Flying

I’ve spent some time in my last posts showing you how to use Excel to work with data; filtering it and converting text files to a format usable to Excel. What’s the value of that?
The value is that your data can tell you a story if you can work with it. Excel (or the spreadsheet software you use) is your best tool for ad hoc analysis of your data. You can’t predict everything you’re going to need to analyze and how you’ll want to show it. So, you need something that is extremely flexible. Excel fits that and you already know how to use it.

You’ve heard the expression, “can’t see the forest for the trees.” In a work setting the impact of that translates to the people doing the work aren’t good at seeing trends and patterns. On the other end of the scale is the executive who boasts about flying at 30,000 feet to manage the business. Translated that means they’re not into details.

There is a lot of room between the worker who can see that the trees he can see are good or bad and the executive looking out the plane window and seeing a forest below. Using the data allows you to target what you look at. To stick with the metaphor, you can look at the forest from 30,000 feet then dive to 5,000 to see how healthy the forest is. You can zoom to areas that look bad perhaps even flying at tree top level. I’ll give you a couple examples of when I was able to use data in this way.

I worked at a manufacturing company. One of our customers set up a supplier summit; they invited all their vendors to come for a presentation. Prior to that I analyzed the customer. I had put all sales history into data I could work with. The sales history had customers and part numbers along with the sales and associated costs. Looking at the data made me do some more digging into the customer’s parts because the profit was very low. The customer was ordering parts in small batches but needed us to have any of the parts they might order available at any time. This caused us to keep large amounts of inventory. Looking at all of this and the extra costs incurred from meant that we were not making any money on this customer. At the supplier summit the customer said they were requiring all their vendors to give them a 30% price cut. We said no. Even though we lost the customer, we were better off.

Later at the same company we were told by operations that another customer was bad. They were too much trouble for the amount of money we made on them. Looking at the data showed a very profitable customer, even with the extra costs for their requirements. I wanted to present this in an easily understandable way. I chose to use our financial statement that everyone was used to reading. Using the P&L as a template I put our results from the last 12 months in the first column. In the second column I put the sales and costs from this customer. Finally, the third column showed where we would be without that customer. Using a report that people were familiar with allowed us to focus on the results and not on how to read the report. That third column looked pretty awful and we stopped hearing suggestions that we should drop the customer.
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If you can get the data and work with it, you can look at all the trees in the forest and see the ones you need to see. Because successful companies know they profit and where they lose.