The document discusses the significance of Business Intelligence (BI) in the manufacturing sector, highlighting its role in enhancing operational efficiency, reducing production costs, and improving customer satisfaction. BI systems provide actionable data that help managers make informed decisions regarding production, inventory management, and responsiveness to market demands. By leveraging data analytics, manufacturers can optimize processes, increase product quality, and maintain competitiveness in a rapidly changing environment.

2. 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
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THE ECONOMIC TIMES POLYMERS june - july, 2010 11

3. 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.
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4. 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
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THE ECONOMIC TIMES POLYMERS june - july, 2010 13

5. 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.
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