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Deep in the recession of the early 2000s, HallStar Co., a $125m specialty chemical manufacturer, was doing what most mid-sized manufacturers were doing: pursuing every avenue to cut costs and making do with systems already in place. Then, in 2003, after the market had eased up a bit, HallStar brought in business intelligence (BI) tools to try to leverage the information in its new enterprise resource planning system to make better business decisions.
The first initiative was to reduce inventory, which, at the time, was on the high side at 18 percent of revenue. After knocking that figure back to 7.5 percent of sales while increasing its on-time delivery rate in a short year and a half, HallStar plunged deeper into BI. It began to leverage its BI tools not just for rear-view mirror insights into its quarterly performance, but also to garner real-time information about how the company was doing in all aspects of its business. Salespeople used the tool to evaluate how well they were meeting sales goals in new markets, such as Asia. The director of marketing orchestrated a BI initiative to pinpoint problems with margin erosion, allowing HallStar to fine-tune its prices to regain margin points.
In the past year, the company grew its gross profit by three percentage points, and earnings before interest and tax (EBIT), its key metric, rose 55 percent from April 2006 levels.
While the BI efforts aren't the only driving force behind the company's notable performance improvement, the tools do serve as a focal point.
As BI tools become more accessible, a greater number of manufacturers are rowing in the same direction as HallStar, giving operational managers in sales or production, for example, the information they need to manage the business in real time. With a view into how the business is performing at any given time, managers are empowered to take corrective actions that can reduce costs and bolster efficiencies, as well as create revenue opportunities and drive growth.
Source: Managing Automation, http://www.managingautomation.com
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