The Profit’s in the Details: Using Data Analysis to Increase Your ROI

It’s no secret that the companies that withstand the test of time are the ones that remain profitable no matter what exterior variables they face. However, being profitable consistently and preparing for the countless possibilities as a leader is not as easy as it may appear at first glance.

This is where data analysis and predictive data come into play. With a strong grasp on your company’s data and how it affects your day-to-day operations and success, you can increase your profits and see a return on your investments in every facet of your business — not just your direct ROI. In order to see how data can benefit your company as a whole and help your ROI in ways far surpassing immediate and visible profits, it’s important to first look at the benefits of data in our society as a whole.

The Indisputable Benefits of Data

To understand the value and power of data, you needn’t look far. Data isn’t just something that scientists and mathematicians utilize to measure their experiments and devise hypotheses. It can be used to improve people’s lives, make informed decisions, determine intelligent solutions to various problems, and yes, even predict the future with a level of accuracy that guessing and assuming simply can’t achieve.

The truth is that everything in our world is organized and managed through data. From traffic lights and school records to social media and music. With enough data that is managed effectively, practically anything is possible.

One incredible example of the power of data can be seen in the way that the pandemic was handled — more specifically, how government officials working together and compiling their collective data helped to develop vaccines in a faster timeframe. According to, “The Chinese authorities released the genetic sequencing of the coronavirus very quickly. This has fast-tracked efforts to find a vaccine around the world. Research milestones, that normally span years, are being squeezed into months…our ability to harness emerging technologies to decode and analyze data is a world apart. In many ways the crisis has shown how far we have come.”

However, data’s strength doesn’t end there. Data has also helped to develop cures for terminal illnesses, improve the lives of disenfranchised families, prove important sociological concepts, create innovative technology, and much more. So, the question we must ask ourselves is not if data is valuable but rather how we can harness the power of data to succeed as business leaders in our respective industries. For that, let’s take a look at how to connect data and profits seamlessly below.

Connecting Data and Profits

One of the most crucial facts that companies must recognize when tracking data is that data is only as effective as the ways in which it is leveraged. If you compile data but never use it to your benefit, you might as well track nothing at all.

Knowing this, it’s important to not just create a data management and tracking plan but an analysis and implementation plan as well. To start, figure out what data to track based on your wants and needs as a company. Twilio has an excellent data tracking plan guide that can help you to know how to track these metrics successfully once you’ve determined which ones matter most to you and your brand. Some of the most common data types that companies track are as follows:

  • Total Revenue
  • Overhead
  • Variable Costs
  • Gross Margin
  • Customer Lifetime Value
  • Win Rate
  • Retention Rate
  • Brand Sentiment
  • Perfect Order Index
  • Inventory Turnover
  • Supplier Relationships
  • Supply Chain Cycle Time
  • Supply Chain Costs
  • Warehouse Price
  • Return Reasons

With the different data points being analyzed on a consistent and thorough basis, you can now determine how these various data points can be applied to your business model for increased profits at last.

To help with this, let’s take a look at how supply chain data alone can help a company increase their profits and employee/customer retention.

  • Total Revenue

The power of total revenue tracking as a company is relatively obvious as most successful businesses will likely already have a plan to track this data point in place. However, what many companies fail to track in relation to this metric is how it is influenced by your supply chain specifically.

Considering this, companies should seek to track not just their revenue but how it relates to the other metrics in this list as well. For instance, if your supplier relationship is strained or your orders are rarely considered ‘perfect,’ you will want to be able to show how this is directly affecting your revenue in order to create a base to compare yourself to when switching suppliers or production procedures moving forward. Using this data point, you can see precisely how changes in your supply chain affect your profits and determine precisely what decisions are benefitting your business in the long run.

  • Perfect Order Index

The perfect order index tracks your company’s ability to package and ship products out to your customers on time and in a satisfactory manner. If your orders are being sent on time and received positively by your customer base, your perfect order index will likely be high to reflect these efforts.

However, if your company has bottlenecks in their supply chain or production line, your perfect order index will be low and will help you to recognize a problem that can then be tracked down and fixed to increase your customer retention and satisfaction significantly. This will help your profits directly as a happy customer is a loyal customer. In fact, 87.2% of organizations agree that customer loyalty can relate directly to commercial success.

  • Inventory Turnover

Your inventory turnover also can help you to increase your profits as it will tell you exactly what products are the most popular, where you can cut costs on inventory, and whether or not you are actually appealing to your customer base overall.

With this information, you can transition to a different supplier if necessary, increase your product base, or even reduce your inventory to save money on warehouse space and products that don’t resonate with your customers. All of these decisions can save you money and help you to grow your brand organically.

  • Supplier Relationships

One of the most important metrics that businesses rarely track when it comes to their supply chains are the relationships they have with their suppliers. However, by tracking these relationships, you can find the best suppliers for your company locally and determine when to end relationships as well.

For instance, if you take a look at your supplier relationships and find one supplier isn’t consistent, communicative, or cost-effective, you can begin to look at other suppliers that will help improve your product quality, perfect order index, total revenue, and supply chain cycle time significantly. When transitioning to new suppliers, you can utilize the Stimulus Relationship Intelligence Platform (SRIP) as it will help you to analyze your data and find suppliers that can truly meet your company’s needs and increase your profits year after year.

  • Supply Chain Cycle Time

Supply chain cycle times help us to determine how long each supplier relationship we have takes to meet our needs and our customers’ needs. This data is invaluable when it comes to determining potential profit losses in your shipping, quality, and inventory rates.

If you have suppliers that are regularly taking too long to deliver products or delivering subpar products that must be returned and replaced, you can begin to look for new suppliers that will increase your profits and eliminate these problems in the future.

  • Supply Chain Costs

Similar to your supply chain cycle time, you will also want to track how much your supply chain relationships are costing you as well. This will help you to compare them to other vendors in your local area and determine if you are actually getting a reasonable price for your inventory and its overall quality.

If you compare your current vendors and find that you are being overcharged in any way, you can cut ties with those suppliers and save money by working with individuals that aren’t taking advantage of your company and customers.

  • Warehouse Price

Just as the price of your inventory is important to track, you must also track the cost of your warehouse space likewise. If you don’t have a warehouse or storage facility to keep your inventory, this data point isn’t applicable.

However, for companies that do, tracking this information can help you determine if you need to upsize or downsize, if you should decrease or increase inventory, and if you are getting a good price on your warehouse compared to other warehouse costs in your area. Compared to your revenue, these metrics can show you where to cut costs or increase your operations in a seamless manner.

  • Return Reasons

Lastly, if your company is currently struggling with frequent returns, don’t despair. Instead, by tracking the reasons for your returns, you can trace them back to the direct problems along your supply chain and shipping processes.

For instance, if your company is receiving frequent returns because of subpar product quality, you can take a look at what products they are purchasing, determine what supplier they have issues with, and communicate this with that supplier to either rectify the problem or find a new supplier to replace the. By doing this, you can increase your customer satisfaction rates moving forward which will help you grow your brand and increase your profits in an entirely organic and data-centric way.

By seeing how these various supply chain metrics can benefit your profits as a company, it’s now time to begin tracking them and using them to grow your business and its online image accordingly. After all, as we stated before, data means nothing if it isn’t being used effectively.

Transforming Your Data Into Business Success

To begin to transform your business through data analysis and management, you will need to compile all of your current data and find a way to measure it all in a simple and consistent manner. For sourcing and supply chain management, SRIP is ideal as it not only can hold all of your data in one convenient platform but it will utilize said data to find suppliers that will increase your profits, expand or grow your relationships, and even help you match suppliers quickly to contract opportunities.

As a data-driven software platform, SRIP helps brands to truly take their data to a whole new level and see exactly what data can do for profits, customer satisfaction, and company image. To learn more about the power of data in the supply chain and how Stimulus ties into this powerful and modern market, be sure to sign up for a SRIP demo today.

In the end, data isn’t just a list of numbers and points that only ‘data-nerds’ can appreciate. Instead, it may very well be the answer to all of our problems as diverse leaders for a future of efficiency, automation, and consistently unstoppable growth. So, what are you waiting for? It’s time you join the data-driven future at last.



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Stimulus, Inc.

Stimulus, a relationship intelligence software that helps companies build more valuable vendor and supplier relationships.