Using Analysis to Fight Uncertainty

MGMT3D > Using Analysis to Fight Uncertainty

3 Ways EBM Catalyst Can Help You Get Critical Data for Better Decisions.

Just a few short weeks ago the idea that most of the country would be working from home (or not working at all) would seem like crazy talk, but yet, here we are. The COVID-19 pandemic has made for a difficult time the world over, but it has also been an eye-opening experience for many businesses.

These businesses will no doubt be left with tough decisions to make in the weeks and months ahead, with potential interruptions or reductions to cash flow and production, among other things. Having granular insight into your business is becoming a necessity. You need to be able to spot risks and opportunities faster than ever before; and formulate contingency plans in the face of extremely rapid change.

Our clients have been using Catalyst by EBM Software to make changes like this for years, and this week we’d like to share with you a few examples of ways the software can enable good decisions that may help protect profitability in the face of modern uncertainty. This uncertainty isn’t just limited to the coronavirus, but also other factors like international trade policy and general economic uncertainty, as well. At the end of the day, being prepared is just smart business.

Analyze the profitability of Your SKUs

The profitability of individual SKUs is a blind spot for many businesses. Catalyst’s Profitability Cube allows you to drill in and very quickly understand which items (and customers) are making you the most money and which SKUs aren’t making you as much money as they should be.

This is a great exercise to go through, regardless of conditions out in the world, but with uncertainty about future quarantines from waves of coronavirus (or another pandemic), it could very well be a life and death exercise for a business.

Say you are in manufacturing, for example. Conditions like the current quarantine or natural disasters could put severe limits on production line time. Wouldn’t you want to ensure that the products you are producing are the ones that will make you the most money at the end of the day?

Just within the last couple of years, one of our manufacturing clients was able to reduce their SKU count by about 25-30% while making significant growth in their EBITDA. Catalyst empowered this decision-making process by giving them a clear view of each SKU’s profitability. If your back was against the wall, wouldn’t you like to have that same level of insight?

Analyze Your Bill of Materials

One potential area for vulnerability for many companies is the complex international supply chain leading up to your products. As we’ve seen in the recent trade war with China, and sadly, again in the COVID-19 pandemic, relying on critical supplies from other countries can be a risky proposition.

For some industries, this is particularly difficult, consumer electronics for example. Assembly is often outsourced to China. Even products that are proudly made in the USA are often packed with parts that originated in China. In the case of the trade war, tariffs caused the COGS associated with the products to fluctuate wildly. And now, the problems have become even more painful with many parts and products hung up in China indefinitely.

Of course, getting surgical with the bill of materials and re-sourcing parts or assembly has massive implications on the cost of the product. You’ll need good data to properly analyze the impact of costs vs. potential risks. Catalyst allows you to see everything in one place, explore potential variables inside the bill of materials and make more fully baked decisions at the end of the day.

Pandemics and international trade policy aside, this level of visibility is important and often overlooked. We once had a client who was being charged $2.00 apiece for packaging that was supposed to cost $0.20. Once Catalyst came into the picture, we found the issue immediately, and our client went back to the vendor and got all their money back. You don’t know what you can’t see. Catalyst brings all your data together into one location, so you can instantly see the impact of variables like pricing changes, shipping cost and more on your bottom line.

Get Better Reporting Faster

Your monthly reporting is obviously one of the most important pillars of understanding your business. The problem is, the process often takes so long, you don’t have time to properly analyze the data it yields. It’s hard to make good decisions off of data you barely have time to look at.

Catalyst’s reporting functions give you more depth faster. Catalyst saves you all the time spent consolidating and tying out data by tapping your most granular levels of data directly and using that to formulate your monthly reporting. Everything is 100% accurate and 100% drillable, and it’s ready as quickly as you can hit refresh.

We often see clients reduce their reporting cycle time from two or three weeks to just a few days, and at the end of the day, they have better, more accurate information in a time frame where it’s much more relevant to the business. Now, more than ever, you need to be able to catch things quickly and have the data to back up these important decisions.

Of course, there is so much more in terms of planning, budgeting and forecasting in Catalyst, which could also be helpful in this scenario. We wanted to keep this week focused on some potentially helpful analysis tools for people who are still learning about the software. Don’t hesitate to reach out to our team if you have any questions.

What measures are you taking to protect your business in these uncertain times? What kind of data would help propel your decision-making process? We’d love to hear what you think. Sound off on social media now and join the conversation.