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Business Intelligence (BI) for Manufacturing

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Business Intelligence (BI) for Manufacturing - Plastics are no different …

Business Intelligence (BI) for Manufacturing - Plastics are no different

BI is very effective for all types of manufacturing, be it process, discrete or automatic. BI can close the ‘fact gap’ by improving the availability and delivery of actionable data with minimal IT
involvement.

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  • 1. FOCUS W ith increasing competition and Sanjay Mehta ever more demanding customers, BI is very effective for all types CeO manufacturing is not easy. While MAIA Intelligence Pvt. ltd., of manufacturing, be it process, Mumbai factory floor automation has significantly improved all areas of processing for discrete or automatic. BI can manufacturing companies, it has also created a staggering amount of data. close the ‘fact gap’ by improving There never seems to be enough time the availability and delivery of or resources to meet the needs of factory managers who face the ‘fact gap’ that exists actionable data with minimal IT between the data and the usable information required to make real business decisions. involvement. Agile enterprise is always one step ahead of the competition, which cultivates a Optimising performance requires responsive environment and delivers major managers to have an in-depth understanding improvements in lead time, product quality of how products and customers consume and lower production costs. resources and this is why manufacturers adopt • THE ECONOMIC TIMES POLYMERS june - july, 2010 11
  • 2. more sophisticated cost and profitability l Improve planning, scheduling and the analytics, solutions that go beyond production procurement schedule. and include the supply chain, support l Maintain and develop quality assurance. functions and infrastructure. l Select and apply world-class With a robust and reliable understanding technologiess. of costs and profitability and their sensitivity to changes in demand, managers are able to Benefits of BI make informed and incisive decisions about BI can be used to increase the flexibility and strategy and tactics. speed of operational reporting as: Manufacturing MIS l Quickly generate established reports. l easily create ad-hoc reports. l Material Requirements Planning (MRP). l Isolate specific problems. o Determine when finished products l Analyse data across multiple systems. are needed. l Integrate new data sources. o Determine deadlines accordingly. BI helps manufacturers get a better visibility of their financial l Manufacturing performance and the Resource Planning insight and understanding (MRPII). to improve it. These o network include solutions for scheduling. cost and profitability o Improve analytics and solutions customer for operational planning BI can be accessed service and and budgeting. Being by top management productivity. able to quickly assess the impact of internal and who need to obtain l just In Time (jIT) external changes, BI helps such Inventory System strategic information companies become more agile and o Inventory and Materials delivered better able to keep the bottom line that can help them right before usage. on track. decide the future Companies adopt Business Intelligence course of action. (BI) Reporting & Analytics software as part Manufacturing Scheduling and of their strategic approach for attaining their Production Planning goals. They are streamlining the information Manufacturing planning encompasses the flow, both across the organisation and through hourly, daily, weekly and monthly production the tiers of the supply chain to reduce cycle and machine schedules across multiple and manufacturing time and adapt quickly to plants or production lines to meet orders market changes. or forecasted demand. Success hinges on accurate materials planning. Manufacturing Reports generated in high data volume managers, product managers and purchasing environments normally take a long time to run. analysts review metrics such as production To speed up report generation, many systems capacity and current inventories to plan use tools that employ a summarisation appropriate production schedules, ensure technique, to reduce the amount of records, raw material availability and make plant by aggregating records together with reallocation decisions when appropriate. common characteristics. Problem with this technique includes inherent inflexibility and inability to cope with the constantly changing information needs of manufacturing. BI helps companies in the manufacturing industry to: l Increase the value of customer relationships. l Respond quickly to changing markets and company sensitivities. l Accelerate new product time-to-market. l Reduce inventory investment. 12 • THE ECONOMIC TIMES POLYMERS june - july, 2010
  • 3. Basic analysis includes real-time status of demands for new products and product plant utilisation and trends in market demand enhancements. versus planned production runs. Advanced using BI, one can assess cash-management analysis includes hedging analysis on and monitor operational effectiveness of commodities used in production, forecasting the payables department to ensure lowest of machine output and linear programming transaction costs. to optimise production resources. Identify most profitable Following business area are prime areas customers, products and of concern for manufacturers: channels, and understand l Having a bird’s eye view of customer profitability drivers across information which helps sales team to regions, divisions and coordinate and collaborate customer profit centres. Improve interactions. inventory management for those products that l Trace the metrics and indicators that consistently fall into improve customer satisfaction. backlog due to lack l lead time to fulfill of appropriate stock customer orders levels. Gain visibility into across sales inventory activities to and distribution minimise unnecessary channels. expenditures and l Improve ‘order promising’ (when optimise inventory to a customer is promised delivery or conserve working capital. issue resolution) through an analysis of Gain detailed visibility historical statistics, expected lead time into direct and indirect spending, and identify and inventory levels. opportunities for consolidation and reduction of costs. Monitor price, delivery and product Using BI, one l Analysis of current usage of products to quality to determine the best and the worst can assess cash- launch new range of products. performing suppliers. management and l Tracking service, to better predict and prepare inventory and production levels. BI can be accessed by top management monitor operational who need to obtain strategic information l Benchmark distributors, regions and that can help them decide the future course effectiveness of the individual locations against each of action. Business Intelligence is being more payables department other in an attempt to foster increased equipped for decision making, predicting to ensure lowest attention to goals and metrics, and trends, analysis and delivering information. reward high performers and aid transaction costs. underachievers. Manufacturing Industry needs to look out for a solution that can help them lower To overcome this, they need to maintain lead time, help in reducing production costs, optimum level of inventory so as to avoid improve product quality, have a better tracking overstock or short-supply and bring system and improve customer satisfaction. innovative and profitable schemes at the The industry also needs to respond quickly marketing level. Business Intelligence is the to changing market environments. Currently, right tool to achieve this. delivering key information to key people has BI helps in keeping managers updated gained extra importance that can help plan for and equipped with state-of-the-art and production, reduce exact information that helps in hidden costs, keep taking critical business optimum level decisions rather of inventory and than going on maximise profits. assumptions. Changing BI helps improve customer and visibility and distributor communication requirements, across increasingly internal operations c o m p l e x demand an optimal manufacturing way of decision supply chains, making by the while satisfying customer manufacturer. each manufacturer • THE ECONOMIC TIMES POLYMERS june - july, 2010 13
  • 4. o Inventory ABC Analysis Value o Inventory Turns Ratio % l new Product life Cycle o Product Development Cost Value o Product Development lead Time Days o Product Milestone Plan V/s Variances Manufacturing KPI’s has its own processes, own tacking system, l Production Capacity Trends order processing and its own challenges. All l Projected Inventory Surplus this add up to the need of having effective l Days on Hand BI system in place and providing results out l Production Shortage as percentage (%) of of it. Again, there has been a long debate Demand on the quality of data that is available with l Inventory Turns the manufacturing industry since most of them have to depend on external parties like l Production Cycle retailers, distributors, contractors, suppliers, l equipment utilisation Percentage (%) BI helps in keeping their own customers and others. If a proper managers updated feed is given to the Supply Chain and Order Inventory KPI’s and equipped with Management, then it will definitely ensure l Average Item Inventory deep customer insight and inventory data for l Days of Inventory Supply state-of-the-art and better and more effective decision making. l Finished Goods on Hand exact information that One of the challenges that the l Inventory Costs helps in taking critical manufacturing industries face is due to l Inventory Turns changes in demand. If managers have a business decisions proper understanding of costs and demand, l lease expenses l Order Fulfillment lead Time rather than going on they can make better decisions. Some of the manufacturers also have a customer specific l Percentage of Backorders assumptions. l Sum of Shipment lead Times costing. Manufacturing companies product l Work in Progress Costs portfolios are larger to manage, have large Financial KPI’s number of suppliers to negotiate on cost and quality, and maintain huge inventories l Operating expense which need to be tracked and moved to l Total Sales meet customer demands. Along with this, l Planning Costs there is always a need to analyse and identify l Procurement Costs customer needs, maintain and improve l Cost of Goods Sold customer delight and add new customers so l Cash-to-Cash Cycle Time as to remain in business and be profitable. BI l % POs Invoiced Properly definitely helps in making the right decisions l Inventory Costs to overcome these pressures and helps to manage and sustain in business in this l Investments complex environment. l Raw Material Costs Key Performance Indicators (KPI) Conclusion Manufacturing Management Analytics BI is very effective for all types of manufacturing, be it process, discrete or automatic. BI can close l Production Goals the ‘fact gap’ by improving the availability and o Back log % delivery of actionable data with minimal IT o Capacity utilisation % involvement. o System uptime % BI for manufacturing industry leverages o Failure Cost Value all the sources of data available throughout o QC Reject Rate % the manufacturing process to deliver a holistic view for smart decisions, based on data that l Inventory Management accurately reflects the true state of the entire o Inventory Ageing Days % manufacturing process. 14 • THE ECONOMIC TIMES POLYMERS june - july, 2010