Amazon’s Financial Indicators… “Falling With Style”?

Recently, an article came out questioning if Amazon is “a giant ponzi scheme dressed in drag,” and it reminded us of a blog post we wrote in January, “What E-commerce Pricing Strategists Can Learn from Aircraft Piloting.” In our post, we discussed Amazon’s current precarious strategy of flying fast and low on increasing revenue and decreasing margins; this “ponzi scheme” article digs deeper into Amazon’s finances to reach a very similar conclusion to ours: “If AMZN’s revenues slow down or its expenses unexpectedly increase, for whatever reason, AMZN could face liquidity problems.”

With Amazon’s “airspeed” (revenue) increasing and “altitude” (operating margin) decreasing, those stakeholders with “brains” may want to know where the parachutes are “stored.”

Picture1(Original chart by Dave Kranzler; Edits by DSS)

Perhaps Amazon’s current position is comparable to how Buzz Lightyear describes his ability to “fly”:

“This isn’t flying, this is falling… with style.”

http://www.traileraddict.com/emd/14537

Omni-Channel Analytics & the Cost-Service Conundrum

When it comes to Omni-channel, advanced analytics can drive many opportunities and benefits, but not without some common roadblocks. A recent RetailWire m*paper outlines a few opportunities worth diving into, but there are two in particular I’d like to expand on: assessing cost of sale and tracking order status across channels. Both are critical to long-term viability and success, but few companies have sufficient performance visibility to either one.

Three roadblocks to these opportunities are listed in the article: 1. disparate systems, 2. lack of resources and 3. cultural barriers. These obstacles certainly contribute to the challenge of elemental cost and service, but each is perhaps only the tip of its own iceberg.

1. The challenge of disparate internal systems is compounded by external data sources (vendors, carriers, providers). Missing or inaccurate data erodes confidence, and any attempt to assemble end-to-end cost or service seems to become impossible or worthless.

2. Lack of IT or business resources is secondary to having the RIGHT resources. Knowing HOW to assemble and allocate cost and time across items and orders requires understanding of both the business drivers and the data and tools by which to illuminate them.

3. Organizational silos can make cross-functional initiatives difficult, but ‘survival instincts’ in today’s highly-competitive retail landscape are fostering improved collaboration. The bigger issues are:

  • Accountability – Who “owns” end-to-end profitability or customer service performance?
  • Sustainability – How do we ensure consistent effort to achieve profitable sales growth and customer service expectations?

While there are some great BI and analytical tools out there, none of them can address the challenges listed above; they are a function of people and knowledge, not interactive dashboards and wizards. That is why many BI investments fail to deliver on their value proposition.

So in the end, can total order cost and service performance visibility be achieved and made actionable? Absolutely! Just ask DSS’s clients. It’s our passion…it’s what we do!

The No. 48 Chevrolet Team & Winning the Business Intelligence Race


racecar-daytona

In the Predicts 2012: business intelligence still subject to non-technical challenges report, Gartner estimates that by 2014 over 70% of BI initiatives still won’t align analytics completely with enterprise business drivers and, therefore, fail.

That rate is even worse than the 19/43 drivers who didn’t complete all 200 laps of the 2013 Daytona 500.

So, what do the 30% BI success stories and 56% cross-the-finish-liners have in common? All five key T’s.

BI-NASCARchart

Let’s break down the 2013 Daytona 500 champion, who had all five keys:

“We work really hard … to prepare for the superspeedway races. We put a great product out there.… I think what we have above and beyond everybody else is the desire to go out and win races. We’ve got 500‑plus employees at Hendrick Motorsports. When they all want to go out and win races (and) you put guys like this [Jimmie Johnson] behind the seat, you’re going to see magic happen” (nascar.com).

–       Crew Chief Chad Knaus

Tools

lowescar

 

 

 

 

 

Talent

500x_jimmie_johnson_winThe winner, Jimmie Johnson, has proven talent and experience:

  • 400 starts in the NASCAR Spring Cup Series
  • Second Daytona 500 victory
  • Five-time NASCAR champion

 

Technique

11-18-12-johnson-pit-crew-4_3_r541_c540“The work of Johnson and crew chief Chad Knaus is the gold standard in the NASCAR garage. They think of everything, including the risk-reward factor of running a new-generation car in an unruly pack during testing sessions at Daytona. So while others tore up cars and engines and just about everything else — see Edwards, Carl — Johnson’s 48 Lowe’s Chevy remained pristine leading up to the 500.”

“‘I know it was pretty boring for Jimmie from time to time,’ said Knaus. ‘He was running laps by himself when there were packs of 10 cars running around, but we felt that was the best way to understand this new generation of race car’” (thedailyworld.com).

Teamwork

What is the secret to Hendrick Motorsports’ success?

johnson&hendrck

  • “Mr. Hendrick and the people he gets to make this place go.” – Kasey Kahne
  • “People and passion in what they do.” – Jeff Gordon
  • “The people; it’s all about the people.” – Crew Chief Kenny Francis
  • “We say we’re driving performance together. It’s everybody working together.” – Rick Hendrick

Tenacity – The Drive to Win

Johnson500Win

  • Hendrick Motorsports has a NASCAR record 13 owner’s championships and 14 overall
  • Roster of top drivers Kasey Kahne, Jeff Gordon, Jimmie Johnson and Dale Earnhardt Jr.
  • Hendrick is second on NASCAR’s all-time Cup wins list (1949-present) and leads all owners in modern-era victories (1972-present)
  • His Cup-level teams have won at least one race each year since 1986 – the longest active streak – and averaged nearly 10 wins annually during the last decade. (hendrickperformance.com)

Five T’s for BI Success

That formula for winning the Daytona 500 should also apply when it comes to “taking the lead” in business intelligence. As seen by Hendrick Motorsports, success is not an accident; success is a result of bringing the right elements together for a winning combination.

In business, BI is more than a technology experiment; it is an essential element in institutionalizing actionable analytics. When the goal is to create competitive advantage, the ability to make accurate, data-informed decisions is a key to driving the business forward. Those decisions are made by teams who blend the right tools, talent and techniques together and have the tenacity to overcome obstacles.

DSS is made to be on such a team.

Big Data vs. Actionable Analytics

Dilbert

“Big Data” has quickly risen as THE top buzzword in business intelligence, but what does it mean in terms of the supply chain’s impact on profitability?

The Answer: Very Little

A recent article defines Big Data as “a generic term for ‘analytics’, except it’s done by ‘data scientists’ rather than ‘business analysts’…. folks like McKinsey and the Harvard Business Review have used it to describe pretty much any business opportunity related to data.”

What do we care if, as the Harvard Business Review says, “The permutations of available data will explode, leading to sub-sub specialized streams that can tell you the number of left-handed Toyota drivers who drink four cups of coffee every day but are vegan and seek a car wash during their lunch break.” While those statistics may be of interest to sales and marketing departments, they hold little value for supply chain owners. With D2C logistics operations expense as high as 30-35% of sales, I’d rather focus on understanding what’s driving order cycle times, shipping expense and returns.

So here we go again, getting distracted by new hype surrounding new technologies. So what if Big Data is Available, is it…

Complete?

Accurate?

Relevant?

Actionable?

A recent article on business intelligence trends to watch in 2013 says, “Trends for BI and analytics may sound brash and cutting-edge, but for businesses to see success with the new, they’ll still need to master the old.” And that means focusing on the ability to translate complete, accurate and relevant data into ACTIONABLE SOLUTIONS.

You have to be able to turn 1’s and 0’s into X’s and O’s if you want to make plays – so put us in, coach.

 

Dilbert Comic Source