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  • Boost Procurement's Buying Power with Analytics

    Boost Procurement's Buying Power with Analytics

    For procurement professionals feeling the pressure to produce greater value, analytics offers myriad benefits.

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    Analytics. It is a word that strikes procurement professionals in different ways. For some, it is the must-have tool for taking procurement into the future. For others, just how it will help sourcing is unclear. And for many, it is a source of anxiety: How do I acquire the analytics I need when I don’t understand analytics in the first place?

    Indeed, as companies beef up their competitiveness, leadership expects procurement to generate additional value beyond cost. In turn, procurement is contributing more to strategic differentiation. Analytics is key to that growth: Spend analytics vastly improves visibility on purchased goods, services, and opportunity identification. Advanced bid analysis helps sourcing experts deftly juggle conditional discounts and alternative bids. And cost regression analysis pinpoints unusually high vendor pricing for a negotiating advantage.

    So what holds back some groups from acquiring these capabilities while others surge ahead? Leadership may not yet see analytics’ value to procurement. Staff may not have the resources to produce reliable data or may worry about lacking analytics knowledge. Finally, the path to developing analytical capability may be unclear. This paper discusses how to overcome these hurdles and offers three strategies for acquiring analytical know-how.

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  • Data Analytics Need CIO/CMO Cooperation

    Data Analytics Need CIO/CMO Cooperation

    The Economist Group,19 August 2013

    In order to successfully utilize big data, the roles of CIO and CMO must center on the company’s pursuit of data analytics in a shared overall view of where the company is going. 

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  • A Healthy Dose of Data Analytics

    A Healthy Dose of Data Analytics

    As healthcare providers feel the squeeze they are turning increasingly to analytics for solutions.

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    Gone is the comfortable era of near-zero price elasticity when a well-negotiated fee schedule and a heavy patient volume were enough to guarantee healthcare providers a comfortable existence. As payers, both public and private, require demonstrable value for their money, and cost containment becomes the order of the day, pressured providers around the developed world are increasingly deploying value-driven analytics, a systematic, business-led framework designed to build out the necessary skills, processes, and infrastructure for a successful business data analytics capability that can lead to transformative improvements in healthcare praxis, economics, and outcomes. The paper discusses the three practical guidelines governing the operating model of a value-driven analytics capability: identifying the value drivers of the business; developing a complete, mutually reinforcing set of capabilities to extract insights; and quantifying the value to the business.

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  • Challenged by Complexity? Quantify It!

    Challenged by Complexity? Quantify It!

    Supply Chain Management Review, July|August 2012

    Complexity's operational impact can be measured in dollars.

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  • Reinventing Measurement

    Reinventing Measurement

    Delivering better results for Procter & Gamble's shared services organization.

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  • Quantifying Creativity

    Quantifying Creativity

    How can firms quantify creative work to determine the best way to compensate advertising agencies? Several models have emerged.

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    You only have to consider the recent impact of Facebook and Twitter to understand the media revolution that has roared since the advent of cable television in the 1970s. As companies seek new ways to reach customers using ever-proliferating, constantly evolving media channels, customized advertising messages have become increasingly vital to success, with creative advertising agencies remaining as the major players in this process.

    However, the dramatic change in the media landscape has done little to change the way companies compensate ad agencies—few companies want to rock the boat of an established relationship. But, to maximize their advertising budgets and achieve their business goals, leading companies are reevaluating how they compensate their ad agencies. By selecting the right model to manage their agencies' compensation properly, firms can dramatically improve their top and bottom lines.

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  • Expanding the Profit Frontier

    Expanding the Profit Frontier

    Multi-product companies often need to break their business into component parts and prioritize profit opportunities within a market context.

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    For businesses seeking to improve profits, the low-hanging fruit is obvious. Fixes, such as reducing manufacturing costs, improving marketing effectiveness, or optimizing a supply chain are typically among the first to be implemented. Thus, a company that has already made such improvements faces a challenge. Does it, like the fox, conclude that anything else is out of reach and therefore not worthwhile? In such challenging economic times, a company can't afford to draw such conclusions. Does it then run for a ladder and raise it to a spot where, at first glance, more fruit appears to be within reach? Because of past improvement activities that seemed promising but failed to produce bottom-line results, many companies are wisely hesitant to do so. So is there a way to take a more holistic approach—to use the ladder to learn more about the tree, use scaffolding to align efforts to achieve productive results, and even prune the tree's branches to improve the likelihood of a long-term sustainable harvest?

    Yes, there is a way. We call our approach Expanding the Profit Frontier. We've used it to help companies improve overall earnings 300 to 500 basis points before interest and taxes. For example, one company saw a 1 to 2 percent revenue lift when it aligned its pricing and discount strategies with a cost-to-serve model for each customer segment. Another company, initially planning to implement a single fixed-cost reduction strategy, instead combined this one initiative with another designed to streamline the product portfolio, and achieved six times the benefits with this more holistic approach.

    Success for these companies was achieved using proven tools to address all of their profit frontiers (cost reductions, price increases, portfolio adjustments and other actions)—and doing so simultaneously as part of a continual business process to ensure maximum profitability both today and in the future.

     
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  • A Forward-Looking Way to Improve Weapons Programs

    A Forward-Looking Way to Improve Weapons Programs

    Business case analyses give weapons program leaders a deeper look at sustainment systems and help them make the right strategic decisions.

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    Business case analyses (BCAs) for U.S. Department of Defense weapons programs should serve as more than a requirement—they should also be educational endeavors. BCAs provide the opportunity to step back from the daily grind and think strategically.

    During typical business case analyses, staff members grind through the required elements, often gaining only limited insights about possible alternative means for completing their mission. A forward-looking approach—rooted in hard data rather than intuition and past practices—provides a deeper look at how the sustainment business model is working and the potential alternatives available.

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  • ATM Banking + Game Theory = Profits

    ATM Banking + Game Theory = Profits

    ATMs have saturated the world banking market, but banks have plenty of additional options to make them more profitable.

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    When automated teller machines (ATMs) first became popular more than 20 years ago, banks and their customers gained clear advantages. Distribution costs fell dramatically as ATMs replaced overhead-heavy bank branches, while returns on investment grew rapidly as the cost of new machines was balanced easily by reductions in branch staff. Customers were happier, too, as money became more easily accessible.

    Although the market for ATMs has matured, we have found plenty of avenues banks can still take to make ATMs more profitable. We recently analyzed two banks—one in the United Kingdom and one in the United States—and discovered that ATM location had a significant impact on revenues. By using more detailed data and borrowing advanced theories from outside of banking, including game theory and advertising, we found that optimized ATM networks can improve profitability and increase competitive advantage.

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In the News

Read insights from A.T. Kearney consultants quoted in the media.

Global Leaders

Khalid Khan
Khalid Khan
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Anshu Prasad
Americas
Asia Pacific
Jules Goffre
Jules Goffre
Europe, Middle East, and Africa