Evaluating purchase habits can feel like a mundane process, but analyzing a few key data points can help you make smarter purchase decisions next year. There are a few strategies that can help guide your analysis:
1. Evaluate Conversions
Look at your products with the largest volume or highest conversion rates, and see if there are similar products with the same quality but lower pricing. This will increase margins for your bestsellers and make a bigger impact on your bottom line than scaling or expanding options would. There’s industry-specific software that can cater directly to your business needs. Consider investing in a conversion-tracking system or a balanced scorecard model to identify where you’re underperforming and find ways to trim costs.
2. Add Levels of Analysis
Big data is inherently disorganized, meaning it requires a high level of analysis to make sense of it. In fact, manufacturing companies can improve margins 2 to 4 percent by applying more analytics to existing data, according to Sanjay Agarwal, principal of Deloitte Consulting. Properly analyzing big data can help companies set more competitive pricing, predict commodity fluctuations, and resolve issues that arise from merger and acquisition integration.
3. Tap Into Consumer Trends
Many business owners make the mistake of sticking to what’s worked in the past. But to be successful, your business needs to evolve with your customers. Evaluate industry research reports or purchase data from companies like Nielsen to keep an eye on customer trends and potential future needs you can fulfill. Then you can start allocating funds to appropriate improvements or expanded product offerings and move quickly when the demand manifests. If you can satisfy consumer needs more quickly than your competitors, you’ll secure a greater competitive advantage in the market.
Use Your Insights to Make Smarter Decisions Next Year
Actively assessing key data points and consumer trends can shed light on new opportunities for growth and quick fixes to reduce costs. Once you’ve taken the time to analyze your purchasing habits, keep these factors in mind to get a head start on planning for 2015:
- The Cost of Price Inflation
For culinary consultants, food cost inflation is important to track, but this is obviously specific to that industry. Looking through your supply chain, identify areas where cost inflation may create a compounding problem for your business, and throw around some ideas for reducing that impact.
- The Power of Together
This rule applies in nearly every industry. By partnering with group purchasing organizations (or creating your own purchasing group), you can combine your orders and maximize savings. Rather than getting out-priced by local or national vendors, look for ways you can increase your buying power to get lower pricing for your regular orders.
- Local Government Representatives
The members of your local and state government can make a significant difference in the way you do business. Pay close attention to candidates in midterm elections and what their tenure could mean for your business. Get involved by lobbying for your interests with local officials, or take part in statewide initiatives that affect your industry whenever you can. Their decisions could dictate your profitability and savings down the road.
After evaluating these analytical reports, I’ve seen businesses entirely change their buying habits and reap the benefits of lower pricing and a more agile structure.
As you assess the year in review, think through small improvements you can make to create a demand-driven supply chain. Together, they could have a huge impact on your bottom line.