Predictive Analytics for Small and Medium Businesses - Essay Example

Operations Management Operations Management Question Predictive Analytics for Small and Medium Businesses article describes the importance of predictive analytics in managing small and Medium Business operations. Small and Medium Businesses can benefit from Predictive Analytics in several ways. Analytical Customer Relationship Management (CRM) is a common application of Predictive analysis. Techniques of predictive analysis are applied to customer data to pursue CRM aims and objectives (Johnston & Clark, 2008). With the increased competition for customers, organizations need to focus on efforts that maintain continuous customer satisfaction. In such competitive situations, customer attrition needs to be reduced, and customers’ loyalty needs to be rewarded (Johnston & Clark, 2008). Most organizations address customer attritions, only after the customers have initiated the process to end the services. However, changing the customers’ decision at this point is almost impossible. Adequate application of predictive analytics can create a proactive retention strategy. Proactive models can predict the likelihood of customers’ desires to end the services, through frequent analysis of the customer’s past service performance, spending behavior, and service usage (Johnston & Clark, 2008). Predictive analytics is used to predict customer’s silent attrition before it occurs. The organization can then take proper actions such as giving lucrative offers to customers, to increase the customer activity. For example, lucrative offers can be used to increase the chances for retaining the customers (Johnston & Clark, 2008). Predictive analytic also helps in identifying customers with a higher likelihood of responding to a certain market offer. This technique is built using customers past response rates to every channel, purchasing history, and geographic and demographic characteristics (Johnston & Clark, 2008). This helps in identifying the most appropriate combination of marketing and product channels that should be used to win and maintain a given customer. Predictive analytic technique is not sufficient enough to solve the problem of customer’s termination of services. This is because the impact, timing and size of important events are difficult to predict. Timing the period when the customers will terminate the services is almost impossible to predict with any consistency (Johnston & Clark, 2008). The other drawback of predictive analytic is that it is based on inductive reasoning. This is because it mainly applies to the prediction of human behavior, which is too inconsistent to be relied upon. Question # 2 The organization is a retailing public, corporation. The aspect, chain supply can benefit from the following two techniques decision support systems and supply chain management. The challenge or opportunity to be addressed is the matter of processing a customer’s orders from production to delivery. Supply chain, entails processing a customer’s orders of goods or services, through a number of activities which will see to it that they move from production stage to consumption stage. Customers usually place their orders on the hands of businesses retailers, who ensure that the required goods and services are produced and thereafter processed in order to come up with the end products. In essence, attending to customers wants is the basis in which an organization is built (Johnston & Clark, 2008). The two techniques appropriate in addressing the challenge of chain supply are supply chain management and decision support systems. Supply chain management, contains six components, which are essential in the process of supply chain. The first component of production focuses on quality, volume of goods, and customer needs. The second component is supply, which entails acquiring raw materials used during production of goods. Inventory is the third component in supply chain it monitors the day to day stocks in the organization. The fourth component, which is location, describes the physical place where an organization is situated. The fifth component in the supply chain is transportation; this entails the delivery of customer’s goods to the residents. The final component is information; here, data collected from customers is used by the organization’s managers in formulating strategic plans. Decision support systems are used together with the enterprise resource planning (ERP) to identify key performance indicators. Effective supply chain management is achieved through the application of decision support systems (Johnston & Clark, 2008). Question #3 In the organization, inventory is the best aspect that can benefit from applying technology in the process of decision making. Inventory management see to it that the daily stocks of the organization are tracked technologically. Inventory management aims at overseeing the consistent in and out flow of units in an inventory. Cost-effective inventory management focuses on controlling the costs related to the inventory. The three elements associated with an inventory are time, buffer stocks, and records of the finished goods. The first element, time, take into consideration how long the supplier takes in processing an order and executing its delivery. The second element, buffer stocks, ensure that a surplus stock is stored which will cater for any interruption in the supply inventory as a result of a shortage. The third element involves recording data pertaining to finished goods waiting for shipment. Inventory management makes use of the following gadgets barcode scanner, barcode printer, barcode label, inventory software and wireless barcode scanner. The inventory management software aids in creating purchase orders, invoices, receiving lists, payment receipts and printing bar codes labels. It is effective and efficient for an organization to apply inventory management software in the management of incoming and outgoing stocks (Johnston & Clark, 2008). Question # 4 Background Information for Acme Mexico City Acme Home Improvement Inc. was established in 1982 in Raleigh North Carolina. The company had 125 retail stores along the United States Coast from Florida to Maine (Johnston & Clark, 2008). It receives annual revenue of approximately $5,400,000,000 with $280,000,000 net income. The main store is situated on a 100,000 square feet with an extension of 10,000 square feet of outside garden center. The retail stores carry 40,000 different products from 5,000 suppliers worldwide. Its key American rival companies include Lowe’s, Home Depot, TruValue and Ace. The company has extended its operations to Mexico and Canada, so as to increase its competitiveness against Home Depot and other key rivals (Johnston & Clark, 2008). The five major product groups stocked in the company’s stores include building materials, paint, wall and flooring coverings, yard/garden materials, hardware and tools, and plumbing and electrical supplies (Johnston & Clark, 2008). Each retail store is managed by store manager, assistant store manager, an information systems manager, and bookkeeper. There are also cashiers, customer service employees and stocking employees who help in the daily operations of the store. Using Excel Spreadsheet solver to develop an optimal schedule for full-time and part time customer service employee is ineffective and inconvenient for scheduling several operations of diverse jobs on resource of infinite capacity (Johnston & Clark, 2008). The assumptions that are made while using it include (a) individual weekly calendars used are exceptions of resources, (b) there are no frequent changes in job priorities, and (c) multiple resources are not requirements of operations. The non-typical day include holidays and weekends, or any day that is not counted as a normal business operation day. Acme requires part-time customer service employees to run the business during the non-typical days, and their shifts begin from any hour between 7 am and 7pm. This means that the company requires two shifts of part-time customer service employees on a non-typical day, which is in accordance to Mexican labor law of corporate policy. The corporate policy requires part-time customer service employees to work for 50 percent of the day’s total schedule hours (Johnston & Clark, 2008). This makes the company to spend more money in paying out wages and salaries of part-time customer service employees. They earn $500 per day. Reference Johnston R, Clark G. (2008). Service operations management: improving service delivery. New York: Financial Times/Prentice Hall. Read More