Operations statistics

Statistical records may be kept on almost any area of an organization's operations and analysis of them can indicate more profitable, more efficient or more effective ways of operating. For example:

a. Stock-control statistics: stock records will indicate stocks being run down or built up, or bottlenecks in the stock system. Calculations can be made of the amount of investment tied up in stock at any particular moment. In these days when additional profits are hard to achieve by increasing sales volume, analysis of stock inefficiencies may make a greater contribution to an overall increase in profitability than any marketing activity. The use of computerized stock control systems has, for example, led to the development of just-in-time delivery, which saves warehousing costs.

b. Transport statistics: maintenance of statistics on mileage, routes covered, vehicle maintenance, and so on, will often lead to more economical handling of a company's distribution and transport system.

All the statistics referred to above should be maintained continuously over time to enable the manager to spot trends or change in the marketplace and deal with it. The danger inherent in producing any continuous set of data is the problem of information overload. This occurs when the system is generating more information than the manager can cope with reading, never mind responding to. Some mechanism needs to be introduced to ensure that the manager's attention is only attracted to continuous sets of statistics when some action may be necessary. This normally involves setting out guidelines that will enable management to identify and deal with only exceptional developments. An instruction may be given that the manager will only see the information personally if the data for any period are outside an operating norm of, say, 10 per cent either way. Statistics based on operations data are also used to calculate operating ratios. These are an input to assessing the efficiencies of different operations and to allocating budgets for those areas.

The data generated from operating data can prove extremely useful in indicating the performance of the company. They are not appropriate for identifying changes in the external environment that do not necessarily show themselves in company sales. It is for this reason that the market intelligence system is particularly useful.

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