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Experimenting with Data

December 13, 2009

Having a lot of data can make you feel informed and in control, but that can be deceiving.  All companies have more data points at their disposal than ever before.  But only some organizations know how to turn data into knowledge and insight.

Having data alone is worthless.  For example, virtually all companies know exactly what they buy and when they buy.  It’s all recorded in the subledger.  But not all companies use this information to source better.

You work hard everyday to accumulate all this data.  It should earn its keep.  Here are a few new ways to play with the data you already have:

1.  Experiment with a Timeline: Look at when journal entries are posted after period cut-off.  Is there a telling trend?  Are there any that can be posted earlier (so you can distribute a more accurate flash?)

2.  Experiment with Exceptions/Errors: How many non-standard check runs do you do each month?  How many error correcting journals do you book?  What are some ways to prevent these?

3.  Experiment with Totals: Add up how much money is spent with the five largest vendors.  Or, add up how much money is spent in the top five purchase categories.  Can you earn a bulk discount with your top vendors?  Can you source top purchases to just a few vendors and earn a discount that way?

4.  Experiment with Production: Compare total number of transactions each person processes for one month.  Is there a big difference between the two people who processed the most and least?  There could be a training opportunity.  Caution that initial results can be misleading.  A very “efficient” person may produce many errors, for example.

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The Back Office Mechanics Blog by Nancy Wu is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.

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