Adam Gartenberg's Blog

Business Analytics and Optimization, IBM and Social Marketing

Cognos deployment at US Lumber achieves 3,623% ROI

"With the current economic conditions, data becomes like a goldmine and you need the best tools to mine it,"
 -- Felipe Herrera, senior financial analyst, U.S. Lumber Group.

I’m going to cheat a little here, as the marketing thought of the day comes courtesy of a Cognos customer that I just recently learned about.  The headline of a 3,623% ROI and 11 day payback period on their Cognos deployment caught my attention, but it was what I read in more detail on their story that really drew me in.

US Lumber is a distributor of specialty and wholesale building materials in the Southeastern and Mid-Atlantic States. They had been using a 3rd party provider for reporting and metrics, but found what they were getting out of them was significantly lacking.

What stood out for me was that they began this initiative back when the building boom was still going strong.  They realized that while their lack of adequate information and reporting might not matter much during high times, “the system would not enable employees to perform analyses with sufficient speed or granularity in the event of an economic downturn. U.S. Lumber needed to restructure its methods of managing sales, accounts receivable and inventory. Maintaining the existing use of static reports, labor-intensive analyses and poor forecasting would not be feasible in a faltering housing market.”  

It's important - in marketing as in business in general - not to get caught up in a "let the good times roll" mentality.  Just like a down economy may be the perfect time to start an advertising or marketing campaign, there's never a bad time to start looking at how you can get the most out of the information you have, or the information you should have.

As for US Lumber's ROI?  It was actually a third party - Nucleus Research - that examined their Cognos 8 Business Intelligence deployment and arrived at the 3,623% ROI.  Some additional details on their deployment:

IBM Business Partner Lodestar Solutions helped U.S. Lumber develop more informed and accurate business strategies providing greater insight into operations and increased customer satisfaction by being able to diagnose and solve issues quickly.

Branch managers can now create reports that break down information account-by-account and expense-by-expense. With more granular breakout, the company can easily see which strategies work best and improve on the execution of those strategies. The IBM Cognos 8 BI solution has also given U.S. Lumber the ability to create a profitability application that helps the company better assign costs to each customer based on order size.  For example, orders can vary from sending one piece of lumber to one customer to sending an entire truckload of 45,000 pounds to another. U.S. Lumber now has clear visibility into profit levels for each and every order.

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