Case: Analytics in Decision Making After completing your college degree you go to work for an energy generation company. For the last two years you have been relocated to a remote town in the Midwest for a special project. Your entrepreneurial instincts have led you to explore problems faced by farmers in the region. One of the problems you have uncovered is the difficulty in finding replacements for farm equipment parts. Although most farmers are able to identify which equipment part has developed a problem, it is difficult for them to arrive at the technical specifications of the part in order to buy a replacement online. To address this issue, you have developed an analytics app with your friend Nerd. By using this app, farmers can simply take a photo of the faulty part and the app generates all the associated technical specifications. The app also generates pricing information from different websites and allows farmers to complete their purchases. After 3 months of beta testing, you are contemplating a key business decision. After analyzing the results of beta testing, you have noticed that 60 percent of sales were generated by 50 equipment parts. You are thinking that if you could buy or rent a warehouse, you could stock these 50 parts by buying them from manufacturers in bulk. You could then sell these parts to end customers by taking advantage of the margin while still being competitive. Due to your proximity to the end customers, you are confident you can offer a better service compared to existing market players. Going ahead with this plan will allow you to expand your business beyond just the software application and to generate more revenue. This way, you will be able to quit your job and become a full-time entrepreneur. Case Questions Before going ahead with this plan, you need to answer the following: Should you have in-house warehousing and logistics for handling those 50 parts, or should you outsource these functions? What data analytics do you need to consider? What qualitative factors should you consider? If you decide to outsource, will you partner with one warehousing and logistics provider for the entire region or will you engage in multiple partnerships? Why? If you decide against outsourcing, what techniques and which types of data will you use to ensure efficient and effective warehousing and logistics operations?
Case: Analytics in Decision Making After completing your college degree you go to work for an energy generation company. For the last two years you have been relocated to a remote town in the Midwest for a special project. Your entrepreneurial instincts have led you to explore problems faced by farmers in the region. One of the problems you have uncovered is the difficulty in finding replacements for farm equipment parts. Although most farmers are able to identify which equipment part has developed a problem, it is difficult for them to arrive at the technical specifications of the part in order to buy a replacement online. To address this issue, you have developed an analytics app with your friend Nerd. By using this app, farmers can simply take a photo of the faulty part and the app generates all the associated technical specifications. The app also generates pricing information from different websites and allows farmers to complete their purchases. After 3 months of beta testing, you are contemplating a key business decision. After analyzing the results of beta testing, you have noticed that 60 percent of sales were generated by 50 equipment parts. You are thinking that if you could buy or rent a warehouse, you could stock these 50 parts by buying them from manufacturers in bulk. You could then sell these parts to end customers by taking advantage of the margin while still being competitive. Due to your proximity to the end customers, you are confident you can offer a better service compared to existing market players. Going ahead with this plan will allow you to expand your business beyond just the software application and to generate more revenue. This way, you will be able to quit your job and become a full-time entrepreneur. Case Questions Before going ahead with this plan, you need to answer the following:
Should you have in-house warehousing and logistics for handling those 50 parts, or should you outsource these functions? What data analytics do you need to consider? What qualitative factors should you consider?
If you decide to outsource, will you partner with one warehousing and logistics provider for the entire region or will you engage in multiple partnerships? Why?
If you decide against outsourcing, what techniques and which types of data will you use to ensure efficient and effective warehousing and logistics operations?
Step by step
Solved in 3 steps
