Harness the Power of Data Analytics and Business Intelligence
In manufacturing, your bottom line is impacted by more than how much you sell. Your inventory, your ability to get raw materials, your processes and more also play a role. Maximizing your revenues requires making decisions based on the latest information—and that’s where harnessing your data comes in.
On a recent episode of Moore on Manufacturing, James Moore partner Mike Sibley discussed harnessing the power of data. His guest was Marie Hibbert, the firm’s Director of Business Intelligence and Data Analytics, and she started off by explaining the mission of her work.
“We see over and over again that companies are sitting upon a vast amount of information. And they don’t have the time, capital or resources to leverage it in a meaningful way,” she said. “I help organizations use the data they already have to be more strategic and make better decisions.”
Data analytics and business intelligence do more than simply present data. They change how quickly and easily you can access it to keep pace with an ever-changing world. From understanding why costs are spiraling upward to knowing the right time to perform maintenance on your machinery, the benefits for manufacturers are endless.
“Out of Many, One.”
The poignant saying isn’t just the motto of our country. You could also apply it to your data. Because while you likely already have mountains of information, it often lives in several places.
For example, most manufacturers have a basic accounting system and then additional systems for inventory, maintenance and other operations. The data produced from all of these systems can disclose hidden aspects of your company’s story, from why your margins are slipping to where wasted time goes.
That’s great. But now imagine getting this data from each system. Maybe some allow you to run reports. Others are simply a series of Excel files you maintain. You might even have a list stored as an expansive Word document. Either way, each process is done separately and produces results in different formats. Weeding through all that data manually could take hours, days or even weeks.
“We need to get the data timely because if we’re going to make decisions, we have to be able to kind of snap our fingers and pull together that information,” said Sibley. “And the only way to do that is to connect to these systems, pull that information out, use a tool to build that workflow, and apply the logic steps to transform the data into something that’s actually usable.”
Once you have this done, you can make data retrieval an easily repeatable task—something Hibbert calls process automation.
“What we want to avoid is having somebody whose full-time job is running these reports out of 10 different systems,” she explained. “Process automation is important because if you can’t do it quickly (and again and again and again), it’s just too time consuming. Organizations are trying to do more with less, so we want to enable that by using some technologies that help automate that across the board.”
Quick and easy access to your data does more than help you work more efficiently. It also provides you with more accurate data to begin with. For example, the information in your financial statement is at least a week or two old (often more). That might not seem like a long time, but it won’t reflect drastic changes that could have happened just a few days ago. And that data can make all the difference.
While your data isn’t the equivalent of a fortune teller, it can help you see trends more quickly when it’s at or close to real time. You can then view this data from a single dashboard, allowing you to perform more predictive analysis when making decisions.
How does this help manufacturers?
A prominent application of data analytics is with inventory management. As we all know, inventory is one of the biggest investments most manufacturers make. Be it raw materials or finished goods, it’s essentially cash sitting on your shelves until it’s used or sold. And the more you have, the tougher it gets to manage it.
To achieve a just-in-time supply of inventory, you need to know more than just how your inventory turns right now. Historical trends in your sales and production can be a helpful predictor for future demand. “What does the customer demand to look like over the next three, six or 12 months?” said Hibbert. “In July and August, should I expect a pretty significant uptick? Are there other things out in the marketplace that indicate my demand’s going to go up?”
Data analytics (and the timely insights that result) can also help you see trends earlier, such as a spike in the cost of raw materials. Is the jump due to market conditions or a specific supplier? Knowing the difference helps you decide whether to find a different vendor or compensate in another way.
Your maintenance schedule can also benefit from timely data. “You can’t afford to have equipment going down. That’s not good for your production cycle,” said Hibbert. “So when we get into predictive maintenance, it’s really about whether you’re being proactive versus reactive. Do you have the data available in house to show when you should be doing maintenance, repairing, replacing parts and doing certain maintenance types of activities?”
Your manufacturing CPA can help you weed through the process. That said, the first thing you should do is decide what information is most important to you.
“What are the problems you’re having today? What are the questions that you’re asking that you don’t know the answer to?” said Hibbert. “I think a lot of our business owners know (what they need) in their gut, but they really want the data to back it up.”
Consider the thoughts that keep you up at night. Are you thinking about expanding your operations or targeting a new market? Would it help to purchase new equipment or are you better off with what you have? Are you having trouble remembering the last time you performed maintenance on your machines?
Then consider what you have on hand. In many instances, you already have tools in house that could be utilized better. They might have additional capabilities and modules you either haven’t enabled or simply don’t know about. Review your existing technology stack to see how it can help.
If you need more help, start with relatively inexpensive tools like Microsoft’s Power BI. If you already using Microsoft at your company, a Power BI license is not too pricey (especially if you have someone in house that can help you implement it quickly).
You can consider other software tools, such as Alteryx, if Power BI won’t do the trick. These more powerful tools also come with a more powerful hit to your wallet. But the cost benefit can’t be denied when the alternative is having a full-time employee manipulating data all day, every day.
“Nobody wants to go through millions of lines and rows of data to try to make interpretations. Our brains just don’t work that way,” said Hibbert. “That’s why we have tools that can pull out insights and show us things we didn’t realize were there. That’s where there’s a tremendous amount of opportunity.”
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