The Business of Big Data: Operations

Throughout the month of March, G2 Crowd’s research department will share our insights around the topic of big data. Check back here, on the blog and on our social channels to read the latest.

This big data miniseries examines the way an imaginary toy manufacturing company, “Big Toy,” uses big data within its various teams: operations, product, sales and marketing. While the company is not real, its uses for big data are like those at real businesses around the world.

ERP Systems have long been monolithic, expensive, on-premise, legacy products that are crucial to the operations of manufacturing businesses. In recent years, the push to modernize ERPs by hosting them in the cloud and offering granular modules to better fit a company’s needs has been the main agenda of the software vendors in the space. With these modernizations, vendors and users alike have discovered ways to utilize the massive amounts of data produced by the wide-reaching systems. ERPs touch on various business aspects, such as accounting, budgeting and forecasting, inventory and demand management, and distribution, so the big data produced by each of these areas can overlap to create more practical, efficient and profitable business actions.

Properly analyzing big data and taking action on data discoveries is the true value of the big data explosion. For a company like Big Toy, which manufactures and sells a long list of products, ERP data can provide end-to-end business insights. By interacting with all business aspects, operations can directly impact the goals of nearly all departments in the company.

Supply Chain Optimization

A major benefit of utilizing big data from ERP systems is the increased efficiency of supply chain management, which is generally a difficult process to organize. With the help of big data, a company such as Big Toy can more accurately estimate the demand for each of its products. Volume forecasting can be drilled down based on historical data, predictive analytics and market trends. With accurate demand planning, it allows Big Toy to plan sales prices, optimize inventory and, ultimately, profitability.

Inventory management is aided by real-time data recorded by an ERP system and helps prevent product surpluses or shortages. Also, if the company is going to go over or under its optimal inventory numbers, it is alerted sooner, allowing employees to take action against any major profit losses or other issues. This process of optimizing inventory has long been done manually by using historical data and estimates, but with the help of real-time data, businesses can practically automate the process and stay current with their numbers.

Once Big Toy produces each individual product, it then distributes to a variety of stores. Using big data, it can geo-target specific stores based on its target buyer in that area. This information may include the amount of families in the area who have children that may want their toys, or even toys aimed at specific demographics that make up the neighborhood, town or city. Beyond microtargeting, distribution can be effected by outside factors, such as weather, which may impact delivery; big data can assist in preventing delays. Also, product tracking is much simpler with increased barcode scanning capabilities, which allows companies to granularly track each product.

Accounting and Corporate Performance Enhancements

Each of the supply chain improvements made with big data directly impact other operations departments, such as accounting and corporate performance management. By taking in the massive swaths of data from its supply chain modules, Big Toy’s accountants can record which products are selling and which products are lacking, allowing them to pivot quickly if needed. This exact historical data can also allow for better budgeting and, with the help of further predictive analytics, more precisely forecast profit estimates. Combining historical financial data with projected market trends is another advantage of big data. With more exact budgets and forecasts, operations departments can give C-level executives accurate insights, providing them ample opportunity to make changes if necessary.

This sort of transparency is what ERP vendors originally sought out to achieve when they started selling the giant, on-premise systems way back when. However, with the help of big data, users are finally able to achieve the level of transparency that can benefit the range of functions connected with ERPs.