That’s a lot of data, and a lot of it is valuable. There are some upfront costs when it comes to implementing business analytics tools in your company, but the cost reduction potential is enormous. There’s practically no area of your business where you can’t cut costs with business analytics. Harnessing the power of business analytics to help you parse the wealth of data at your disposal can help your company identify opportunities to reduce risk and fraud, improve manufacturing processes, streamline operations, and more.
Lower Risk and Eliminate Fraud
How can business analytics reduce third-party risk and slash fraud? By analyzing past patterns of customer and vendor behavior and spending habits to identify anomalous activities that could be fraudulent. Banks and credit card issuers use analysis of previous purchasing patterns to identify purchases that might not fit the pattern — and they save themselves and their customers a ton of money by flagging and checking up on these transactions, even when many of them turn out to be perfectly legitimate.
You can also use predictive business analytics to assess the risk presented by a specific vendor or customer. Predictive analytics is an important part of what goes into third-party risk assessments and vendor security ratings, for example. Assessing vendor and customer risk through predictive analytics is an important tool for cost reduction through business analytics.
Improve Manufacturing Processes
Can predictive analytics help you cut costs in manufacturing? It can. Intel has been using business analytics to lower manufacturing costs since at least 2012. Each computer chip Intel manufacturers is subject to an exhaustive litany of about 19,000 quality control tests, but by analyzing the past results of these tests on past batches of chips, Intel has been able to reduce the number of chips that need this extensive testing. Now, instead of testing every chip, they can just test the chips that need it. This saves time on testing and cuts costs without sacrificing quality.
Streamline Shipping and Logistics
Shipping and logistics can be a huge financial drain on a company — between shipments that get lost or arrive too damaged to be useful, you can lose a lot of money to shipping damage alone. Then there’s shipping delays, fleet costs, manpower costs for tracking and managing inventory — the costs just keep adding up.
But data analytics can do a lot to help you reduce shipping and logistics costs. Take fleet costs — you can use fleet tracking tools to collect data on your vehicles, including routes, fuel consumption, and driver behavior. Perhaps you find that drivers are driving erratically, using a lot of fuel, and still struggling to deliver their shipments on time — because they’re using a route that hasn’t been reviewed in recent memory. Maybe that route has a lot of road work on it, or there’s a more direct route that was built more recently. With the data at your fingertips, you’ll know that changing your delivery route will give drivers more time, allowing them to drive better, use less fuel, deliver their shipments on time, and feel less tired and stressed as they go through their days.
Boost Employee Engagement
Voluntary turnover is a huge expense for most businesses. It costs $15,000 just to lose one employee to voluntary turnover.
How can data analytics help? You can use predictive analytics to examine the pre-hire data available from employees, and make better choices for new hires that will integrate seamlessly and feel engaged enough by the company culture to want to stay. You can use employee satisfaction surveys to gather data about what is and isn’t making employees happy and what might be making them consider other employment. This data can help you make changes that could convince employees on the fence to stay a little longer.
Implementing business analytics might have some upfront costs, but they’re well worth it for the cost reduction that integrated analytics can bring. Harness the power of business analytics to make better business decisions regarding new hires, inventory, shipping and logistics, manufacturing, and more, to help your company thrive in the new age of data.
Author | Emily Forbes
An Entrepreneur, Mother & A passionate tech writer in the technology industry!