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Using EDM to effectively allocate resources


Continuing my series on using EDM to manage in a recession, allocating resources effectively. In a recession resources are, almost always, constrained and so the proper and effective allocation of resources can be critical. Enterprise Decision Management, EDM, is particularly useful in allocating resources to customers. This plays out in a couple of key ways.

Firstly, think about all the occasions when staff have to make judgment calls about customers and whether to allocate resources to them or not. When someone returns something without a receipt, when someone asks for a discount or a special privilege. All too often companies rely on front line staff to make these decisions unassisted or only provide tools to access data, something front line staff rarely have the time or skills to do. EDM can be used to automate these decisions, applying the rules established by the company and, in particular, the rules about who is and who is not a valuable customer. Predictive analytics can also be used to apply those resources where they will have the most impact. Instead of relying on how a customer looks or how pushy they are, staff allocate resources systematically and effectively. Check out this story about returns, for example.

For organizations that have loyalty programs a similar argument can be made. The purpose of a loyalty program is, of course, to make customers more loyal and more profitable. Allocating resources purely on the basis of prior behavior, however, is very inefficient. Using EDM you can apply your resources where they will make a difference. You can make an offer to someone that will make them more likely to become a better customer, you can target loyalty rewards to someone whose behavior you predict will change when you do so. You can change and adapt the rules of your loyalty program to allocate resources effectively as conditions change and so on. Applying more sophisticated decision making logic to loyalty programs can boost returns and allocate resources more effectively.

The first two examples were focused on customers but there is potential on the supply side too. Automating decisions about suppliers and reordering can ensure that the best value suppliers are used and that order volumes and timing are optimal for profitability. Ensuring that resources are not wasted on unnecessary stock or poorly performing suppliers can squeeze expense from your supply chain.

Finally you may feel you don’t know exactly what will work as the economy changes. Adaptive control and constant challenging of what you believe to be your most effective approach is key. As the economy changes and people respond to those changes, your challenger strategies help ensure that you are using the most effective approaches.

EDM brings rigor and analytics to operational decision making and so can really improve the allocation of sparse resources.


Comments on this entry are closed.

  • Nathan Jones February 6, 2008, 11:08 am

    Hi James,

    Thanks for taking the recession idea on. I thought the cost control article was very useful, the examples are real-life enough to get a good feel of what to do to sell EDM to business people.
    How have you found the process of thinking about EDM in this way? Is it constraining or creative?