5 - No Big Data?

This statement and others like it stand out in the current literature:

“Regardless of the tools available, data-driven pricing adjustments allow distributors to . . .”

It suggests that if you don’t have tools, just do it anyway. It is admittedly a frustrating situation to be in.

So there are two positions:

1) You have the data analysis tools - the best position obviously, as long as in addition to the heavy lifting you have effective placement of summary data into management reporting. And remember, if you are going to simulate the Total Cost to Fleet Owner, you will need to factor in non-system details.

2) You do not have data analysis tools - here I think you have to believe that if you have Excel or Access, you have a start. To that, you can introduce results from intermediate tables that you can create to simulate the most important movement.

The Champion demo company uses intermediate table. Here is the setup:

1) define the fleet into a manageable number of models. Champion used a series of 8 models, Model100 to Model800. Total units were 2,040. Assign a user group to each. Champion used size of service provider (the Champion customer) with 5 levels.

2) define the set of work orders opened per model per year. Champion used 42 - 3 PM’s, 3 custom and 36 spread over replacement jobs, attachment and regular repairs.

3) define work order segments. Champion used 10 segments - 5 for main components and 5 for kits. Kits are a key simplifier. Champion’s kits account for about 35% of costs.

4) create tables of frequencies - work order types per model per year

5) there are now 42 x 10 x 8 = 3,360 cells in use. For each, assign a vendor number, a pre-tariff cost and a tariff status - tariff-yes or tariff-no, with country and rate.

Now you are 5 deep on the 3,360 table. This is not unmanageable. It gets populated by formula and results get pulled out by formula and used for segmentation.

To calculate TCFO - Total Cost to Fleet Owner - Champion assembled tables for unit OEM cost and the labor and markup added by the service providers.

We started wondering about this quote. Let’s insert this:

“Regardless of the tools available, with the use of intermediate tables, data-driven pricing adjustments allow distributors to . . .”

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