BUSINESS INTELLIGENCE FOR MANUFACTURING ROI
Manufacturers run their businesses on a multitude of different systems — ERP, customer relationship management, supply chain management — and each of these produces its own data. Getting an accurate picture of how the organization is doing can be difficult, but with business intelligence for manufacturing, that picture can become clearer.
For example, manufacturing executives are often hard-pressed to unearth such metrics as their rates of scrap and rework or the number of orders that didn’t ship on time. Before business intelligence (BI) software and BI analytics, business users typically requested reports from IT, but these took too long and were often inaccurate and too focused on internal data. Consequently, companies could not improve their performance in critical ways, and sales and customer retention suffered.
“Business users have questions that require data to be correlated across multiple different systems — things like, What is our yield across customer, product and region? and Why are we not getting [advanced shipping notices] from our suppliers?” said Jeff Hoffmann, vice president of software for SWC Technology Partners, a consultancy in Oakbrook, Ill. Traditionally, businesses would rely on spreadsheets and homegrown reports to unearth these insights.
Shooting for Business Performance Management
From a technical standpoint, BI software takes data from numerous internal and external systems and feeds it into a data mart or data warehouse, where the data is cleaned up and made available for ad hoc analysis. The BI analytics tool can then populate a “dashboard” or “scorecard” showing how the business is performing against its most important key performance indicators (KPIs), whatever they might be.
Just as with the controls of a car or plane, the BI dashboard will indicate in green, yellow or red whether performance on a particular KPI is good, of concern or needing urgent attention. Because the data derives from all the corporate systems — as well as relevant supplier and customer systems — the quality of decisions is much higher than with traditional methods, and users can take curative action much more quickly than in the past, BI proponents say.
The true breakthrough, though, comes from a usability standpoint. Rather than having to rely on IT to generate arcane reports, business users can do their own analysis in real time, putting them in charge of business performance management.
With today’s usable BI tools, “the people who are hungry for the data don’t have to go on a month-long reporting cycle with IT in order to get it,” said Jesper Volk, a former BI consultant based in Bellevue, Wash., who now works for a BI vendor. “They can make better decisions faster.”
For example, if a business user discovers that certain important shipments did not go out yesterday as planned, he can use a BI software tool to drill down into the data, discover the source of the problem and solve it.
BI Software Tools: Users Have the Power
This is the heart of BI — the ability to uncover insights that are actionable. So if the dashboard shows dangerous yellow or red readings on the KPIs, users can find the problems themselves, as opposed to calling someone one rung down on the organizational chart. “The scorecard will uncover problems that will require a more rich data context in order to solve,” Hoffmann said. “That comes from the connections between systems.”
Return on investment (ROI) for BI can be significant, according to Hoffmann. “The true ROI is driven by the decisions you can make now that you have access to the data.” For example, if you could easily discover scrap rates by individual worker, production line and product, how much can you reduce scrap and how much time and money would that save?
“That’s when you get into hundreds of thousands and even millions of dollars in ROI,” Hoffmann said. BI allows organizations to hone in on their business levers — improving quality and on-time delivery, for example — and make positive changes, driving profitability and customer retention, he said.
This article, “Business Intelligence for Manufacturing Made to Deliver Insights, ROI,” originally appeared at SearchManufacturingERP.TechTarget.com.