A challenge in every segment of the logistics industry is measuring and understanding your data. It can be hard to know where to start. Or, if you already have a massive amount of data, there might be confusion understanding how to make sense of it all.
In this article, we’ll discuss the different ways to approach your data and provide guidance to help you understand how you can use that powerful data to improve your business.
Your Most Valuable Asset: Data
One great advantage of the freight forwarding industry is that you don’t suffer from a lack of data collection. Gathering transactional data is a chief necessity of running your business. So no matter what you do, you’re already gathering rich, valuable data that can help you understand and grow your business.
That said, your biggest asset is that data you process. Which also means, by not understanding and leveraging it, you’re losing opportunities where you could become faster, more efficient, ultimately, more profitable.
Now, before we dive into how you can leverage your data, let’s first discuss the two primary approaches to analyzing data:
- Using Data to Answer Questions You Already Have: This approach means you come to the data with a business problem already in mind, and hunt for the specific answer you’re looking for from the data.
- Allow Questions To Bubble Up From Your Data: This approach removes any bias you might already have as far as what business problems you’re trying to answer. Here, you allow the problem to present itself by analyzing patterns in the data. Essentially, you aren’t applying a problem – you are letting the data speak for itself.
Scholars, statisticians, analytics professionals, anyone who spends any amount of time understanding data will tell you the pros and cons of both approaches, and that there are appropriate times for each method. For example, the second method is especially useful when dealing with departments that are reluctant to change. Consider the people who make the case that, “The reason we do it this way is because this is how we’ve done it decades.” Chances are good they are not utilizing data to guide these decisions, they are simply operating out of habit. It’s critical for any business to continuously look at the data and let the data tell you if those operating procedures are still working for you.
We point out these methodologies because it’s important to be aware of which mindset you’re using when approaching the data, to ensure you are truly letting the data do the work of speaking to the questions or problems you’re looking for.
Now that you’re approaching your data, understand that your business ebbs and flows over the weeks, months, and years. The power of leveraging your data is understanding exactly what causes those fluctuations.
Getting to the causation of fluctuation means that you need to gather as much data as possible. Let’s say that again – As. Much. Data. As. Possible. There are software systems available that allow you to easily visualize this data so that you can make it a habit to become a data driven leader and/or operator.
From there, always consider how big your sample size is. The magnitude of the sample size is a direct correlation to your ability to make smarter business decisions. This is because you’ll be able to understand if you are observing a fluke or an actual trend.
How big should your sample size be? That is highly dependent on what you are looking at. For example, if you are looking to make a decision that impacts the entire business, then looking at 50 shipments might be unwise. However, if you are trying to categorize what primary mode one of your shippers specializes in, 50 shipments may be an accurate representation.
Never Forget Context
Data is powerful and tells you a real story about your business, but it’s critical to put that story into context. You cannot take a slice of data at face value without understanding other factors that were going on at the time. Consider questions like:
- In what segment of my business did this occur?
- Does the time of year contribute to this anomaly?
- Does the method of transportation matter here?
This will help you to uncover WHY it happened. Then, just as importantly, these considerations need to be made before you make a big decision on if it’s good or bad for business, because this will have an influence on if you need to make a change based on what you’ve observed.
Getting to the bottom of the data story can be tricky, but one of the most reliable ways to put your data into context is by comparing it to the last year. Are you seeing the same behaviors last year given the same factors, or even the year before? This will help you determine if this is a reliable data pattern or a random irregularity.
Understand, Enhance, Predict
When you can understand what factors are contributing to business fluctuations, you can better prepare your organization to reallocate resources in times of slowdown, as well as ramp up segments of your business when you know things are going to be more busy.
Utilize the three step approach to leveraging your data:
- Understand what’s happening: Implement systems that allow you to make this a habit within you operating routine.
- Enhance decision making: Make it a habit to leverage data when having leadership meetings. Decisions should be made based on data and analytical performance.
- Get predictive: Now that you have the data and know what it means, you can prepare your operation around the patterns that you’ve identified to ensure efficiency and stability. If utilized correctly, this can be a huge money saver for your company.
Give Your Customers Visibility
No matter how well you measure your data, if you can’t see it, who cares?
Same goes for your customers. Provide them with visibility into their shipment data. The more informed your customers are, the more you are helping them to make better decisions, which means you are delivering direct value to them as a vendor. This, in turn, can mean repeat business, can motivate them to shift more of their business to you, and create more opportunities for you to grow your operation.
It is important to be strategic with what information you are sharing so that you are truly showing meaningful data. As previously mentioned, you must be accurate and thorough with the information you are providing so they have context on metrics and figures.
How You Present The Data Matters
Finally, please be cognizant of the WAY you are providing the data to your customers. It is critical to present a story that is clear to them. If it’s overwhelming, they will be turned off, rendering all of your hard work useless. Provide them with easy-to-use visual representations like graphs and charts, populated with real-time data that they can access at anytime. Not only are you giving them critical information they are looking for, but you are providing a tangible value-add that can help you grow your business with them.
Great – Now What?
We understand – this is a lot of information. Don’t stress yourself out by trying to do it all at once. Start small by simply approaching the data, and take a stab at understanding what you have before you. You don’t need to get it right away. Just get used to looking at it daily, then grow your usage as you develop your understanding of the data. It can be overwhelming when first trying to use data and draw conclusions, so don’t walk up to a data set with a big business problem just yet. Start with attainable questions and get comfortable exploring and answering those before you decide to ask the data, “How can I grow my business?”
The goal here is to help you leverage what you already have – beautiful, compelling data! That data will help give you the answers to your toughest business questions. Additionally, your customers are craving a compelling data story that they can see clearly so they can learn more about their business and take measurable, profitable action.
Fortunately, using and providing visibility on data is what we do best. Whether we are the ones who can help or if we can guide you to resources, it’s time to get started somewhere. Click here to start leveraging your data >>