Decision making is, and always has been, an important activity at the centre of every business. Whether it’s deciding the volume of products that need to be manufactured, the countries to export to, or switching marketing strategy for the quarter, decisions drive business performance and growth.
However, the business landscape has changed dramatically over the past decade. Businesses now operate in a 24/7 global environment, employees work across organisational boundaries and time-zones, customers demand instant responses, and for the manufacturing industry in particular, a growing skills-gap can expose personnel in decision-making positions. In any environment, being able to respond decisively, quickly and correctly is vital.
Understanding the risks of ill-informed decisions
According to the PwC 2014 Big Decisions survey ‘Gut & gigabytes’, 44% of the executives surveyed make a big decision every three months. However, how many of these decisions are made with the correct information? Unfortunately, the reality is not many.
Our recent research, conducted with ICM, reveals that over three quarters (79%) of office workers in the UK, Sweden, Germany and the UAE have had to make un-informed decisions at some point in their career, with a third (33%) doing so on a weekly basis, and perhaps more worryingly, 14% doing so on a daily basis.
However, what many businesses may not realise is that un-informed decisions can have serious business implications. For example, choosing to present a proposal without having reviewed the profitability of past orders could squeeze profit margins. Similarly, introducing engineering changes without assessing the impact on current works in progress or raw materials can affect orders and increase lead times.
Poor decisions over production priorities can lead to wasted man-hours, late deliveries, inflated work-in-progress, increases in working capital and worse, poor customer satisfaction levels – all factors that could prove detrimental to the future performance and profitability of the company.
In fact, when asked to predict the likely impact of their most important decision, respondents to the PwC survey gave estimates ranging from under US$1m to over US$10bn – a clear indication of the true impact an un-informed decision can have on the business.
It’s not just the company that is at risk from blind decisions, but employees’ health and wellbeing too. Our research indicated that 40% of European office workers suggest that making decisions without sufficient information leads to higher than necessary stress levels. Further consequences cited by respondents include; damage to an employee’s personal reputation (36%), poor personal performance (29%), and 1 in 6 even fear that they may lose their job due to making the wrong decision (17%).
So with the consequences clear and time of the essence, how can businesses ensure that their staff are making the right decisions, when and where they’re needed?
A simple answer to the solution could lie in technology; more specifically – in the next generation of enterprise resource planning (ERP) solutions. Today’s ERP systems enable the integration of data across the entire product lifecycle – from design, through engineering, manufacturing, delivery, and service — a digital model that allows immediate and actionable information to reach the necessary departments and functions with greater speed, accuracy, and efficiency than ever before.
By encompassing all areas of the business, everyone from C-Level executives, to those on the manufacturing floor, can have access to the information they need, filtered and in real-time, ensuring that decisions are being made based on relevant, accurate and reliable data.
The benefits are plain to see. In fact, over half (52%) of respondents in our research believe that the solution can be found with technology. However, despite the widespread adoption of enterprise management solutions, why do companies continue to generate islands of information on paper, registers and spreadsheets to manage business processes and collate data?
Data is now accumulated from a wider variety of sources than ever before, so it’s becoming increasingly difficult to manage a huge and tremendously growing wealth of information, whether that be financial transactions data, inventory data, production information, vendor data, employee database or even emails. While deploying a data driven approach may seem to be the logical answer, for many businesses it’s not that easy.
With such a vast amount of data to interpret and analyse, it can be hard to determine which data points are relevant and aid decision-making. To eliminate complexity, individuals need to access and contextualise data in a format that suits their own preferences and requirements. This could be via role-based dashboards, graphics or alerts, or even screen views that arrange the most critical information first.
All data still needs to be stored in a central integrated repository, with users able to access it at a location and from whatever device suits them. By enabling users to consume information in a way that they are familiar with in their personal lives, such as via social and mobile technologies, it instantly becomes easier to digest and understand.
It’s also important that businesses opt for an ERP system that can use analytics and process automation to speed up decision-making. By automating decisions where possible, businesses can eliminate human error and improve the speed of decision-making simultaneously.
Fostering a culture of high-performance
In high-pressured environments such as manufacturing and distribution, there’s no margin for uncertainty. Businesses are under increasing pressure not just to make the right decision, but to do it quickly. Those that fail will be those that either made the wrong decisions, late decisions or no decisions – and they will be the ones that aren’t providing their employees with real time, relevant information in the context they need using a technology they are comfortable with.
With the business landscape developing at such a rapid pace, it is essential that all businesses, irrespective of size, equip themselves with effective business management tools to facilitate effective decision-making at all levels. Most businesses understand the importance of an innovative, flexible and skilled workforce that’s both supported and enabled by technology.
By putting in place a modern and intuitive ERP system that integrates all areas of the business and utilises social, mobile, and analytic capabilities to provide contextual information, organisations can not only help employees feel more confident about making faster and better decisions, but also foster a culture of innovation and high-performance. Ultimately, this is what leads to business growth.
Sourced from Martin Hill, VP of marketing, International, Epicor