About management decision support systems
I was not too lazy and phoned several managers of companies, my clients. On the subject - if they know what a "decision support system". Do not know. However, everyone uses it.
It is necessary to clarify this issue. And at the same time, we will consider this article the fourth part of a series of articles on testing ERP-systems.
Those who believe that decision making is the prerogative of important guys in high offices are mistaken. In fact, in business every day a large number of decisions are made at different levels.
When I wrote the first part , some readers accused me of writing about too simple things, and not about high matters. And that de ERP systems are created for high matters. Here in this part and talk about high matters. I just could not talk about complex reports, analysis, without talking about simple tools for automating business processes, without which no analysis is possible.
')
So what is a “decision support system”? In fact, everything is simple. Here you go by car. Every second you make decisions: add something, slow down, fill up, then something else. How do you accept them? Well, of course, looking at the dashboard. No one will make decisions for you, but you need adequate information about the state of affairs to make the right conclusion.
Decisions are made at different levels. Somewhere it is enough just to have the right data in front of your eyes and you will make an unmistakable decision, as is the case with a car. However, if you introduce yourself at the helm of an airliner, then the situation is changing. Here, too, there are devices and they work, but special decision-making is necessary for making a decision. Here, just a transparent picture is not enough.
There are cases that are even more complicated, where there is no sense in the transparency of the picture (instrument readings), because there is too much data and such amount of data a person simply does not digest and does not make the right decision. Therefore, in the absence of a decision support system, these decisions are made intuitively. Well, as it is known, man is prone to make mistakes.
Literally every day there are a lot of questions in business that require quick response and decision making. Here are just a few of the simplest ones:
All these questions interest different people, from an ordinary manager to a company manager. We need answers to these questions for ... decision making.
Answers to such questions are a simple dashboard. Knowing the answers to such simple questions, you will quickly make the right decision.
And now the situation is more complicated. Your company produces or distributes something. Issues that directly affect the level of competition and the effectiveness of your company:
etc.
Correct answers to these questions solve the key tasks of the enterprise. The company does not buy what it does not need right now. She buys and produces what is important right now. It does not overstock warehouses, it produces quickly and on time. If you do not know what you should buy now first of all, you will buy the wrong thing and:
The system provides answers to these questions. Answers to these questions should be at the level of mathematical accuracy in order to exclude the human factor. Such a system, in my opinion, is Goldratt's Theory of Constraints. How she works in the field of procurement management, I told (and showed) here , in the field of production here .
Thus, the decision support system is a tool that allows you to quickly get the information you need to make the right decision.
But in what form is this information needed? And here is the main difficulty. You can also find a needle in a haystack. Just what effort ...
Information should be concise, simple and does not require any effort for its perception. For example, in procurement and production, it is simply a list sorted in order of priority. The principle is simple - take care of what is on top.
For example, in many ERP systems, in order to simply look at the remains of a particular product at
warehouses, reserves and other very simple information, you need to do a whole report. This is elementary information, a few numbers, but to get them you need to perform a lot of actions.
Information must be dosed. A report that is larger than one page is suspicious. First you need to see the main thing, then, if there is a need to detail the information already, and not dump it all at once. Otherwise, you will spend a huge amount of time searching for the right information.
Here is how, for example, a report on the financial condition of an enterprise may look. Everything is clear on one screen. How much money we have, how much we owe, how much we owe, etc.
As a result, you understand whether your company is growing at all or not. How do key indicators change over time, etc. And you can make decisions on how to change them.
Here, you do not like the amount of receivables. Then you detail it in the necessary section (for example, by customers) and work with it. Send customers letters, call, etc. And your actions should change the situation for the better. If you change, then you have made the right decision.
The report, which is shown below, tells you where the profits come from in your company. At the expense of what you earn, where and how much you spend and how the situation changes over time.
If a company has an extensive branch structure, then of course such a report should be received not only for the entire enterprise, but also for each branch separately. "The average temperature in the hospital" is, of course, not bad, but it is also desirable for each patient. And if it turns out that one of the branches is not profitable? That's what you need.
If a business is project-oriented, then of course such a system must also give a report on projects in order to understand which is unprofitable and which is profitable, in order to understand the reasons for unprofitability and to correct something.
There is another report that talks about financial flows, but I will not overload the post here with pictures, I think that's understandable. It is called a cash flow statement. By and large, it shows how much more money comes to a company than it leaves. Especially serious conclusions about the state of affairs on it can not be done, but many people “buy” for it and believe that if there is money, it means things are going well. But in reality, the state of affairs can speak only those two reports that I showed. If there is money in business, it does not mean that you can take it in your pocket, because it is not a fact that the company has earned this money. The illusion that everything is good, may arise from the fact that customers make prepayments, banks give loans. And then there are crises ...
So the assessment of the state of the company must be approached skillfully.
If there are tens of thousands of product names in a company, then it is necessary to constantly engage in the optimization of the product range, optimization of warehouse stocks. The system should help answer the question - where are the leaders and where are the outsiders among the nomenclature. You should always know what products you bring nothing but a headache. The presence of goods in your assortment is, after all, the cost of it. The goods need to be brought, it needs to be stored, provided with document flow, etc. And if he does not bring profit at all? Moreover, it is very interesting to find in my assortment a product that does not bring profit, but it does bring a lot of turns. This is one of the most dangerous goods. For which you need to work in the first place. Find out the causes of low profitability and eliminate them. Or refuse such a product. Of course, to do this manually, without an ERP system, is simply unrealistic.
Incorrect, unsystematic procurement can cause serious damage to the business. In the warehouse, you can freeze a huge amount of money, and then still get a problem with the sale of what no one needs. As old Matroskin used to say "in order to sell something unnecessary, you must first buy something unnecessary." And sell something just the problem. I touched on this topic in the article In search of working capital , I do not want to repeat.
Or, for example, optimization of the client base. Here you have 500 customers. One brings 0.1% of turnover, but at the same time 3% of profit, and the other 3% of turnover, but at the same time 0.1% of profit and even 10% of the receivables. The first is your best customer, and the second is a parasite that settles well on your neck. All you need to know and work with it. The first of the most attentive manager, the second of the most experienced, able to conduct complex negotiations, in order to somehow change this situation.
Another situation. Here is a picture showing the remnants of the warehouses and other interesting information on the product. Interesting information is aggregated. If someone is interested, he will press the button and detail the information he is interested in. For example, by whom exactly are these three pieces in reserve or when exactly these 7 pieces will arrive on an invoice.
In other words, such a system should have the character of an iceberg or cone. You get compressed information, which you can optionally detail and receive in more detail.
Sometimes even in a simple situation, the system overloads the user with completely incomprehensible data. I personally observed the following situation: here there is an account, you need to see when and for what amount it was paid and by what payment order. So, they showed me a special form that was called up with several buttons. And in this very form of data there was so much that even my head was spinning. An infinite number of dates, amounts, checkboxes and other "kryzhikov." Even the demonstrator found it difficult to immediately answer my simple question about why all this variety of buttons and checkboxes.
The decision support system should be built on the principle of a normal cone, not a reverse cone, which is inverted. And in order to extract the necessary information, you need to endlessly study the “sheet” on 20 sheets, armed with a calculator.
It is necessary to clarify this issue. And at the same time, we will consider this article the fourth part of a series of articles on testing ERP-systems.
Those who believe that decision making is the prerogative of important guys in high offices are mistaken. In fact, in business every day a large number of decisions are made at different levels.
When I wrote the first part , some readers accused me of writing about too simple things, and not about high matters. And that de ERP systems are created for high matters. Here in this part and talk about high matters. I just could not talk about complex reports, analysis, without talking about simple tools for automating business processes, without which no analysis is possible.
')
So what is a “decision support system”? In fact, everything is simple. Here you go by car. Every second you make decisions: add something, slow down, fill up, then something else. How do you accept them? Well, of course, looking at the dashboard. No one will make decisions for you, but you need adequate information about the state of affairs to make the right conclusion.
Decisions are made at different levels. Somewhere it is enough just to have the right data in front of your eyes and you will make an unmistakable decision, as is the case with a car. However, if you introduce yourself at the helm of an airliner, then the situation is changing. Here, too, there are devices and they work, but special decision-making is necessary for making a decision. Here, just a transparent picture is not enough.
There are cases that are even more complicated, where there is no sense in the transparency of the picture (instrument readings), because there is too much data and such amount of data a person simply does not digest and does not make the right decision. Therefore, in the absence of a decision support system, these decisions are made intuitively. Well, as it is known, man is prone to make mistakes.
Literally every day there are a lot of questions in business that require quick response and decision making. Here are just a few of the simplest ones:
- money came?
- when will the goods arrive?
- how much does he owe us?
- how much money on hand?
- Is the company’s account receivable rising or falling?
- how much did we earn last month?
- where did the contract go?
- How many goods are free in stock?
- when will the delivery?
All these questions interest different people, from an ordinary manager to a company manager. We need answers to these questions for ... decision making.
Answers to such questions are a simple dashboard. Knowing the answers to such simple questions, you will quickly make the right decision.
And now the situation is more complicated. Your company produces or distributes something. Issues that directly affect the level of competition and the effectiveness of your company:
- What should I buy now?
- What should I not buy?
- How much should I buy?
- When should I buy?
- What should I produce?
- How much should I produce?
etc.
Correct answers to these questions solve the key tasks of the enterprise. The company does not buy what it does not need right now. She buys and produces what is important right now. It does not overstock warehouses, it produces quickly and on time. If you do not know what you should buy now first of all, you will buy the wrong thing and:
- spend money that you could not spend.
- increase inventory in warehouses.
- do not buy what you need.
- the necessary order will be without the necessary components and will be overdue.
The system provides answers to these questions. Answers to these questions should be at the level of mathematical accuracy in order to exclude the human factor. Such a system, in my opinion, is Goldratt's Theory of Constraints. How she works in the field of procurement management, I told (and showed) here , in the field of production here .
Thus, the decision support system is a tool that allows you to quickly get the information you need to make the right decision.
But in what form is this information needed? And here is the main difficulty. You can also find a needle in a haystack. Just what effort ...
Information should be concise, simple and does not require any effort for its perception. For example, in procurement and production, it is simply a list sorted in order of priority. The principle is simple - take care of what is on top.
For example, in many ERP systems, in order to simply look at the remains of a particular product at
warehouses, reserves and other very simple information, you need to do a whole report. This is elementary information, a few numbers, but to get them you need to perform a lot of actions.
Information must be dosed. A report that is larger than one page is suspicious. First you need to see the main thing, then, if there is a need to detail the information already, and not dump it all at once. Otherwise, you will spend a huge amount of time searching for the right information.
Here is how, for example, a report on the financial condition of an enterprise may look. Everything is clear on one screen. How much money we have, how much we owe, how much we owe, etc.
As a result, you understand whether your company is growing at all or not. How do key indicators change over time, etc. And you can make decisions on how to change them.
Here, you do not like the amount of receivables. Then you detail it in the necessary section (for example, by customers) and work with it. Send customers letters, call, etc. And your actions should change the situation for the better. If you change, then you have made the right decision.
The report, which is shown below, tells you where the profits come from in your company. At the expense of what you earn, where and how much you spend and how the situation changes over time.
If a company has an extensive branch structure, then of course such a report should be received not only for the entire enterprise, but also for each branch separately. "The average temperature in the hospital" is, of course, not bad, but it is also desirable for each patient. And if it turns out that one of the branches is not profitable? That's what you need.
If a business is project-oriented, then of course such a system must also give a report on projects in order to understand which is unprofitable and which is profitable, in order to understand the reasons for unprofitability and to correct something.
There is another report that talks about financial flows, but I will not overload the post here with pictures, I think that's understandable. It is called a cash flow statement. By and large, it shows how much more money comes to a company than it leaves. Especially serious conclusions about the state of affairs on it can not be done, but many people “buy” for it and believe that if there is money, it means things are going well. But in reality, the state of affairs can speak only those two reports that I showed. If there is money in business, it does not mean that you can take it in your pocket, because it is not a fact that the company has earned this money. The illusion that everything is good, may arise from the fact that customers make prepayments, banks give loans. And then there are crises ...
So the assessment of the state of the company must be approached skillfully.
If there are tens of thousands of product names in a company, then it is necessary to constantly engage in the optimization of the product range, optimization of warehouse stocks. The system should help answer the question - where are the leaders and where are the outsiders among the nomenclature. You should always know what products you bring nothing but a headache. The presence of goods in your assortment is, after all, the cost of it. The goods need to be brought, it needs to be stored, provided with document flow, etc. And if he does not bring profit at all? Moreover, it is very interesting to find in my assortment a product that does not bring profit, but it does bring a lot of turns. This is one of the most dangerous goods. For which you need to work in the first place. Find out the causes of low profitability and eliminate them. Or refuse such a product. Of course, to do this manually, without an ERP system, is simply unrealistic.
Incorrect, unsystematic procurement can cause serious damage to the business. In the warehouse, you can freeze a huge amount of money, and then still get a problem with the sale of what no one needs. As old Matroskin used to say "in order to sell something unnecessary, you must first buy something unnecessary." And sell something just the problem. I touched on this topic in the article In search of working capital , I do not want to repeat.
Or, for example, optimization of the client base. Here you have 500 customers. One brings 0.1% of turnover, but at the same time 3% of profit, and the other 3% of turnover, but at the same time 0.1% of profit and even 10% of the receivables. The first is your best customer, and the second is a parasite that settles well on your neck. All you need to know and work with it. The first of the most attentive manager, the second of the most experienced, able to conduct complex negotiations, in order to somehow change this situation.
Another situation. Here is a picture showing the remnants of the warehouses and other interesting information on the product. Interesting information is aggregated. If someone is interested, he will press the button and detail the information he is interested in. For example, by whom exactly are these three pieces in reserve or when exactly these 7 pieces will arrive on an invoice.
In other words, such a system should have the character of an iceberg or cone. You get compressed information, which you can optionally detail and receive in more detail.
Sometimes even in a simple situation, the system overloads the user with completely incomprehensible data. I personally observed the following situation: here there is an account, you need to see when and for what amount it was paid and by what payment order. So, they showed me a special form that was called up with several buttons. And in this very form of data there was so much that even my head was spinning. An infinite number of dates, amounts, checkboxes and other "kryzhikov." Even the demonstrator found it difficult to immediately answer my simple question about why all this variety of buttons and checkboxes.
The decision support system should be built on the principle of a normal cone, not a reverse cone, which is inverted. And in order to extract the necessary information, you need to endlessly study the “sheet” on 20 sheets, armed with a calculator.
Source: https://habr.com/ru/post/94352/
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