business information and analytical tools to inform key business decisions that drive increased profits. For example, industry consolidation puts pressure on profit margins.
McCormick has chosen to respond to this challenge by adopting a strategy of supply chain collaboration, which seeks to drive costs down by using IT and business process improvements to improve operational efficiency. Toward that end, having SCM BI and customer service BI would allow McCormick manage the key variables and processes that determine supply chain costs, time, asset utilization, service, and quality—all of which contribute to the ability to maintain or improve gross margins in the face of margin pressures.
The McCormick BI opportunity analysis case study illustrates how your company could go about identifying actionable BI opportunities. The process does not stop there, however, as you then need to prioritize those opportunities based on business impact, risk, and project interdependencies. The next part of this BI opportunity analysis overview describes a straightforward method for prioritizing your BI opportunities.
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Figure above shows the continuation of the BI opportunity analysis from the point of having identified opportunities of business-driven BI value creation to the point of having used a portfolio of BI opportunities to create a BI opportunity map. The BI opportunity map is a conceptual framework aimed at prioritizing BI opportunities based on what amounts to a risk-reward tradeoff.
The opportunity map should not be thought of as a deterministic model, although opportunities are present to use multi-factor quantitative and/or qualitative analyses to support project placement on the business impact scale and/or the risk scale. Rather, the BI opportunity map serves as a basis for riskreward tradeoff discussions between the business and IT leaders and managers who collectively have to sponsor, execute, and leverage the contemplated BI investments so that business value is created. To illustrate the use of the BI opportunity map, let’s continue the analysis of the McCormick case.