8 Business Process Analytics Every Manager Should Know

by   |   July 12, 2016 5:30 am   |   2 Comments

Bernard Marr

Bernard Marr

Operational analytics can help businesses increase efficiency, protect their reputations, save money, and eliminate waste. This is a broad area, covering everything from supply chain management to detecting fraud, but it is not to be overlooked. Let’s explore the key operational analytics you should be using in your business.

Fraud-detection Analytics

Fraud costs businesses a great deal of money every year. A recent report from the Association of Certified Fraud Examiners estimated that the typical organization loses 5 percent of its revenues in a given year to fraud. This is money that could be bolstering profits and helping the business grow. Fraud-detection analytics helps you predict and reduce fraud by  looking at vast amounts of data and identifying patterns or certain behaviors that flag fraudulent activity. Activity data, text data, and spoken data offer a rich vein of information from which to conduct fraud-detection analytics.

Tip: If you discover fraudulent activity, try running some data mining on those cases to see if you can identify patterns that you can then use to prevent future fraud.

Core Competency Analytics

Finding and securing a competitive advantage is tough. Core competency analytics is the process of identifying what your core competencies are so that you may exploit them to the fullest. Start by listing all the actions that are required to produce your products or services. Then, taking each step or element in turn, break it down to understand what enables competency in that task or process. You can then start identifying patterns (using, for example, factor analysis) to determine what are the core competencies in your business.

Tip: Identifying core competencies can help to pinpoint and eliminate waste or improve inefficiencies as a by-product of the identification process.

Supply Chain Analytics

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The more you understand your supply chain and the more flexible it is, the better able you will be to understand your market, predict potential road bumps, and adapt to changing customer needs. Supply chain analytics is the process of assessing each stage of your supply chain or the various processes that go into creating your product or service. The purpose of supply chain analytics is to determine opportunities for savings, improvements, or increased return while also ensuring that your customers get what they ordered as quickly as possible. These days, with sensors and data-collection points along most supply chains, it can be easy to track actual performance.

Tip: Making money in business is not just about making sales – it’s also about managing costs. Supply chain analytics offers powerful insight into where and how you can manage costs effectively.

Lean Six Sigma Analytics

Efficiency and quality matter in any business. Lean Six Sigma analytics is the process of analyzing efficiency and quality in your business. Traditionally used in manufacturing, Lean Six Sigma is now also being used in service industries. As a methodology, Lean Six Sigma represents a set of tools, implemented by certified employees, that enable continuous or, preferably, breakthrough performance.

Tip: The biggest benefits from Lean Six Sigma are secured when projects are related to the achievement of strategic goals.

Capacity Utilization Analytics

Capacity utilization affects efficiency, productivity and, ultimately, profit. Capacity utilization analytics is similar to employee capacity analytics, but the focus is on equipment and plant rather than people. Most modern machines have in-built sensors that collect information about their use. This data can be analyzed to extract useful insights that help improve efficiency. If machines are not fitted with internal sensors, you can fit sensors or use techniques like video analytics to determine utilization levels.

Tip: As with so many other analytics processes, it is important not to get too carried away with analyzing everything you can and instead concentrate on the key assets in your business.

Project and Program Analytics

Most strategic and change initiatives are delivered via projects or programs. Project and program analytics is the process of assessing how effective your internal projects and programs have been so you can improve them in the future. Performance is assessed in terms of schedule, budget, and quality of output. There are a number of KPIs that can help you keep track of the various parameters involved, including project schedule variance, project cost variance, and earned value.

Tip: Before you embark on any new project or program, make sure you are very clear about why you are investing in the process and what you expect it to deliver.

Environmental-impact Analytics

Customers are becoming increasingly concerned about companies’ environmental impact. They want to know where they are buying their products and services from and that those companies have acted responsibly toward the planet. Environmental-impact analytics is the process of assessing the impact your business has on the environment: from where you source your raw materials to your production process and delivery. There are a number of KPIs that you can use to measure your environmental impact, such as carbon footprint, water footprint, energy consumption, supply chain miles, waste, and product recycling rate.

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Tip: Taking action now, when you can implement incremental changes that help you become more environmentally responsible, is always going to be preferable to waiting until you are forced to take action.

Corporate Social Responsibility Analytics

Customers are much more discerning than they used to be, and they are increasingly demanding that companies behave in an ethical manner. Corporate social responsibility analytics is the process of assessing just how closely your stated corporate social responsibility is related to reality. In other words, it seeks to determine whether your actions match your promises. There are many tools and approaches that can help measure your corporate social responsibility, such as triple bottom line.

Tip: If you advertise your green credentials, be very sure you can back them up.

This is just a brief overview of these analytics, designed to give you an idea of how they can help improve performance. You can find out more about these analytics and how to use them – plus lots of other analytics for measuring business performance – in my new book, Key Business Analytics.

Bernard Marr is a bestselling author, keynote speaker, strategic performance consultant, and analytics, KPI, and big data guru. In addition, he is a member of the Data Informed Board of Advisers. He helps companies to better manage, measure, report, and analyze performance. His leading-edge work with major companies, organizations, and governments across the globe makes him an acclaimed and award-winning keynote speaker, researcher, consultant, and teacher.

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2 Comments

  1. Posted July 12, 2016 at 1:32 pm | Permalink

    Hello Bernard Marr,
    I had a question regarding what KPI’s were needed to access a machine’s performance. Thank you for this post and I hope to understand how to do this for my project.
    Best Regards,
    Tammy Iwanicki-Panasiuk.

  2. Posted July 16, 2016 at 4:29 am | Permalink

    Organized layout of execution. good points.

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