Meet, Steve, a global operations manager for a clothing company. Recently, he implemented SAP Analytics Cloud into his workflow and gained a much clearer perception of his entire operation.
Upon importing a sample of his data into SAP Analytics Cloud, he created a visual analysis of:
- Shipping Routes
- Customer satisfaction (CSAT)
- Delivery times
- Shipping costs
Shipping Routes in 2015
The first thing Steve did with his data was create a geo-map of shipping routes, which showed him his customers in 2015 (red) and the distribution centers (blue).
He noticed that in some cases, European orders were being fulfilled by North American distribution centers due to a lack of inventory in the European distribution centers. This caused a chain reaction that impacted his business. He saw:
- Increase in shipping cost for the company
- Lower profit
- Longer delivery times
- Lower CSAT scores
Customer Satisfaction in 2015
Steve charted CSAT scores for all his customers in 2015. A standard bar graph highlighted a trend with his customers. A large majority of customers fell in the 3 and 4 range on the customer satisfaction scale. Having such a high number of dissatisfied customers was a cause for concern since it would surely impact future sales.
Delivery Times in 2015
Steve wanted to better understand the cause of these low CSAT scores. The next chart he added to his story was an area chart, which showed the length of time in which customers received their orders.
While many customers received their orders within five days, a large percentage waited ten or eleven days, and even as long as fifteen days. This was unacceptable.
Shipping Costs in 2015
Shipping costs ranged from $4.00 to $15.00, depending on the location of the customer. The further the distance from the distribution center, the higher the shipping cost. The higher the cost, the lower the profit.
Naturally, Steve wanted to address this issue by reallocating inventory so that supply matched demand. In effect, customer orders would be fulfilled by a local distribution center rather than an overseas facility.
Sharing Steve's Story
Steve finished his story in SAP Analytics Cloud, displaying all the interconnected elements in a clean and easy-to-understand dashboard. The final piece he added was the profit in 2015.
At a board meeting, Steve proposed a solution — if the company reallocated inventory so that supply matched demand, customers orders would be fulfilled by a local distribution center in their region rather than an overseas facility.
If this solution were to be implemented, it could result in the following changes:
- Reduction in delivery times
- Lower shipping costs
- Higher profit margins
- Increased customer satisfaction scores
- Increase revenue
Steve shared his findings with his executive team. Upon seeing the visual representations of the data in Steve's story, it was easy for the executive team to make the decision to amend their current order fulfillment procedure. They agreed to Steve's recommendations to stock inventory to match consumer demand for each respective region.
2016: The Year of Change
After implementing the recommended changes, Steve ran another report for his executive team. Once again he used SAP Analytics Cloud to create a story using all the same elements from his 2015 story. When his 2016 report was complete, he easily shared his findings with the executive team so that they could visually see how the improvement in their shipping procedure trickled down and positively affected the company's bottom line.
The change to the order fulfillment procedure was significant. Instead of an order from Europe being fulfilled by a North American distribution center, the company ensured the nearest facility was adequately stocked so that inventory closely matched demand.
Looking at the 2016 geo-map, overseas shipments are a thing of the past. Now, each distribution center facilitates a particular region. This drastically reduces shipping costs and delivery time.
Comparing CSAT scores from 2015 to 2016, the executive team saw a marked improvement. In 2016, most customers fell in the upper quadrant of the satisfaction scale. Happy customers translated into more frequent purchases, larger purchase orders, and better word-of-mouth reviews.
In 2015, some customers had to wait up to two weeks to receive their orders.
In 2016, customers received their orders within seven days.
Now that distribution centers handle shipments by region, this reduced shipping costs for the company.
The chart below shows that the company pays $4.00 to fulfill most customers shipping cost. This in turn has a direct impact on profit.
The Bottom Line
After implementing the change to the order fulfillment process, the company nearly doubled their profit.
Profits for 2015
Profits for 2016
Steve looked good in front of his executive team and it was all thanks to the insights he gained from SAP Analytics Cloud.