One of our recent webinars, where we discussed how you can use big data in your business forecasting processes, showed that a lot of companies out there aren’t taking into account the enormous amount of external data available. The below graph shows that more than 50 % of the participants said that they were not yet using big data in their current business processes.
This might not come as a surprise to you! We see and hear this in a lot of companies. However there is eagerness to integrate external data in business processes, many of you face difficulties in convincing management or don’t know where and how to start.
Big data is more useful than many people fully realize. Having the tools and capabilities to grasp external information sounds like an interesting path to follow. So here are 6 resasons why you should be considering implementing predictive analytics in your company practices today!
1. Understanding the market environment
Companies that do not take their external environment into account should be concerned with how their business will evolve in the coming years. Knowing how your market environment looks like, and which important features of that market environment you should take into account, can have a significant impact on your business. Using predictive analytics to scrawl through big data, in order to find what is relevant for you, enables you to be realistic regarding your organization within the market and helps you to make informed business decisions. Know which opportunities to cherish and how to weapon your company against threads outside your organization.
2. Optimize strategic forecasting
The acquired business insights from using external insights will help you to better grasp and utilize the demand drivers for your business. This will guide you in developing your strategic forecast. When building a longer term forecast, a means for making business decisions, it’s crucial you are talking about the right things and that you are making the right decisions, as these can have a tremendous impact on the future of your organization.
3. Better S&OP processes
A long term view is important to make qualified decisions for the next coming years, but what about the next coming months, weeks, days…? Translating those longer term prospections into operational and tactical planning is essential. Including that external data in your forecasting processes with advanced predictive analytics, will lead to improved forecast accuracy, better inventory management, enhanced supply management… overall this will deliver an optimized S&OP process.
4. Get sales more involved
Companies are having a hard time getting different business units aligned (Read more in our previous blog post here). This definitely counts for getting sales involved in the forecasting process. When companies make their sales forecasts, this often happens via a bottom-up process. Salespeople are required to insert their prospected sales volumes for the next coming months. These forecasts are in most cases accurate for the short term (read: the next quarter), but after that its accuracy declines… This oftentimes leads to a disconnect between the S&OP team and the sales team. So, how could external big data and advanced predictive analytics be of help here?
By revealing what the external demand drivers for your sales are, advanced insights will be gained. Our experience tells us, that this is highly interesting for sales people. They are happy and curious to find out what causes sales to spike or drop in a certain period. Eventually resulting in more involvement in the sales forecasting process, and enhanced cooperation between the S&OP team and the sales team.
5. Make informed business decisions
Having improved your strategic forecast and your S&OP process by including big data in your business practices, will fiercely help you better steer your business. Decisions as “Should we open a new production plant?” or “Where should I deploy more sales recources?” will be informed decisions, where external data and advanced analytics are used to validate qualitative assumptions.
6. Get ahead of the competition
Better business processes, better sales forecasts, better cooperation between the different departments within your sales teams will result in an improved position towards your competition. So get in the driver’s seat. Get ahead of the competition and start implementing predictive analytics today.
Want to learn more on how to incorporate external data into your forecasting process? Read our e-book on the essentials of forecasting with leading indicators here.