Deloitte provides a clear and simple answer to this question in their “Analytics for Manufacturers” guide. Their bottom line? Data-driven insights are a strategic necessity.
Deloitte’s “Three Minutes” report series is a go-to source for the firm’s most important industry recommendations. For manufacturers, Deloitte argues that more fluid visibility into performance metrics is critical to improving performance and profitability in the face of globalization, vertical integration, and margin pressures.
Why Do Analytics and Dashboards Matter in Manufacturing?
Business Intelligence (i.e., reports, dashboards, and KPIs) helps surface key insights, such as points of constraint in the order-to-cash process, costs that exceed industry benchmarks and erode margins, and sub-standard machine and employee utilization rates.
Similar to Deloitte, McKinsey & Company’s report, “Manufacturing: Analytics Unleashes Productivity and Profitability,” states that "high uncertainty and low growth have already forced manufacturers to squeeze every asset for maximum value. The next target is their own data."
Why is data the next target for manufacturers? Because manufacturing is complex, with sophisticated process flows, a myriad of actors from employees, to sales channels, to vendors in the supply chain, to clients, etc.
Without the ability to quickly assess the causes for what’s working and what’s not, you risk forever being trapped in a reactive-management mode. Visibility enables you to be intentional and strategic. Allowing your competitors to take the lead in leveraging their data will quickly reduce your company to a state of catch-up.
Don’t Trust The Buzz. Data Analytics Is Not That Complicated.
The terms Big Data, Machine Learning, and Artificial Intelligence are so commonly printed, published, and talked about it’s easy to assume they’re the only path for achieving data-driven success in manufacturing. More often than not, they’re just buzzwords - more a means of staying in the conversation than applying actual solutions.
Although highly-sophisticated analytics have their applications, common-use cases call for something simpler. In other words, using complex technologies to extract value from massive data sets often ventures well past the point of diminishing returns when it comes to the blocking and tackling of mid-market manufacturing.
What manufacturers need most is a simple, real-time way to see and evaluate their most critical performance metrics. More importantly, they need to be able to share that visibility across the organization in order to elevate above reactive, micro-management and empower their people to perform at their best.
Although Indispensable, Beware Of Spreadsheets
When the buzz around buzzwords loses relevance in the face of real management issues and market challenges, hopes of finding data’s holy grail can give way to the perpetual churning out of more spreadsheets.
Excel is comfortable and will always have a place for ad-hoc and table-based reporting, but problems can emerge when growth demands real-time analysis of complex, interdependent systems. Operational complexity also requires reporting governance, in order to avoid the proliferation of extraneous, unreliable, and overlapping reports. The Excel Jungle is real, and most companies are lost in it. Don’t join them. Effective reporting improves outcomes by automating the dissemination of trustworthy reports to the right people at the right time.
The proliferation of Excel spreadsheets can bring as much confusion as clarity. They’re a snapshot in time and they’re difficult to distribute and maintain, leaving a company working in isolated camps rather than as a single force.
This is where a built-for-purpose business-intelligence tool emerges as the most practical and effective solution.
How Manufacturing Analytics Improve Efficiency And Accountability
Analytics in manufacturing are comprised of the tools and processes that enable a company to mobilize its performance data, giving everyone in the organization the feedback they need to excel at their work.
These tools and processes haven’t always been a mainstay in the industry, as manufacturers aren’t typically leaders in adopting business technologies. However, leading manufacturers increasingly recognize that data is needed to solve problems across a broad range of operating units to increase output and quality control while reducing costs.
4 Key Ways Analytics Can Help Manufacturers Excel
Way #1) Consolidate your data to a single reporting tool.
For many manufacturers, multiple locations, product lines, operating divisions, and systems create an unmanageable amount of disparate data. Without the right business intelligence solution, it can be difficult, if not impossible, to consolidate data into a format that maintains control of data and distills it to the essentials needed to effectively monitor and assess performance across the organization.
Countless tools are available that can help. Currently (according to Gartner and Forrester), Microsoft leads the pack with Power BI and other integrated tools such as Azure SQL and Office 365.
Having developed Power BI out of established (and already monetized) technologies such as Excel and SQL, licensing for the system is the lowest (in some cases by an order of magnitude) among leaders in the space. If you have a working knowledge of Excel, you can begin creating dashboards in Power BI within an hour.
Gathering data from your various systems into a form that makes report development relatively simple requires a deeper knowledge. And deploying a reporting system that employees adopt and trust requires some best-practices knowledge.
Power BI’s ability to integrate data from a wide array of systems and sources gives manufacturers the opportunity to gather, analyze, and act on consolidated data insights.
Way #2) Ensure report adoption through reliable data validation.
Manufacturing is changing at an unprecedented pace with the onset of what has come to be known as the “4th Industrial Revolution.” As manufacturers increase productivity through automation and interconnected systems, they’re also encountering more data than they’ve ever seen.
With high volumes of disparate data, it can be difficult to gain clear visibility, and with poor visibility, comes poor decisions.
To avoid this pitfall, today’s manufacturers need assurance that everyone in the organization is looking at the same data, and can confidently trust the insights gained. To accomplish this, a standardized, comprehensive validation plan is needed to create a single source of truth.
Close isn’t good enough. Your reports need to match the source data precisely or users won’t trust them, and therefore, won’t adopt them.
Way #3) Apply principles of manufacturing automation to your data.
As any Excel jockey knows, as soon as you produce a new report, the clock starts ticking. With each passing hour/day/week, the report becomes more obsolete, and you’re one step closer to the grind of producing that report again.
Just as manufacturing automation turns raw material into product, once your data is extracted from your systems and distilled down to the critical elements needed for insight, connecting an automated reporting tool will turn that raw material into an actionable tool.
Rather than letting the flood of data accumulate each month, then manually muscling that flood into a useful spreadsheet, once you build your report in Power BI or a similar tool (e.g., Tableau, Qlik), that report will update automatically and not monthly, but weekly, daily, or hourly.
Way #4) Empower your managers; eliminate micro-management.
When managers no longer have to spend their time hunting down data, or even worse, foraging through a never-ending barrage of spreadsheets, they’re free to focus on what they do best: manage. And with better insights, they can manage more strategically based on empirical performance data, rather than reacting to the most recent significant issue.
Instead of relying on lagging indicators or “managing through the rearview mirror,” managers can catch issues in real-time and drill down in granularity to access root issues.
Good instrumentation empowers managers and shifts communication from top-down to bottom-up. Why? Because if everyone from executives to managers have real-time insight, no one can hide.
Executives will find themselves being proactively notified by employees when performance is outside established tolerances, rather than having to call emergency, all-hands meetings when last month’s numbers come out.
Manufacturing Analytics And Dashboards Takeaway
According to Bain & Company: “Investing in digital operations can deliver impressive results—for instance, production efficiency gains of 15% to 20%, as well as improved manufacturing flexibility and product quality. Those returns dwarf the average 2% to 4% production efficiency gains from standard continuous improvement methods. To get the most from data, companies need to link data-gathering technologies and tools with their long-term strategies.”
Once the buzzwords are put to rest and spreadsheet proliferation has been tamed, manufacturing analytics provide real-time, automated insights that empower managers and support better business decisions.