5 Ways To Reduce Labor Costs With Business Intelligence and Analytics

Business Intelligence Vs. Business Analytics- What's the Difference?

Do you find that you have more employees milling around at your organization than you actually require? Or do you notice that employee morale is low and employee exits are high? Is interpersonal discord rising in your organization? Are you witnessing more and more cases of absenteeism, time theft, and subpar performance overall? Issues like these, related to your Human Resources, have pushed your labor costs high and gnawed at your profits.

Had you invested in the right business intelligence and analytics software, you would have been given the key to solving all your employee management problems. Or perhaps you have already invested in business intelligence tools, but they remain under-utilized. Either way, you're missing out on a vital resource that can help you run your staff more efficiently.

Let's look at business intelligence BI and data analytics in more detail. Careful data gathering and analysis allows decision making to be strategically sound and geared firmly towards discovering profitable opportunities, reducing unnecessary costs, supplying the best goods and services you can, enhancing customer satisfaction, and boosting profits.

Business intelligence or BI strives to assist organizations with data exploration and gathering. Every firm has access to a wealth of data that is gathered from numerous sources, including the point of sale (POS), workforce management, customer relationship management (CRM), enterprise resource planning (ERP), and other systems.

A business intelligence solution gathers and stores data from many internal and external sources at a nodal location so that they can be correlated and compared. A data warehouse is created as a result. Mining the information held in the data warehouse gives the business owner a bird's eye view of the organization's performance across various functions.

Business intelligence places a strong emphasis on descriptive analytics, seeking to compile a summary of historical and current data.

Since this information is inert by itself and has to be interpreted to make it actionable, business analytics come in. The latter focuses on predictive analytics, going beyond the issue of 'what', and asking questions related to 'how', 'why', and 'what next'. To predict the future, data analytics makes use of data mining and machine learning. It's a distinct case of big data helping businesses unmask the future to prepare better today.

Different Types of BI Tools

1. Ad hoc analysis- Also called ad hoc querying, it is one of the cornerstones of modern business intelligence solutions, and a significant part of self service business intelligence systems. It involves building and running queries to look into particular business issues. Ad hoc queries are often created on the go. However, they are typically implemented with analytics information built into dashboards and reports.

2. Mobile BI- With this BI tool, users may access applications and dashboards on their smartphones and other mobile devices. Ease of use is frequently taken into account while developing mobile BI solutions. These solutions tend to focus more on data display than data analysis per se. For instance, only a handful of data visualizations and key performance indicators may be displayed by mobile dashboards to ensure that the information fits on the screen of the device.

3. Online Analytical Processing (OLAP)- This is among the earliest business intelligence technologies. OLAP tools enable users to analyze information across several dimensions, and are therefore perfect for handling complex calculations. Earlier, data had to be extracted from data warehouse and placed in multidimensional OLAP cubes. However, it is now possible to conduct OLAP analyses directly in columnar databases.

4. Operational intelligence (OI)- This is alternatively called operational business intelligence (OBI). It is a form of real time analytics that provides management and frontline staff with access to data. OI applications promote quick action and aid in operational decision making. For instance, call center representatives can address customer concerns with the use of OI, while logistics managers can clear distribution bottlenecks.

5. Real-time BI- To keep users informed about business operations, consumer behavior, financial markets, and other topics, this business intelligence tool makes sure that data is assessed as it is generated. Real-time analytics supports processes like credit scoring, stock trading, and targeted advertising.

6. Embedded BI- These technologies for business intelligence integrate BI and data visualization features directly with business applications. It enables users to inspect the data that applications hold and regularly use. The most common users of embedded analytics are application software suppliers. Corporate software developers may also incorporate these functionalities into their programs.

7. Software as a Service (SaaS) BI- SaaS technologies offer business users subscription-reliant data analysis through vendor-hosted frameworks for cloud computing. The SaaS substitute, also known as cloud BI, provides multi-cloud compatibility, enabling enterprises to operate business intelligence applications across a number of cloud platforms to meet user needs and avoid vendor lock-in.

Metrics That Can be Measured With Intelligence Tools

To improve the quality of its products, the level of service it provides to customers, its productivity, profitability, and overall business growth, a business must monitor and assess its performance on a regular basis. To be able to do this efficiently, the business must have a clear idea of its KPIs.

Profitability is one of the most important indicators of a restaurant's performance. The restaurant can measure this from its gross margin percentage, which examines how much of its dollar revenue is utilized to pay for product purchases, costs of labor, rent, utilities, and so on, customer spending, and profit margin.

The number of patrons served or the amount of food that the restaurant sells over a period of time would provide insight into its operational strengths and weaknesses, from supply chain management and inventory management, to menu management and staffing.

On the other hand, data from Google reviews, Google analytics, Yelp ratings, surveys, and social media comments are used to track customer satisfaction.

Restaurants might establish the 'correct' prices by using point of sale (POS) data to estimate the mealtime frequency, average bill size, and length of meals. Furthermore, restaurants can examine data from their POS systems to identify the forms of payment most popular with their patrons. This will enable the business to make more prudent judgments. For instance, restaurants don't need to purchase pricey POS terminals if consumers rarely use upgraded cards.

Restaurant owners can also fine-tune strategies by looking at how seating capacity, space, menu options, and staffing are organized. Information on these subjects can be gathered from metrics like revenue per available square meter, and revenue per available seat hour.

Contrasting sales figures in the current month with those over the past year would throw light on the impact of menu revisions and the popularity of newly-introduced menu items. Market research would reveal dishes that are in high demand. The restaurant can then modify its menu offerings to provide its clients with something extra. Age, gender, frequency of customer visits, and the restaurant's location all need to be taken into consideration when analyzing data. This will help the operator plan for new dishes, or help them craft a great deal on old favorites.

Metrics like net sales, average food expenses, and percentage of actual food cost will demonstrate the restaurant's profitability as well as its effectiveness in procuring and stocking food.

The number of patrons per table, the average check per client, the proportion of tables served, reservations and cancellations, and inventory turnover are some of the other metrics that can be measured with the help of BI tools.

Why is Labor Management Important?

1. A business will be able to flourish when the relation between employee and employer is warm and cordial. It increases efficiency all around, and efficiency results in productivity. Businesses that get the most out of their staff keep them motivated.

2. The foundation of any organization is labor relations. Poor working conditions will reduce productivity and increase staff turnover. Employees won't use their abilities and knowledge to the fullest extent to support the expansion of the business unless they feel appreciated. Companies with positive labor relations offer better pay and alluring incentives.

3. Lower turnover means workers stay in an organization for a longer period of time. As a result of this, they are able to learn a lot about the procedures, policies, and practices of the business. Knowledgeable staff members are a great resource. They can train new hires and are quite proficient and effective. Most businesses find it challenging to replace experienced workers. Also, businesses would not want to lose their best employees to rivals.

4. Disengaged workers can cost businesses millions of dollars. Employee engagement increases productivity for businesses. The US Department of Labor estimates that a bad hire can cost a company 30% of an employee's first-year salary. According to Joergen Sundberg, CEO of Link Humans, a company that offers data-driven employer brand analyses, onboarding an employee can cost up to $240,000.

5. The advantages of a healthier and happier workplace are visible to customers too. Highly motivated employees will provide better customer service, and satisfied customers bring greater revenue to the business.

5 Ways To Reduce Labor Costs With Business Intelligence and Analytics

1. It's crucial to know how many employees you require on any particular day. Business intelligence and analytics help you know this. An accurate sales forecast will allow you to make employee schedules that perfectly match your staffing needs, and prevent money from being wasted on employees you don't need on a shift.

2. You may discover flaws in your labor planning. For example, you may notice that the cost of labor as a percentage of sales shoots up during mid-day lulls in customer traffic, at around 2 or 3 pm. By analyzing BI data, you realize that though staffing levels remain unchanged, sales decline after lunchtime. You can then make necessary adjustments and schedule fewer employees for times customer traffic thins out.

3. Business intelligence data also lets organizations Reduce Overtime. Labor rules in the US are pretty strict, and the Fair Labor Standards Act (FLSA) states that any employee qualified for overtime pay must get at least 1.5 times their normal rate for any work that extends beyond 40 hours in a workweek. This may tempt employees to push for overtime even when there is no need for it. Unnecessary overtime adds to the company's labor cost burden, which is already very high in the restaurant industry. A company that denies overtime pay will invite stiff government sanctions. Studying business intelligence data churned out by workforce management systems would tell business owners if employees have tended to do unnecessary overtime. An efficient WFM software would send out alerts when employees approach overtime.

4. BI software can also help businesses identify their best and worst performers by analyzing the clock-in and clock-out time of employees, and through employee task management software. This information would, in turn, help organizations place the most efficient employees in charge of the most critical shifts so that customer service is top-notch. They can also make do with fewer employees per shift, if the employees chosen are the most efficient of the lot. Perpetual laggards may then be given marching orders.

5. BI data can help an organization understand the effectiveness of onboarding and training so that it can make sure that employees are working at peak efficiency. Business intelligence and analytics can allow you to monitor metrics like onboarding time, employee mistakes, customer service, and so on, which would show how successful training has been. This will in turn help improve training and onboarding processes, so that expenses on Human Resources can be minimized. Repetitive training can result in undue cost escalations.

Top 3 Business Intelligence Software - Features + Pricing

1. Zip Reporting- This program from Hubworks offers a straightforward method for gaining access to and comprehending even the most complex data from any location, at any time, and on any device. Zip Reporting provides consolidated BI reporting, which lets organizations conserve effort, and time, and spares them the frustration of dealing with multiple apps for running the business. Cloud-based synchronization enables real-time data retrieval. Zip Reporting automatically transforms the complexities of business into actionable insights, thereby saving business owners the effort and time needed to manually go through several layers of data and try to interpret them. This cutting-edge software comes free of cost for a year.

2. Microsoft Power BI- This software transforms data into useful graphics, enabling companies to have more targeted information about what their customers want. A collection of BI tools from Power BI is available for segmenting data and producing high-quality insights. Instantaneous responses to queries are possible with dashboards supported by Power BI. Users of this software may quickly share insights with multiple data visualizations, Excel integration, and embedded artificial intelligence capabilities. Power BI Pro costs $13.70 per user per month; Power BI Premium is priced at $27.50 per user per month; and at $6,858.10 per capacity per month.

Restaurant365- It is a cloud-based software for handling operations and accounting. All the features required to manage your restaurant business are contained in one consolidated platform, and it's fully integrated with your bank, payroll service, food suppliers, and POS system. This business intelligence program allows you to use a handheld device to count your inventory easily. Users can track inventory transfers between stores automatically, making sure that prime cost figures accurately reflect actual product usage. By encouraging a business to buy only the inventory it needs, this software helps eliminate over-ordering and lowers food waste. Restaurant365 offers four subscription packages with monthly costs ranging from $289 to $489 per location.

Final Word

Labor costs typically range between 30-35% of a restaurant's total sales. Invariably, the maximum expenditure that restaurants end up making is on labor. Apart from permanent employees, restaurants may also need to bring in temporary workers to handle occasional spikes in business. That would mean unforeseen expenses on labor. In addition, if employee exits suddenly increase, the restaurant's overhead costs also increase on account of fresh hiring, induction, onboarding, and training.

Therefore, no organization can ignore business intelligence and analytics. However, a positive return on investment can't be guaranteed by simply choosing the best BI solution around. What is additionally required is an effective business intelligence strategy.

A BI strategy plan is a road map for employing data analytics and data mining to track company performance, fully orient the company around the customer, and pinpoint competitive advantages. It guarantees that the organization's decision making is firmly based on data and can prevent cost escalations. Therefore, the selection, acquisition, and installation of BI software should be guided by an effective business intelligence strategy.

Businesses will also be able to lower labor costs by preparing ahead of time. By being aware of the available training options and their costs, business owners can efficiently plan their budgets.

While business intelligence without a clear goal might still produce insights, it may not be very effective in helping a firm to achieve its objectives. Therefore, business leaders need to have a clear BI strategy for utilizing their business intelligence software to its maximum potential.