How Finance Drive Data-Driven Supply Chains
In the past, finance primarily served as a scorekeeper, responsible for tabulating figures and ensuring organizational compliance. These processes were often time-consuming, manual and did not contribute significantly beyond ensuring accuracy and alignment. As a result, finance teams had limited opportunities to interpret the data. At first, it resembled reporting the news, simply summarizing financial data. However, today, finance has transcended that role.
Now, finance teams have shifted focus toward charting the strategic direction of the company, harnessing the numbers to ensure well-informed decision-making. Finance is evolving to consolidate data in a format that is accessible, understandable and visually engaging. This transformation empowers businesses to make informed choices, establishing a direct link between strategic objectives and financial terms, thereby facilitating a clear path toward achieving goals.
Finance is increasingly recognized as the guardian of a business's data. Their expertise, refined through accounting exams and related training, uniquely equips them to work with numbers. Their true value lies in aggregating and guaranteeing the reliability of this data. In this blog, we explore how they are steering a more data-driven supply chain.
Challenges and Risks Associated with Financial Data
- Data volume and accuracy
The pivotal role of data, especially data quality, encompasses a multitude of aspects. Most companies managing rebates are inundated with a vast amount of data – millions of transactions and thousands of different deals, all of which needed to be organized into a coherent format. Attempting to manage this volume of data using spreadsheets is challenging.
Common pitfalls often involve inconsistencies in data or varying interpretations of contractual agreements, which then need to be translated into actual invoices or statements. The objective is to prevent errors and duplications. Data complexity and ensuring data accuracy are at the forefront of these challenges. Without a single, reliable source of truth, teams may end up working in isolation, each with their own version of reality. This common understanding of data is what people are striving for in today's data-driven landscape, especially when dealing with high data volumes.
While processing power is continuously improving, the volume of data is often growing even faster. As you transition from handling smaller datasets to handling millions or hundreds of millions of data points, you require fundamentally different capabilities. Recognizing where these breakpoints occur and planning for them as your data volume increases is vital for maintaining data accuracy and integrity.
- Siloed data
Dealing with silos within a company can be incredibly challenging. Information may be scattered across individual hard drives or disparate locations, making it difficult to make informed decisions. If you need specific data, but only one person has access to it, you're at risk of being left in the lurch if that person departs from the organization.
Centralized data is of paramount importance in such scenarios. It ensures that everyone within the organization has access to the same information, which fosters transparency and clarity. Without centralization, different groups may report conflicting numbers, leading to confusion and a lack of trust in the data. Breaking down these silos is essential, particularly when dealing with large volumes of data. Establishing a centralized data repository not only resolves these issues but also promotes collaboration and ensures that everyone is on the same page.
- Outdated, legacy systems
Legacy systems often struggle to handle the sheer volume of data or adapt to modern demands. Take forecasting, for example, where outdated models are still in use. These models rely on random assumptions about demand, which fall short in a world where we can pinpoint demand by understanding customer behavior and responses. The challenge extends to financial data as well. Many organizations rely on individuals with spreadsheets who are the sole gatekeepers of critical data. These people hold their positions by hoarding data, and when discussions ensue, they often deteriorate into arguments over whose data is correct.
- Data cleanliness
In finance, ensuring data cleanliness involves various reconciliations and frequent checks, such as three-way matching. This process helps establish reliable and clean data. It's also essential to keep up with changes in the business environment, including new products, processes, or attributes that need to be tracked. As the business evolves rapidly, it's important to adapt your data management to stay current and relevant, while also removing clutter and outdated data.
Leading by example is a powerful approach to start cleaning up your data. When your own data is clean and reliable, it sets the standard for others in the organization. People come to you for trustworthy information, so checking and double-checking the data and maintaining robust processes behind it is vital. Sharing your clear and effective data management process with others is crucial for maintaining consistency across the organization. When everyone subscribes to and follows the proven methods, you create a reliable and unified source of truth. Ultimately, achieving a clean and reliable data environment is a team effort that enhances the organization's ability to make informed decisions and achieve its goals.
Transforming Data into True Actionable Insights
This begins with defining your goals and objectives, understanding what you want to achieve. To determine how to reach these goals, you examine historical data and project into the future, seeking patterns and insights. But to do this effectively, you must organize and centralize your data, ensuring its accuracy and eliminating data silos. The problem of tribal knowledge, where only a few possess critical information, should be resolved.
Identifying these patterns and aligning them with your goals, you can make decisions with conviction, setting your course for the quarter or year ahead. The role then becomes about monitoring whether or not the patterns you predicted are manifesting. You need to synthesize and simplify the multitude of data points into easily digestible information, especially for leaders and managers who require at-a-glance insights. Visualization and reporting tools play a crucial role here, as they help convert the data into consumable formats.
This process allows for ongoing course adjustments throughout the year, ensuring that you make informed decisions and stay aligned with your initial goals and objectives. If you're on track, everything is smooth and stakeholders are content. But if not, it may be necessary to reassess, adapt your goals and realign your data accordingly. Then, the cycle repeats as you identify new patterns and make necessary adjustments, regardless of the timeframe, be it daily, yearly or anything in between.
Having the ability to view current figures in relation to previous weeks, months or years offers invaluable context. This allows you to assess the performance of your deals against various rebate programs and make well-informed decisions based on these comparisons. In cases of underperformance, you can swiftly adjust your course. Conversely, if you're surpassing expectations, you can explore opportunities to further optimize your rebate programs.
Turning Your Data into Dollars
When managing rebates, harnessing data is essential to fine-tune the types of deals you make with your trading partners, whether they are suppliers or customers. Having accurate and insightful data enables collaborative efforts with your trading partners, and this is where the magic happens. Working together effectively unlocks the strategic potential and allows you to tap into a larger share of the profit pool in your sector. Rather than pulling in different directions, when you collaborate, you can make the profit pool stretch further and reduce wastage.
There's a growing trend towards real-time decision-making, as the pace of business continues to accelerate. Making rapid adjustments to maximize your margins for a specific week or product group is where you can truly enhance your performance. You may already be making a decent return or gradually improving over the previous year, but it's those strategic tweaks that add extra value. Achieving this level of precision is only possible when you have access to near real-time, accurate, and trustworthy data. This data empowers you to control costs and make nimble inventory decisions.
For instance, you might choose to purchase more of a particular item to reach a higher rebate rate. You can make such decisions by considering the return on investment (ROI) and comparing it to your cost of capital. This level of insight helps you maximize your bottom line on a case-by-case basis.
To ensure a smooth end-to-end process, having visibility from start to finish is crucial. In a distribution context, accessing information about the manufacturer's stock levels and availability for delivery has become increasingly important. This allows you to promise customers timely delivery, meeting their expectations. With the right data, you can uphold all supply chain requirements, from order fulfillment to on-time deliveries. Effective data insights and collaboration across the supply chain levels bring everything together successfully.
Unify and Visualize Your Data with Enable
The solution to address all your data challenges lies in adopting a centralized rebate management platform. This serves as the single, universally validated source of truth for your entire organization. It eliminates the reliance on an individual with a hidden spreadsheet tucked away in some corner. By transitioning to a shared and centralized approach, you can fully unleash the potential of your data, enhance its reliability, and break free from data silos that are scattered across outdated or offline systems.
Utilizing our comprehensive rebate management platform, you gain access to real-time insights from your data, enabling you to make more informed trading decisions based on facts rather than guesswork. In essence, visualizing data and having immediate access to it is essential for ensuring that your decisions are well-informed and effective. This capability empowers you to adapt your strategies promptly when required, averting financial losses and ensuring that your finance team maximizes the impact of your rebate efforts.
Are you ready to become more data driven? Schedule a demo of Enable today https://insights.enable.com/schedule-demo