Business intelligence: A modern tool for cost optimization
1 Abstract
2 Introductions
3 Problem statement
4 literature Review
5 Overview of business intelligence
o What BI is
o Core components of BI ecosystem
o Tools of Bi
o Types of Bi
o Key capabilities of BI
6 Cost Optimization: Concepts and Challenges**
Defining Cost Optimization: Strategic reduction of expenses while maintaining or enhancing value,
quality, and performance. Contrast with simple cost-cutting.
Key Areas for Cost Optimization:
i. Procurement & Spend Analysis
ii. Supply Chain & Logistics
iii. Manufacturing & Production
iv. Inventory Management
v. Human Resources & Workforce Management
vi. Energy Consumption & Utilities
vii. Marketing & Sales Efficiency
viii. IT Operations & Infrastructure
ix. Overhead & Administrative Costs
7 How Bi works in Cost Optimization**
**Phase 1: Data Foundation & Integration**
✓ Identifying Relevant Cost Data Sources (Financial, Operational, Transactional).
✓ Establishing Robust ETL Processes for Data Cleansing and Consolidation.
✓ Building a Centralized Cost Data Repository (Data Warehouse/Mart).
✓ Ensuring Data Quality, Consistency, and Governance.
**Phase 2: Cost Analysis & Insight Generation**
* Spend Analysis (Supplier Performance, Contract Compliance, Maverick Spending)
* Variance Analysis (Actual vs. Budget/Standard)
* Activity-Based Costing (ABC) Modeling
* Trend Analysis & Pattern Recognition
* Root Cause Analysis of Cost Overruns
* Identifying Cost Drivers and Correlations
* Utilizing Dashboards and Visualizations for Cost Transparency (e.g., Heat Maps, Trend Lines,
Pareto Charts for spend).
**Phase 3: Actionable Insights & Decision Support**
✓ . Translating Analysis into Specific Cost Reduction Opportunities (e.g., Renegotiate Supplier X
Contract, Optimize Route Y, Reduce Inventory Levels for SKU Z).
✓ 2. Predictive Analytics for Proactive Cost Management (e.g., Forecast Demand to Optimize
Inventory, Predict Maintenance Needs to Avoid Downtime Costs).
✓ Prescriptive Analytics for Scenario Planning (e.g., "What-if" analysis on supplier changes, process
modifications).
• Enabling Data-Driven Negotiations and Sourcing Strategies.
. **Phase 4: Monitoring & Continuous Improvement**
i. Tracking Performance of Implemented Cost Optimization Initiatives.
ii. . Real-time KPI Dashboards for Ongoing Cost Visibility.
iii. . Refining Models and Analysis Based on Results and New Data.
iv. . Fostering a Culture of Continuous Cost Awareness.
v.
8 Case study
How Amazon reduce cost using BI
9 Challenges of implementing BI
10 Findings
11 Reference
