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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
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
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
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

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Business Intelligence (BI) for Manufacturing

  • 1.
  • 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 • 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. 12 • THE ECONOMIC TIMES POLYMERS june - july, 2010
  • 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 • 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. 14 • THE ECONOMIC TIMES POLYMERS june - july, 2010