Chris has worked in a business leadership role for the past 10+ years. He likes to share his experiences with others to help them learn.
Geographic Information Systems (GIS) for Business
A geographic information system (GIS) is a database that relates any kind of informational data to a geographic location. In a business setting, knowing the spatial relationships between you, your customers, and your suppliers can vastly improve your profit margins and advertising campaigns. GIS can even help you calculate more efficient delivery routes, locate new office or retail locations, and/or identify trends in your business’s growth or decline.
Did you know that Google Earth and Google Maps are simplified GIS Systems? Even these free services can be used to help improve your business.
Analyze Your Customers' Whereabouts and Buying Habits
Most businesses collect and store some sort of information from their customers. This could be anything from a name and phone number to an address or even their complete buying habits. I'm sure that you’ve used those store loyalty cards or completed customer surveys for a chance to win money before, haven’t you? What about giving out your phone number or zip code at the checkout counter?
Online retail businesses can easily collect the addresses of their customers by storing their shipping information and accounts in a database. Online retailers also have the advantage of being able to store a customer’s buying habits without the use of a shopper’s card simply by maintaining a database of orders.
For business owners and managers, a customer’s information is the most valuable information that you can obtain. After all, they are what keep your business afloat.
Geographic Distribution of Customers
Many businesses collect the addresses and buying habits of its customers through a shopper’s card. This information can be used to geographically represent the distribution of their customer base. This can help reveal a number of key items to the business executives.
For example, decision makers can identify gaps in their customer base and seek to close those gaps by adding new store locations or performing targeted advertising campaigns. They can also analyze shopping frequency with respect to distances from the store or adjust operating hours based on the temporal distributions of the store's shoppers.
Customer buying habits can also be spatially analyzed for various trends and anomalies. Decision makers can find out when particular items sell well and where the customers that purchase them live. This can help the business project future inventory needs and adjust product pricing.
For example, if you are a milk producer and know that a certain area of the city bought significantly more milk than another area, you may be able to discern what types of people live there and what their needs are. You could then make decisions about where to distribute your milk to and perhaps how to set your prices. You may decide to adjust milk prices for stores in the vicinity of that part of the City to capitalize on the increased demand.
Cultural Buying Trends
Another example of the value of spatial data is the analysis of cultural buying trends. Let’s say that you get output from a GIS analysis that shows that a particular area of the city buys significantly more Hispanic food items than any other part of the city. Business owners can then make informed decisions about what other types of food items they should be selling at the stores located in that part of the city.
This decision can be made without ever asking the customer for what other items they would like to see in the store. Additionally, this information can also be used to estimate the future demand of various types of holiday and culturally significant merchandise.
Delivery Route Optimization
Delivery routes can also be optimized using GIS. The system can analyze the road network of a city and determine the most efficient route based on distances, speed limits, left turn locations, and even traffic signal locations and timing. Advanced delivery routing software can even compute the most efficient path for multiple deliveries over a specific period of time. Therefore, the schedule of deliveries can also be optimized.
Improving Delivery Efficiency
An example where this technology would be useful is at a restaurant that makes regular deliveries to various locations, such as a pizza place. A pizza restaurant can use GIS software to optimize their deliveries at any given moment in time. This will prevent excessive travel, back tracking, and ensure that the pizzas get delivered in a manner that is both efficient for the business and satisfactory for the customers. GIS becomes more important and effective at improving your delivery efficiency as your business grows in size.
Optimization En Route
The future of this technology will include the combination of GPS navigation with the delivery routing GIS system. This will enable delivery optimization to occur while a truck is in route to its destination. The system could even incorporate traffic accidents and construction detours if that information is available. The potential for significant money savings can not be understated here.
GIS Can Revolutionize Your Business Strategy
I think that you can clearly see the value of a geographic information system in a business setting. But, if you still need more convincing, here is a great article about Nike, Inc and how they used GIS technologies to improve their business and increase their profit margin.
GIS can revolutionize your business strategy and enable you to capitalize on things that you didn’t even know existed before. A small initial investment in a GIS system can easily lead to large profit increases and significant expenditure decreases by improving the efficiency and effectiveness of your business plan.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
Tess on June 01, 2012:
Thanks for checking out our blog (I work on the same blog with Tim).
I love this article too! Definitely along the same lines with GIS and biz applications that our blog is focused on as well.
Christopher Wanamaker (author) from Arizona on May 31, 2012:
Tim - Yes, good point - GIS is itself a business. I checked out your blog - good stuff as well. Very detailed. I will likely be going back to read more later. Thanks for stopping by.
Tim Neidhardt on May 31, 2012:
The GIS business applications highlighted in this article are commonly grouped into two categories: improving market analysis (customer targeting) and improving operating efficiency. Another way to look at it is how GIS actually creates new businesses http://a2groupc.blogspot.com.es/