Analytics III: The Data Expert and His Warehouse

Today’s post is by Eric Strovink of BIQ.

Nothing is potentially more dangerous to an enterprise than the “data expert” and his data warehouse. In the data expert’s opinion, every question can be answered with an SQL query; any custom report can be written easily; and any change to the database schema can be accomplished as necessary. Everything of interest can be added to the warehouse; the warehouse will become the source of all knowledge and wisdom for the company; life will be good.

How many times have we heard this, and how many times has this approach failed to live up to expectations? Problem is, business managers usually feel that they don’t have the background or experience to challenge IT claims. There’s an easy way to tell if you’re being led down the rose-petaled path by a data analysis initiative, and it’s this: if your “gut feel” tells you that the initiative’s claims are impossibly optimistic, or if common sense tells you that what you’re hearing can’t possibly be true (because, for example, if it’s that easy, then why isn’t everyone else doing it), then go with your gut.

Sometimes the reflexive response of management to an IT claim is to say, “OK, prove it“. Unfortunately, challenging a data expert to perform a particular analysis is pointless, because any problem can be solved with sufficient effort and time. I recall an incident at a large financial institution, where an analyst (working for an outsourcer who shall remain nameless) made the claim that he could produce a particular complex analysis using (let’s be charitable and not mention this name, either) the XYZ data warehouse. So, sure enough, he went away for a week and came back triumphantly waving the report.

Fortunately for the enterprise, the business manager who issued the challenge was prepared for that outcome. He immediately said, “OK, now give me the same analysis by …“, and he outlined a number of complex criteria. The analyst admitted that he’d need to go away for another week for each variant, and so he was sent packing.

It’s not really the data expert’s fault. Most computer science curricula include “Introduction to Database Systems” or some analog thereof; and in this class, the wonders and joys of relational database technology are employed to tackle one or more example problems. Everything works as advertised; joins between tables are lickety-split; and the new graduate sallies forth into the job market full of confidence that the answer to every data analysis problem is a database system.

In so many applications this is exactly the wrong answer. The lickety-split join on the sample database that worked so well during “Introduction to Database Systems,” in the real world turns into a multi-hour operation that can bring a massive server to its knees. The report that “only” takes “a few minutes” may turn out to need many pages of output, each one a variant of the original; so the “few minutes” turns into hours.

Consider the humble cash register at your local restaurant. Is it storing transactions in a database, and then running a report on those transactions to figure out how to cash out the servers? No, of course it isn’t. Because if it did, the servers would be standing in line at the end of the night, waiting for the report to be generated. A minute or two per report — not an unreasonable delay for a database system chewing through transactional data on a slow processor — means an unacceptable wait. That’s why that humble restaurant cash register is employing some pretty advanced technology: carefully “bucketizing” totals by server, on the fly, so that it can spit out the report at the end of the night in zero time.

We’ll talk about “bucketizing” — otherwise known as “OLAP” — in part IV.

Previous: Analytics II: What is Analysis?

Next: Analytics IV: OLAP: The Imperfect Answer

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Reverse Logistics Tips from World Trade Magazine

A recent article in World Trade Magazine, “Reverse Logistics: Money Tree or Money Pit?”, had some good suggestions on how to streamline your reverse logistics supply chain to reduce costs and increase customer satisfaction. Quoting a recent study from the Aberdeen Group that found that best-in-class firms reduce return times by over 75%, increase customer satisfaction by 15%, and reduce repair costs by 10%, the article noted that companies best-in-class in reverse logistics have a few things in common.

  1. Standardized Return & Repair Processhodge-podge processes drive up costs
  2. Ability to Recover Costs from Suppliersa contract that allows for the recovery of costs is one thing, the ability to recover those costs is something else
  3. Real-Time Information Retrievalwhen a customer calls, it is imperative to be able to provide them with an update on their return status
  4. Multi-Channel Visibilityreturns can be initiated in the store, on the website, or over the phone, and can be shipped from the store, a reseller, or the home

This leads to the following best practices:

Multi-Channel Visibility

Customers expect a seamless experience. The ability to return an item ordered online to a store or an item bought at a store over the phone if the store is far away is critical. This requires the returns system to be integrated across all of the channels.

Centralized Returns Facility

Reverse logistics goes more smoothly through a dedicated facility which is set up to allow for sorting, testing, repackaging, and shipping of goods to repair centres or supplier distribution centres. These facilities can provide a way of visually identifying common problems quickly and efficiently. Consider the example of the weed whacker manufacturer who was able to identity the reason for a 266% increase in returns by noticing that the switches were white instead of blue, which was the colour of the approved switch.

Quick Problem Identification

Considering that 70% of goods returned as defective actually work, it’s imperative to quickly determine which goods are truly defective and need to go to the repair centre and which goods can be repacked for resale. In addition, with many of today’s products being (built-in) battery powered, many times the problem is just a bad battery, and the repair is as simple as swapping out a defective battery for a good one — something that can be done in the returns depot, saving an expensive return to the repair centre.

Since even the best efforts to improve quality won’t eliminate defects entirely, and since customers will continue to return products that aren’t really defective (or that just need a new battery), it’s important to have a streamlined reverse logistics process to ensure customer satisfaction stays high while costs stay low.