Why Statistical Data Is Important To Your Business

Statistics. A boring subject for many. It brings to mind endless meetings where numbers are thrown out by some bean counter shuffling papers. When you finally find the spot they were referring to, they had moved on to a new page and a new topic. In frustration you listen to the drone of numbers and percentages and settle in to a boring meeting. I hated statistics in college.

However, statically data is one of the most important and interesting pieces of information available to management. It is defined as the art of good decision making in the face of uncertainty and is used in financial analysis, production and other operations including services improvement.

While a profit and loss statement (or P&L) will tell you how your company is doing financially, a monthly statistical report will help you determine where you can improve and how to do it. Don’t get me wrong, an accurate P&L is also essential to your business—especially if your P&L compares to last year and budget. This is the roadmap for your financial success. It can also tell you which departments are running higher or lower expenses than expected and how revenue compares to historical and budgeted records.

Nonetheless, statistical data is also essential. Strong companies keep monthly statistics on any non-dollar item that is essential to their work. Some statistics that companies should have are hours, number of sales calls made by each sales person, number of outgoing calls made by each sales or customer service staff, how long each call is, what the waste is for each job you produce, how many hours each job takes and what hours are just scheduled.

Let’s walk through a case. ABC Company builds widgets for customers. Your production payroll is over last year by 4%, yet revenue is flat to last year. There have been no additional positions added in the last year and no major down time was reported during the month.

You pull out your monthly statistical reports. You note that the average hours per job are over last year by 3%. Why? You also note that waste is higher than normal. After some discussion with the production manager you discover that some of the new materials that were purchased three months ago are not running through the machines efficiently, taking more of productions time in processing the jobs and using more material to get a good product produced.

Now that you know what caused the high payroll in production you can take steps to rectify it. Would you have discovered what caused it without your statistical reports? Probably, but it would have taken longer and, more importantly, you would not have had empirical data to show your production manager what happened.

Statistics may be a boring subject, but it sure can make your job easier.