Week4-Final Project-Applying Business Metrics to a Business Case Study

2017-07-23(日) 蓋樓[214]

Applying Business Metrics to a Business Case Study

A、Problems：

1. The average number of visitors per store has held constant over the past several years.

2. Revenues per store are down by an average of 10%.

3. The client suspects that a large amount of inventory is being thrown away unused at the end of each day.

4. customer polling suggests that the yogurt flavor customers want is often not available, even when the flavor is posted on the menu.

5. People complain about stores being closed when they visit.

6. the chain is facing increased competition from frozen yogurt sold in 24-hour grocery stores.

B、Current Data

1.Cash register data:

• Each transation

• The date and time of the purchase

• The specific items

• The sales price of each item purchased

To sum up, the above data can also viewed as Stock Keeping Unit(SKU).

2. Delivery data：

• How much of each kind of yogurt mix, flavoring, and topping was delivered to each store each week.

3. public company company accounting data

• Annual revenues

• Annual cost of goods sold

• In-store inventory on hand at the end of the year.

C.To improve Happy Hat’s revenue or store profitability , we have to follow the 5 steps.

Step1:Indentify 3 business metrics

Pick 3 business metrics, they are revenue metrics, Profitability metrics, and risk metrics. Besides the following is these metrics' details.

• Revenue metrics relate to sales and marketing and focus on the sales comparisions from different areas.

• Profitability metrics to efficiency and logistics, production like inventory management and wastage of inventory.

• Risk metrics to risk management, and are widely used by a company's creditors, and outside investors. Another focus is on churn rate.

Step2:Ｍap the 6 problems into the 3 business metrics

• Problem1 and 2 are related to sales and marketing, so they belong in revenue metric.

• Problem3 and 4 are related to inventory wastage and insufficient inventory, so they belong in revenue metric.

• Problem5 and 6 are related to churn rate and competition, they are more related to risk metrics.

Step3:Classify submitted metrics into tradtional or dynamic metrics and give an explanation.

• 1.The submitted metrics are classfied to trational metrics

• 2.According to the glossary,

  Business metrics related to financial and managerial accounting, in particular those used for required quarterly or annual financial reporting.

The providing data elements are belong to traditional metrics. Futhermore, Dynamic Metrics will have specific actions with significant impact in short period of time.

As a result, the submitted metrics are clssfied to trational metrics

Step4：Judge if the metric derived from data elements are avaible

• Yes,the data elements are avaliable.

• Example1:We can use third data to find our the average days Inventory to evaluate profitability metrics.

• Example2:we can use first data elements to calculate churn rate,which is belong to risk metrics.

Step5:Specific solutions and give the reasons:

• Increase the average days Inventory

  • I can calculate the the average days Inventory from the company's inventory on hand at the end of the year and the total annual cost of goods sold. Furermore, we can dectect inventory on hand more frenquently so as to sense slight change in Profitability Metrics.

• Find out the customers in web marketing

  • To give customers better shopping experience, the company should develop mobile-optimized version for web site and record web site visitors' full click-stream.

    As a result, we can identify our online customers and access the changes of customers in months or weeks in different areas. To sum up, this solution is to improve revenue metric.