Gaining an Edge in Manufacturing with Business Analytics

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New Tools Take Manufacturing beyond Business Intelligence


Beyond Reports or Spreadsheets

Unfortunately, they’re unlikely to be able to do so by relying on the spreadsheets that our benchmark research into analytics in manufacturing finds are being used in almost two-thirds of organizations (63%). A substantial majority (92%) use them universally or regularly, yet the research found that doing so leads to analytics that take longer to generate and are less accurate. Clearly there’s a reason why three in five (60%) manufacturing organizations say it is very important to make it simpler to provide analytics and metrics to all who need them.

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Manufacturing organizations increasingly need to understand what’s happening right now and to be able to forecast what is likely to happen in both the near future and the long term.

The business analytics that manufacturing organizations need should be built on a range of efficient dedicated technologies. The higher quality information they yield should include well-defined metrics and key performance indicators (KPIs) that are specific both to the manufacturing business and to individual departments including the supply chains of distributors and suppliers. When properly built these indicators incorporate goals, displayed as a range, to enable users to monitor and improve performance beyond the minimally acceptable level. They also should include trend indicators to show progress since the prior period, making it easier to identify early on any changes in organizational momentum.

With the right technology, valuable improvements are possible. KPIs can be woven together in strategy maps that show the relationships between the indicators and overall objectives. When targets are missed, historical and root-cause analysis can help determine the source of the problem. Interactive analysis and visualization (including geographic information) can help spot patterns in the data. And real-time and predictive analytics, the latter now in use in one in 10 manufacturing organizations, can detect problems or opportunities as they arise and point decision-makers toward the best course of action.

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Business analytics can provide benefits to many roles in the manufacturing organization, from the line to field service representatives dealing directly with customers.

Business analytics can provide benefits to many roles in the manufacturing organization, from executives to operations, from the line to field service representatives dealing directly with customers and to the supply chains of distributors and suppliers. Executives need an informed overview of their business while those in operations need a detailed understanding of what is happening in the day-to-day manufacturing activities of the organization as well as the ability to dig as deep as necessary to find both the causes of issues and potential improvements. Finance and product analysts will rely on the outcomes of analytics designed by others to examine demand, profitability or future materials procurement. Moreover, manufacturers can collaborate with their suppliers and distributors more productively if they have relevant metrics to enable them to plan to meet not only today’s but also future expectations.

Our extensive research in this area and into manufacturing confirms that each line of business has its own uses for business analytics. Finance applies analytics to manage operating plans to profit and cost levels. Supply chain managers focus on inventory, procurement and fulfillment while operations personnel are concerned with warehousing, distribution and logistics-related issues within their organization and to the supply chain network of partners. Sales can examine where to drive revenue growth based on availability and profitability. The field service function uses analytics to measure customer satisfaction and resolution effectiveness. IT examines capacity and the utilization of applications and systems to meet business processes.

Each of these areas relies on critical data that must be integrated into analytics. Our research into analytics use in manufacturing finds that financial (77%), customer (67%) and sales (64%) data are the categories most needed. Each of these areas can utilize unique business analytics, although all rely on a common set of technologies for creating and managing them.

The Edge Business Analytics Provides

To maximize the decision-making capabilities of each manufacturing department and type of user, organizations need to provide an array of types of analytics. In some cases determining the root cause of issues may be needed. In others it’s the ability to see previously undiscovered patterns in the data. Elsewhere, analytics can reveal the best action to take among different possible outcomes being evaluated, making it possible to provide decision-makers with informed guidance that includes the potential impacts of any given action. This includes providing metrics to partners directly online where they can see the demand for replenishing inventory of manufactured products or the inventory available for distribution and sales to customers. Once a decision is made and action is taken, the follow-up process begins as users monitor the results and then adjust metrics and KPIs as appropriate.

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Almost half (42%) of manufacturing organizations believe they can significantly improve their use of analytics and performance indicators.

Our research shows strong demand for business analytics across the range of manufacturing lines of business and processes. New methodologies and practices have emerged to take advantage of more comprehensive information sets available today, and mature organizations recognize the need to enhance their analytical capabilities. Almost half (42%) of manufacturing organizations believe they can significantly improve their use of analytics and performance indicators.

Those charged with enabling these capabilities across a manufacturing organization, whether in IT or business management, can find it a daunting task precisely because one type of analytics does not serve all needs and different users will require different modes of access; our research finds that usability is the number-one technology consideration. Moreover, though organizations may use audience-appropriate delivery vehicles to match users’ needs, they need all these to reference the same data to ensure consistency and minimize maintenance of the systems. It is noteworthy that of the possible capabilities to facilitate analytics use, our research finds that providing search for business users to quickly find metrics is cited as very important most often.

Recommendations

Based on our benchmark research into business analytics and manufacturing as well as our expertise, Ventana Research recommends ensuring that users are appropriately empowered by providing for them the right actionable business analytics capabilities. For example, for appropriately tasked employees, interactivity and visualization capabilities – using geographic information and location intelligence – create the opportunity to optimize the availability of products to match patterns of customer demand. Embedding in their business processes such manufacturing-specific analytics capabilities can make them easily accessible to the lines of business and to the supply chain network, and thus more useful.

It’s also important to remember that data preparation processes that produce reliable, complete, consistent data in a timely manner are required. And consider creating and deploying predictive analytics models to add a forward-looking perspective to supplement the more common historical orientation of analytics. Providing these powerful tools in the right circumstances can provide to a manufacturing organization the competitive edge it needs to prosper.

About Ventana Research

Ventana Research is the most authoritative and respected benchmark business technology research and advisory services firm. We provide insight and expert guidance on mainstream and disruptive technologies through a unique set of research-based offerings including benchmark research and technology evaluation assessments, education workshops and our research and advisory services, Ventana On-Demand. Our unparalleled understanding of the role of technology in optimizing business processes and performance and our best practices guidance are rooted in our rigorous research-based benchmarking of people, processes, information and technology across business and IT functions in every industry. This benchmark research plus our market coverage and in-depth knowledge of hundreds of technology providers means we can deliver education and expertise to our clients to increase the value they derive from technology investments while reducing time, cost and risk.

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