The document summarizes a business analytics forum hosted by DeeperThanBlue Analytics. It discusses using various types of data and analytics tools to analyze a steel company's sales, purchases, labor costs, and profits. Examples are provided on enhancing standard sales analysis with economic forecasts to predict trends and inform strategic decisions. The forum also explores analyzing customer profitability, labor efficiency, and linking planning tools like IBM Planning Analytics to coordinate sales, production, purchasing, and labor plans.

1. #BAForum
Chris Booker – Sales & Marketing Director
Simon Harrison – Operations Director
Richard Wilkins – Analytics & Services Director
David Fearne – Global BI Leader - Arrow ECS
16th November 2018
BUSINESS ANALYTICS FORUM

2. #BAForum
Introduction to the forum
• Welcome
• Introductions and Bios
• About DeeperThanBlue / Analytics
• Aims, objectives
• Future schedule, frequency
• Range of guest speakers
• Industry experts

3. #BAForum
10 Types of Data and how it can add value
Simon Harrison Richard Wilkins

4. #BAForum
SalesBuying Patterns
Surveys &
Reviews
Economics
Customers
Operational
Employees
Financial
Social Media
Procurement

5. #BAForum
See, Plan, Predict
• See: What Happened? Why?
Cognos, Excel
• Plan: What we want to happen?
Planning Analytics
• Predict: What will happen
SPSS Modeller, Watson
Data Studio, R, Python
Data Capabilities
Databases, Data Warehousing and ETL

6. #BAForum
Industry example: Background
• Sheffield based specialist steel products
company
• Provide metal products to industrial business
segments inc. the Oil & Gas, Mineral Extraction,
Engineering, Agriculture and Medical Services
• Annual turnover of £3 mil approx.
• 30 employees in 2 locations, operating for over
20 years
• UK and international customer base of approx.
180 customers
• Main reliance on Oil & Gas with smaller customer
share for Agriculture

7. #BAForum
Industry example: Analysis Focus
3 main success drivers or
points for analytic focus are:
• Sales (Total Income)
• Purchases (cost of raw
materials)
• Labour
Direct
Materials
40%
Direct
labour
20%
Overheads
20%
Net Profit
20%
Cost / Profit Breakdown

8. #BAForum
Initial Analysis: Standard Sales Analysis
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
2016 2017 2018 Forecast
Sales£
Gross Sales by Year
Oil & Natural Gas Extraction Engineering & Metal Goods
Other Medical / Dental
Agriculture Extraction

9. #BAForum
Initial Analysis: Standard Sales Analysis
Summary
• Standard Year on Year Analysis
• Shows strong growth in key
sectors
• Limited Benefit
• Factually based but gives no real
context
• Doesn’t actually analyse
performance
• Little strategic value

10. #BAForum
Sales Predictions
• By breaking out the seasonality
and underlying growth in our
sales data we can predict sales
• This should be done per sector
or better still by each significant
customer to give more accuracy
• Controls need to be in place to
set minimum data quality
thresholds, and rules defined to
set sensible baseline defaults
when required
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Seasonality
2016 2017 2018 Median
-
50,000
100,000
150,000
200,000
250,000
300,000
Sales Prediction
Actual Predicted

11. #BAForum
Initial Analysis: Enhancing Sales Analysis
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2016 2017 2018 Prediction 2019 Forecast 2020 Forecast 2021 Forecast
Sales£
Sales By Sector with Three Year Forecast (Using Economic Forecasts)
Oil & Natural Gas Extraction Engineering & Metal Goods Other Medical / Dental Agriculture Extraction

12. #BAForum
Initial Analysis: Enhancing Sales
• By bringing in economic data, and forward predictions
we can show an broader view
• We can plan for predicted demand decreases
• Drive strategy into the relevant markets
• We know 80% of the growth has come from the Oil &
Gas Extraction, increasing dependency, yet of our
sectors it’s the one most likely to suffer a fall in output
• Analysis of the economic forecasts in these industries
shows that this might be the wrong strategy
• By modelling these outcomes we can shift some focus
to stronger growth areas and take advantage of demand

13. #BAForum
Customer analytics By analyzing customer profitability we
can determine the correct strategy for
each of the key customers /
segments:
• Does the right amount of time
get given to each customer /
segment?
• Are we suitably diversified to
mitigate risk?
• Do we have the right mix of
new customers and existing
customer development?

14. #BAForum
Management Actions following analysis
• Increased trade show presence – attendance at
Engineering and Medical shows for the first time
• Upgraded website – product segments, webforms, look
and feel, product photos
• Started to use social media – YouTube promo's,
LinkedIn
• Forming solid business partnerships to cross sell
product lines
• Increased pre-sales efforts in international markets to
combat erratic Oil & Gas markets and to decrease
reliance on main 2 UK based clients
• Possible use of Invoice Financing Drawdown facilities,
utilising the banks credit risk methodologies to assess
viability of existing customers

15. #BAForum
Purchases analysis
• By analysing the high level breakdown of commodity
requirements we can analyse the effect of the input costs
into the business, we can also determine that the latest 10%
cost increase has not been passed on is sell prices,
contributing to increased sales
• By linking the high level material requirements to the sales
forecasts, we can decide on optimum stock levels, for
different scenarios
• By carrying the correct level of underlying stock we can free
up capacity to take advantage of beneficial buying prices and
market opportunities

16. #BAForum
Purchasing Management Actions
• Purchasing in line with the sales
predictions, allowing:
• Purchases at lower price with market monitoring (Medium to
long term)
• Short term stock purchasing with current upswing (and
predicted continuation of upswing) in raw material costs
• Seasonality related stock holding meaning
guaranteed purchases with discount
• Any savings in purchase price feed straight
into profits, saving 10% on costs equals a
20% improvement in profit

17. #BAForum
Labour efficiency analysis
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
0
500
1000
1500
2000
2500
2016 2017 2018 YTD
Labour % of Sales
Sales Labour % of Sales
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
-
10,000.000
20,000.000
30,000.000
40,000.000
50,000.000
60,000.000
2016 2017 2018
Labour Productivity
KG Hours Productivity

18. #BAForum
Labour efficiency analysis
• Typical analysis starts with labour cost as % of sales, which shows a strong improvement
• But in a business where direct labour is a significant cost element then a more integrated
solution is required to find the real opportunity
• We need to identify what drives labour hours and cost separately
• Use the drivers to assess labour efficiency (hours), is there enough flexibility in the system
to cope with demand changes through the typical year
• Lead on to using efficiency and volume plans (from sales / production plans) to set realistic
labour plans, ask leading questions from HR, have we got the right blend of skills,
bottlenecks, correct strategy in place to retain / develop the right levels of skill

19. #BAForum
Labour cost analysis
• Use the costs v economic data for the area to measure whether pay rates
are competitive and in line with strategy
• Wage rates – look at using economic forecasts to assess future pressure on
wages
General Economic Indicators 2015 2016 2017 2018 2019 2020 2021
Indexed
Consumer price index 100.0 100.7 103.4 106.0 108.0 109.7 111.5
Costs, unit wage costs, manufacturing, nominal 124.1 127.1 128.2 131.1 132.3 133.3 134.5
Costs, unit wage costs, whole economy, nominal 108.9 111.0 113.7 116.3 118.2 120.3 122.5
Prices, producer index - manufacturing, all goods 106.6 107.1 110.7 113.8 117.0 120.1 123.6
Retail Prices Index 258.5 263.1 272.5 281.9 290.7 299.1 307.9
Retail Prices Index excluding mortgage interest payments 258.1 263.0 273.0 282.1 289.4 295.7 302.5

20. #BAForum
Management Actions Labour
• Minimalisation of overtime due to predicted sales and
seasonality (efficient use of time)
• Implementation of shift pattern at predicted stress
points in manufacturing process.
• Budgeting for pay increases based on economic
(inflation) forecasts
• Any savings in labour feed straight into profits, saving
10% on costs equals a 10% improvement in profit

21. #BAForum
Management Actions Profit Change Analysis
Element Base Base
-10%
% Inc
Sales 1000 1000 0%
Direct
Materials
400 400 0%
Direct
Labour
200 180 -10%
Overheads 200 200 0%
Net Profit 200 220 10%
Labour
Element Base Base
-10%
% Inc
Sales 1000 1000 0%
Direct
Materials
400 360 -10%
Direct Labour 200 200 0%
Overheads 200 200 0%
Net Profit 200 240 20%
Purchasing
Element Base Base
+10%
%
Inc
Sales 1000 1100 10%
Direct
Materials
400 440 10%
Direct
Labour
200 220 10%
Overheads 200 200 0%
Net Profit 200 240 20%
Sales

22. #BAForum
Bringing it all together
• The ultimate aim,
with the planning is
to make sure that
the plans can keep
up with the business
• By ‘linking’ the plans
together, we can
ensure that the
different areas of
the business are
kept in sync and
working to a
common target
Sales Plan
Production Plan
Purchases Plan
Labour Plan

23. #BAForum
How to link it all together?
• In a small company with a small user base this is
possible to do using Excel
• Reality is once you add users, more complexity, the
sheer number of calculations and the need to co-
ordinate across teams means a fit for purpose
solution is required
• We recommend using IBM Planning Analytics for
speed, reliability and ease of use. And not just
performance, but helpful features like multiple
scenarios, sandboxes, Excel Integration and Strong
dashboarding capabilities
Sales Plan
Production Plan
Purchases Plan
Labour Plan

24. #BAForum
Broad range of use casesBanking
• Market/Liquidity risk modelling
• Customer behavior modelling
• Product profitability analysis
• Resource requirements budgeting and planning
Legal
• Market segment analysis
• Case type profitability/utilisation analysis
• Resource requirements budgeting and planning
• Purchasing planning
Retail
• Store budgeting / targets automation
• Buying budget cascade
• Basket association analysis
• Sales demand prediction, analysis of weather effect
Services Industry (Accounting, IT Services, Advisors etc)
• Dashboards monitoring people utilization
• Training
• Project tracking
• Billing controls

25. #BAForum
Questions?

26. #BAForum
Next Forum
• The next forum will be 22nd March 2019, then July,
November
• Ideas to improve the forum
• Topics and Speakers suggestions welcome
• What would you like to see in the future
• Invite your colleagues and Industry friends

27. #BAForum
Thank you
Simon Harrison
DeeperThanBlue Analytics– Operations Director
m: +44 (0)7949 763848
e: simon.harrison@deeperthanblue.co.uk
Richard Wilkins
DeeperThanBlue Analytics– Services Director
m: +44 (0)7984 427114
e: richard.wilkins@deeperthanblue.co.uk