Manufacturing Dashboards: Turning Data into Real-Time Decisions

“If something’s going off course, at best we find out 45 days late. By the time you find out about it and implement a change, it could be 60 days or later, and now you’ve lost all that opportunity.” — Kevin Golden, James Moore & Co.

In this Moore on Manufacturing episode, Mike Sibley and Kevin Golden from James Moore’s manufacturing team break down why relying on month-end financials leaves manufacturers reacting too late, and how a well-built manufacturing dashboard changes that. They also walk through a live demo of the JMCO manufacturing dashboard, showing how real data tells a story across every area of the business.

Resources

• James Moore Manufacturing Services
• Moore on Manufacturing YouTube Playlist
• Watch This Episode on YouTube

Full Transcript

[00:04] Mike Sibley: Mike Sibley, partner and leader of the manufacturing team here at James Moore & Co. I’m joined, as always, by Kevin Golden, my partner and also a member of our manufacturing team. So today we’re going to talk about an issue, really we’re going to talk about data, which is a topic near and dear to our hearts.

[00:25] Kevin Golden: Yeah, every manufacturing business leader struggles with data, struggles with getting the information in a timely manner and in a way that is actually allowing them to make decisions. A lot of times companies are waiting till month end to really find out how they did.

[00:49] Kevin Golden: They’re eager to get that 10, 15, sometimes even longer days after month end just to figure out how they did a month ago. And now you’ve lost time to make corrections in real time, to address issues in real time. Manufacturers are inundated with data. It’s everywhere. But it’s often hard to actually get it all in a way that makes sense. So today we’re going to talk about data, dashboarding, what manufacturers should be watching more frequently, and of course we’re going to introduce our James Moore Manufacturing Dashboard, which takes a lot of the key data points and starts bringing them to your fingertips.

[01:27] Kevin Golden: Keep in mind, just gotta make it make sense. There’s a lot of data, a lot of stuff you can pull, but being in tune with what’s important to you, what’s really driving you, making it make sense, because otherwise it’s just data for data’s sake.

[01:56] Kevin Golden: There’s probably a lot of commonality amongst different manufacturers, common themes and things that are applicable to every manufacturer. But then again, there may be things that are more important to you that you need to really drill down upon or make sure are included in your data that you’re getting on a timely basis.

[02:13] Mike Sibley: So let’s start with the concept of month end. What is month end doing for us? What is it not doing for us?

[02:45] Kevin Golden: Month end is not a bad thing. We have to have a clean month end, we have to have that process, that procedure to produce those. The problem is it’s too late. If something’s going off course, at best we find out 45 days late, maybe 30 if we’re lucky. But it’s just too late to actually do anything about it. So by the time you find out about it and then you implement a change, it could be up to 60 days or later, and now you’ve lost all that opportunity. If that’s a cost, that’s a real bottom-line cost to you that you could have fixed earlier had you simply known.

[03:23] Kevin Golden: Having the month end close is not a bad thing. You have to have that. Only relying upon that is where the problem is, because operational issues are going to show up before the actual financials come out.

[03:44] Kevin Golden: A lot of these things that are occurring are going to be in real time on your floor long before you see them in the financials, and that’s assuming they’re portrayed correctly in those financials. Sometimes an operational inefficiency or a waste is kind of hidden. You need to be looking at more real-time data to unearth it, because if you’re only looking at that set of data once a month, that doesn’t give leadership very much time or leeway to make on-the-spot decisions that lead into real dollars and real change in your organization. Slower data leads to slower decision-making, which leads to slower course correction.

[04:37] Kevin Golden: If you’re ramping up, it’s your busy time, or you’re a growing manufacturer, that’s just going to build more and more pressure on your margins. And then you scratch your head a quarter later saying, “Well, how did we get to this point? How did we not catch this sooner?” And the answer is information, the clarity and the timeliness of that information.

[05:07] Kevin Golden: Those are some of the problems with relying solely upon month-end close to say, “How did we do? What should we fix? What should we change? Are we meeting expectations or not?”

[05:33] Kevin Golden: A lot of manufacturing leaders say, “Hey, we’ve got a lot of data, a lot of information. Maybe it comes partly from that month end, maybe it comes from other metrics, but I just still can’t see it clearly. How does that translate to operations?” Things like dashboards and data can help you see your business more clearly. But a lot of times we still get that feedback: “I’ve got the data, I’ve got the stuff I need, but I still can’t connect it.” There’s still a disconnect there. Mike, what are some of those disconnects that you hear?

[06:14] Mike Sibley: I hear that a lot. It’s one of the reasons why I created a framework that helps manufacturers understand how to start flowing data into what’s called data centralization so you can do something with it right now. We’ve got data in our ERP system, data in our CRM system, our equipment gives off data, we have Excel spreadsheets. All these different places data is residing, and none of it’s really connected.

[07:06] Mike Sibley: What I’m seeing is you’ve got your production manager doing data analysis, your finance team, your sales team. You’ve probably got enough data analysis happening where you’ve got a couple of FTEs every year worth of time doing financial analysis, rather than spending most of their time actually working on and in the business. Manufacturers are overwhelmed by all this data and detail, and generally speaking, they’re not financial analysts.

[07:31] Mike Sibley: When you start bringing in the ability to use AI, it’s great, but you’ve got to be able to give it access to timely data. You’ve got everybody spending time pulling data and doing all this. It creates a lot of inconsistency. I’ve often seen different people pulling the same data and coming up with different conclusions because they’re not used to running these things.

[08:00] Mike Sibley: What we really need to do is create that framework to allow data to flow to certain places in a much more automated fashion, and then feed into something that summarizes. That’s where dashboards come in, something that summarizes the key things that you can look at at a glance, know that it’s being updated, and actually be able to use it for actionable decisions.

[08:43] Mike Sibley: In order to have analytics, in other words dashboard data telling us something, we have to have an expectation or understand what that means. If we see that our margins are 40%, is that good or bad? It’s going to depend on your industry, your subsegment within manufacturing. We’ve got to build into this the idea of what are our expectations, what is our plan, so that when we compare our dashboard data we know whether it’s going right or wrong.

[09:22] Kevin Golden: I like that because it sets that baseline. What is success? Whether it’s the season, a particular year or a five-year period, what does success look like for my manufacturing company in this moment, this month, this week, this year? And then you have some baseline to judge that against.

[10:13] Kevin Golden: Going back to the fact that we’ve got a lot of data, asking yourself those types of questions about your company will help you dictate what you have to see to know you’re on track, and will help you start dictating what should be on that dashboard, the KPIs you’re looking at on a regular basis.

[10:50] Mike Sibley: There are plenty of companies that have KPIs but they’re spreadsheet-bound. They take a lot of time to build. You’ve got to go in, find the data, crunch the data, then put it on the KPI. What we’re suggesting is that with automations and connectors you can actually automate the collection of data.

[11:19] Mike Sibley: When we think about cost savings, we think about hard costs and soft costs. Hard costs are literally we stop spending money on this thing. An opportunity cost or soft cost savings is more like we’re building capacity. If we take a group of highly valuable people within an organization and free up hours and hours per week because we’re not crunching data, that’s an opportunity cost savings. They can spend that time dealing with the issues versus just trying to figure out what the issues even are.

[12:05] Mike Sibley: When we start talking about useful data points, let’s start big picture. What do you need to know to manage your business? Production trends, margins, raw material costs, productivity, utilization of personnel, sales activity, pipeline activity, sales by day, demand signals, receivables, collections, cash flow and working capital. Those are all examples. Inventory levels, inventory that’s going bad, why is it going bad, did we order too much, do we need to adjust our purchasing. Quality, on-time deliveries. The list goes on. These are all likely coming from different systems or different databases that have to be pulled, which is why we’re talking about the importance of getting this efficiently and in one spot.

[13:18] Kevin Golden: If you’re now looking at this data more timely and more regularly, you can highlight trends earlier, whether that’s a good trend or a bad trend. If you only had those data points at month end, that’s 12 data points a year. You may be way further off than you realize, but it’s six months before you realize it because you don’t have enough regular data to say, “We’re trending in the wrong direction.”

[14:13] Kevin Golden: Looking at data regularly helps bring to the surface those items, those exceptions, those deviations that need attention. Maybe it’s not a big emergency today, but left alone in a few weeks it will become one. You hedge against potential issues. Something that’s slightly off course can create a much bigger problem down the road.

[15:11] Kevin Golden: What do we expect out of our team? We expect to build this product or turn this inventory or make this sale in this period of time. But how do they know they’re doing that if we don’t have regular real data to hold them to that? At some point it’s too far gone. All we can do is cut our losses and get it out as quickly as we can while maintaining quality. But if you knew about it earlier, at each step along the way you can now hold different team members responsible for their areas.

[15:53] Kevin Golden: It creates that sense of ownership, responsibility and accountability that you can hold one another to, to make sure we’re all rowing the boat in the right direction to meet those goals.

[16:33] Mike Sibley: One of the other things we have to address is crossing departments. You have your sales department, production group, finance, HR, and they’re all sitting in their silos. They’re all doing their calculations, but really I think of it in terms of value streams. We need sales and finance talking to each other. We need operations and sales talking to each other. If sales says, “Hey, we can do this for on-time delivery,” yet our on-time delivery is really poor because sales is making promises that ops can’t meet, that’s a problem.

[17:12] Mike Sibley: We need to be able to see that and say, “Why can’t we meet that? Is it a supply chain issue? Can’t we get the materials, are lead times too long?” So maybe we’ve got to figure out our supply chain. By working together and saying, “Okay, what are these issues?” we can do that. If we have a solid dashboard that has a lot of this covered, then as a team we can look at these and say, “Let’s take this one at a time. Where are we going wrong? How do we fix this? This is trending lower, what do we do here?” It allows you to focus on the issues.

[17:50] Mike Sibley: The main thing we see is there’s not enough time being spent focusing on what’s important and what’s in front of us right now, and too much time waiting for information to become available, trying to process it, and maybe even trying to get it. The goal is to move from that to getting data in an automated way so we can start making decisions.

[18:34] Kevin Golden: When you say a comprehensive dashboard, one thing I think of is it’s got to be functional. I’ve got to be able to use this. Especially if I’m that owner who’s not the CFO, not the more financial-minded person, I’m operational. We’ve got to have a dashboard or a report that is functional and can be used across those departments, across those different people. Mike, what’s going to help make that dashboard more functional and simple to use, as opposed to just a data dump of numbers and figures?

[19:17] Mike Sibley: A couple of things, and then we’ll get into demonstrating what this looks like. First, the data’s got to be something that’s meaningful to our business. There are certain standard things that are meaningful to every business, and then you get into the nuances of your own particular business. Second is the timeliness of that information. It’s got to be frequently updating in a way that gives you that information. Some things may be meaningful daily, some weekly, and maybe some monthly, depending on what that data point is. We want a combination of useful, usable information and timeliness.

[19:59] Mike Sibley: We’re adding in a third component, and that is something built into it that highlights, “Hey, you might have a problem here.” So at a glance you get yellow, green, red. Is there a problem? Caution here, or is this on target? That goes back to what’s the plan. If our margins are supposed to be 40% and we are at 40%, we don’t need to spend much time on that. But if we see our cash is running low or our margins are starting to slip or sales are starting to slip, now we’ve got to look at that.

[20:44] Mike Sibley: Now is a good time to jump into this and give a little bit of an overview of a meaningful dashboard. This is dummy data. You’ll notice it has a lot of problems, because it wouldn’t be a very fun demonstration if we just showed you all green. We’ve got an executive summary level, and then we drill down into profitability, customer and channels, working capital, inventory and production. It has a nice flow to it.

[21:26] Mike Sibley: In our executive summary, if I’m a CEO I’m able to look at revenue, our margins, our cash level. This is our negative cash, telling me I’ve got a problem. Our accounts receivable, and you can see here 100% past due. Not great at all for cash flows. We’ve got payables of 1.4 million, receivables of only 400,000, and somehow negative cash. Our working capital situation is in trouble. On-time shipments, some inventory levels. Here we get into insights and exceptions, some things at a glance for a CEO or management team to say, “Here are some things we need to focus on right now.”

[22:31] Mike Sibley: Our margins are low. Revenue has increased, that’s good. Our AR is well overdue. Very basic starting points to give you a glance. And I would look at this every single day and want it updated every single day. As we drill into our profitability levels, we can filter by product families or regions. We can see margins, profit dollars, which product is our best, which is our worst. Gross margin trends, variance, cost driver breakdowns. What are our cost drivers? Top margin improvers, trends over time on things that are up or down. My personal favorite is the product profitability, getting into COGS margin percentages. What’s strong, what’s weak, things we want to monitor.

[23:41] Mike Sibley: We can get into customers and channels, revenue and margins. Another of my favorites is customer profitability. Which ones are good, which ones are not. We might have to look at one and say, “Why is this one struggling? What’s going on there?”

[24:28] Kevin Golden: When you’re looking at this data, be very inquisitive. You probably have some base expectation of how each of these should be performing, whether it’s a product or a vendor. And when it’s not up to that expectation, simply ask why. Careful, you can go down a rabbit hole and be there all day. But being naturally inquisitive, “Oh, that’s interesting, we’re doing a little better than I thought, why?” You’ll start gaining insights, or at least be pointed in the right direction to gain those insights about what’s going wrong, which then causes you to ask, “Okay, what are we going to do about it now?”

[25:31] Mike Sibley: We’ve got working capital here. Here are our top overdue accounts, gives you a glance and says, “These are all overdue, we’ve got to deal with these.” One of the things when we get involved in our fractional CFO work is a lack of a process around working capital. Working capital in and of itself is a process. It has to be managed no less than weekly, sometimes daily in really high-pressure situations. Having the ability to look at this at a glance can help me understand where I need to focus my time.

[26:10] Mike Sibley: Inventory levels, days in inventory. 521 days is awful. Slow-moving items, things at risk for expiration, at-risk lots because they’re old. Some of this is very customized. That’s one of the things we’re able to do, take the data and adjust it and customize it to what’s important to you. For some companies, inventory may not expire but it may be aging because it hasn’t moved so long that it’s becoming obsolete. And then you want to ask, “Why did we order so much of it?” Maybe you got a 10% discount. Okay, great, but you just threw out more than 10% because you bought so much. That was a waste of dollars.

[27:27] Mike Sibley: We’ve got a section on production and fulfillment, scheduled attainment, output. We’re measuring our output, on-time shipments, plans around shipment status, delay reasons. Why do we have so many quality issues? Packaging supply issue, what’s going on there? This gives us something to look at and understand what’s causing it. When you look at production at this level, you can see why we have a problem with our working capital. We’re struggling to get stuff out the door. A 78% on-time shipment rate, and then we’re not collecting our receivables, so we’re not able to pay our payables. Our margins are low. All of this tells a story. The story tells me that operationally we are not functioning well and we’ve got to fix this.

[28:36] Mike Sibley: That’s the goal of the dashboard. I don’t need to wait until month end to find out some of this information. What I need to do is look at this daily, weekly, every other week, whatever the cadence might be, and make sure we’re hitting those targets. Then focus the team not on data collection, but on solving problems.

[30:33] Kevin Golden: If you’re not using anything at all, you don’t have to jump straight to a fully fledged dashboard to begin with. Get with your management team, get with your key members, talk about what’s important, what do they need visibility into to do their job better, what do you need visibility into to make good decisions, and where is that data. Then just start getting some of those into even a very basic dashboard that you’re looking at regularly. Even if it’s only a few metrics, that’s better than only looking at things monthly or quarterly.

[31:18] Kevin Golden: Just like with technology, you don’t have to go all in at once. Sometimes it just starts with some basic data, some of those key drivers that you’re monitoring regularly instead of monthly or quarterly, and then you can make more timely decisions. Start there, then build. You’ll find that you don’t have good visibility into a key area. Okay, what do you need for that? Put it on the dashboard. Next thing you know, over time you’ve built out a full-fledged dashboard that’s important to different people across different departments.

[31:59] Mike Sibley: Figure out a way to automate the completion of it, or as much as possible. If your entire team is extracting data, summarizing it and filling out KPIs, you’re going to use a lot of time. With technology the way it is now, it can be complicated, but it doesn’t need to be. There are ways to automate that piece and get it into some sort of centralized data position that can then update these KPIs.

[32:50] Mike Sibley: From there, you’ve got to build a cadence of reviewing this. I’m a big fan of financial literacy and transparency for management teams. We do a lot of education and have some specialized courses to educate management teams on understanding finance a little bit deeper and what the impact of operations has on finance. I do suggest reviewing this regularly. Some owners prefer not to share all the information, and that’s fine. But there are certain KPIs, certain statistical pieces you can go through, and having a cadence of reviewing that with a cross-functional team allows you to solve issues together. That can be meaningfully moving for a company to make great progress in solving problems and helping the company grow.

[33:45] Kevin Golden: I love that, Mike, with the cadence and consistency. I think about it like working out. If you want to start running, you don’t go straight into running a 10K. You take a quarter-mile walk every day. Okay, now bump that up to half a mile. Now we need more and better results, bump that up to a mile, two miles. Next thing you know, you are running that on a regular basis. The same thing here. It’s creating those habits, that cadence, that consistency, and then layering on the complexity later as needed. Without that consistency, it’s just data for data’s sake, as opposed to a meaningful tool that will actually help you.

[34:42] Kevin Golden: Mike, one pitfall that people can fall into is, I have the best of intentions, I’m going to start doing this, I’m going to try to automate as much as possible, do all these things we’re talking about. Where do you find that manufacturers start building these dashboards with good intentions but it doesn’t stick?

[35:12] Mike Sibley: You have to build in accountability and discipline. Assign responsibility for these KPIs to the various team members and hold them accountable. When I talk about having a meeting, I am not a meeting fan by and large. However, I am a meeting fan if somebody owns it, there’s a purpose to it, and there are actionable results that come out of it. Then there’s an accountability process built in to say, “I’m going to hold you as the owner of this responsible.” It doesn’t mean that if it fails it’s all your fault, but you need to help drive it with the team. It’s a team problem to solve, but you’re going to drive it.

[35:58] Mike Sibley: I also think going too far with too many metrics is a pitfall. You could literally have hundreds of metrics. Don’t go that far. Come up with the key few metrics in each area that makes sense. That’s why we built this, because these are the key things. It gives you the data. Make sure not to go overboard. The goal here is better visibility, clearer accountability and faster ability to make decisions on what needs to improve for the business.

[36:32] Mike Sibley: With that, we’re going to wrap it up here. Thanks as always to all of our listeners. If you’re listening on a podcast, this is also on our YouTube channel where you can actually see the full demo of our manufacturing dashboard. It’s all about not needing more data, but how you’re using the data to give you that visibility and decision-making ability. Feel free to drop a comment in the comments area or reach out to Kevin or me to talk about data and data visibility and how it can help your company.

[37:18] Mike Sibley: To learn more about James Moore and Company’s manufacturing services, go to jmco.com. And don’t forget to subscribe to our Moore on Manufacturing series to receive updates when new videos and podcasts are released. If you’d like to be a guest, or if there’s a topic you’d like to see covered on a future episode, contact us on our website.

Start Building Better Visibility Today

If this episode sparked some ideas about what your manufacturing dashboard should look like, the best next step is watching the full demo. Mike Sibley and Kevin Golden walk through each section of the JMCO manufacturing dashboard live, showing exactly how the data tells a story across profitability, working capital, inventory and production. Watch the full episode here.

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