Business Intelligence in Manufacturing
Manufacturing is a principal driver of growth in productivity
and economic growth of any country. It is also an industry that
has gone through major revolution in the past 50 years. However,
when recessions hit, manufacturing tends to get hit significantly
harder than the rest of the economy, in terms of both depth and
duration. This can lead to a sharp and sustained decline in a nation's
overall employment levels and a drop in capacity utilization.
Manufacturing is often narrowly focused on the actual physical
fabrication of goods. However, it also includes the many services
that surround the physical plant. When considering business intelligence
solutions to manufacturing issues, we must ensure that all activities
are included, and metrics in the appropriate context are applied.
Benefits of BI in Manufacturing
In mapping the benefits of business intelligence solutions to
manufacturing, let’s look at BI in terms of how it contributes
to overcoming manufacturing challenges and leveraging new opportunties
BI and Manufacturing Globalization
Globalization is an trend affecting almost every facet of manufacturing;
manufacturers must find ways to exploit the advantages of globalization
of production and expansion of world markets whilst at the same
time protecting their IP from contract partners. Globally dispersed
virtual enterprises enable manufacturers to reach regions without
infrastructure investment, and offer products anywhere in the world.
Information Technology Opportunities
New information technologies present a continuing and growing number
of opportunities to manufacturers. Information, data communication,
and data processing technologies are powerful tools that can be
used in every element of the manufacturing enterprise, including
just-in-time [JIT] delivery of raw materials, activities on the
factory floor, shipping, marketing, and strategic planning. The
growing reliance of manufacturing on information and communications
technology has given rise to new roles and businesses devoted to
the production and implementation of technology systems.
Technological innovation and engineering design capabilities are
critical for the creation of new industries and products with improved
quality, functionality, and reduced time to market. Innovation is
necessary for sustained competitiveness. Advances in analytics technology
can also provide ideas for new products. For collaboration partners
to interact effectively, it is important to establish responsibilities
for the intellectual property and standards for research, product
development, and product realization.
Strengthening SMB Enterprises
As large companies outsource more of their manufacturing and services,
they choose where their business goes based on technical capability
Rising Infrastructure Costs
The costs of infrastructure, including those for health care, legal
protection, and regulatory enforcement is often a competitive differentiator.
Small manufacturers find the cost of legal and regulatory compliance
particularly challenging due to the variety of raw materials they
handle and the many industrial processes they use.
Manufacturing organisations are replacing linear, operations oriented
processes with structures better able to respond to individual customer
requirements and rapidly changing market demands.
Key success factors are increasingly dependent on the ability
to respond to unpredictable opportunities and change - change being
driven by social and political environments, the needs of the marketplace,
and opportunities created by technological breakthroughs.
Processes must support:
- Concurrency in all operations
- Integrated human and technical resources
- Real time transformation of information gathered from a vast
array of sources into useful knowledge for making effective decisions
- Environmental initiatives to reduce production waste and environmental
impact to "near zero"
- Rapid reconfiguration of manufacturing enterprises in response
to changing needs and opportunities
- Deployment of innovative manufacturing processes and products
Communications and computing are central to most products and processes.
Tools are also being used to guide thought and decisions. The business
intelligence solutions extend the scale and speed at which thought
and information can be applied to strategic objectives and operational
Data, information, and knowledge management capabilities enable
new business opportunities through enabling and linking more complex
manufacturing processes. Manufacturing operations use as much information
as they do raw materials and create at least as much knowledge as
they do products.
Scenarios - Using BI in Manufacturing
Business Intelligence is being used in multiple ways, across all
parts of the manufacturing enterprise:
- A car manufacturer substantially reduced costs and workload
with Cognos Enterprise Planning and Cognos ReportNet.
- Automotive products distributor reduced report times from six
days to a few hours.
- A Steel Building and Metal Roofing manufactuer created a single
version of the truth across the company
- A UK electronics manufactuer anticipated labor costs associated
with future production volumes.
- Conducted in-depth analysis on sales figures, accounts receivable,
and operational results through an easy-to-use customized portal.
- Foodstuffs manufactuer coordinated and streamlined their planning
process and eliminate decentralized planning islands.
- Electrical goods manufacturer radically improved their corporate
planning with a completely centralized and automated process.
- Food manufacturer improved company profitability, customer
service, and performance management.
- Component manufacturer increased revenues, reduced inventory
by 25 percent, and enhanced customer service.
- Industrial packaging company achieved control over their ERP
- Food manufacturer uses BI with SAP ERP to access deeper information
across the supply chain, sales, purchasing, finance, customer
service, and more.
- Tools manufacturer improved communication and credibility of
Business intelligence is being used in manufacturing to:
BI Driving Value Streams
Business intelligence tools amplify brain power in the way that
technologies of the Industrial Revolution amplified muscle power.
As BI integration and data exchange becomes easier, production is
reorganizing into logically driven value streams. Such tools have
also altered the significance of manufacturing in strategic choices.
BI tools affect the core process of creating and sustaining value.
They support laser market segmentation and alignment of distinct
product functions to each segment.
Data warehouse analytic tools segment the market into submarkets,
each with distinct needs and wants down the individual level.
BI Driving Custom Manufacturing
Creating customized products for each consumer demands collecting
a wide base of information about each individual, often triggering
privacy concerns. However, the ability to produce functionally distinct
products for each customer does not only apply to manufacturer controlled
options, but also to features sets that can be configured by each
BI analysis provides groups of ideal product feature sets –
driving product innovation as well as marketing effectiveness. Often
the positioning of the product feature set has an overall quality
impact on the product. Customers are often accepting of reduced
functionality and/or lower quality in return for a lower price.
This distinguishes the product in a range of other feature/functionality/quality
combinations. Business intellilgence helps manufacturers determine
the elasticity of each product feature and pricing point –
extending its products across a more diverse market.
This capability and the resulting products depend on proprietary
manufacturing skills. The combination of market segmentation and
intelligence driven functionality is transforming production into
a commodity. This in turn creates new problems. When market advantages
rest on proprietary product and market knowledge, protecting that
knowledge or intellectual property is a central issue.
Highly skilled, knowledgeable workers need to communicate effectively
within the enterprise, and direct communications between workers
and customers to build a comprehensive understanding of the customers’
needs and capabilities of the organization to meet those needs.
Decisions will be made by workers, supported by business intelligence
systems, thus those closest to the manufacturing process will make
the promises to customers about product features, delivery, and
Frequest system reconfiguration to meet custom production demands
and new processes and products will mean job requirements will be
constantly changing. Whilst certain workers will continue to have
specialized technical skills, knowledge will be shared to ensure
that the impact of decisions on the entire supply chain will be
considered. All workers will contribute through BI Planning Systems
to strategic planning, market research, product design, process
design, and sustainability.
BI Driving Component Based
Digital information systems store explicit product and process
knowledge in easily replicable forms – allowing component
parts to be reassembled in any number of compatible combinations.
Old models relied on formal knowledge based upon the intuitive know-how
of individuals within the organisation. This evolution has fostered
stronger intellectual property as a core strategic asset. This applies
equally to services as it does physical products.
Digital Products Replacing Services
Business intelligence and digital production have together expanded
the format of a single product or service into a multi-product line.
For instance, accounting services are largely being replaced by
accounting programs, and accounting tutorials which can be online,
printed or ebooks, or published to CDs. In this instance, digital
manufacturing has transformed a physical service into digital products.
The Digital Manufacturing Continuum
The value proposition of manufacturing production can be categorized
as either a strategic asset or a commodity that can be purchased
in the marketplace. Different industries and products will fall
within the continuum between these two extremes. For the sake of
simplicity we can categorize three main groups along this spectrum,
based on the sector’s relation to digital tools and to production:
- Products which can instantly be fully digitalized and sold
entirely in online marketplaces.
- Products that remain physical and are best evaluated in person
– such as textiles and larege machinery
- Products that fall in between where information technology
has both added value and created distinct controls, yet the underlying
functionality is physical and not digital.
Producing a digital product involves three steps:
- Creation of the underlying entertainment content or financial
- The digital construction, programming or development of the
digital or software
- The vehicle for delivering the product for the market
The digital product may be totally autonomous or served from a
central system and delivered on a network of digital equipment.
The core product is the information or capability, the hardware
is essentially just an instrument to access the material.
Hardware adds an additional layer to production, and knowledge
as to what hardware is required in an additional element of knowledge,
and the loading of the content to the server is an additional skill
requirement. Both of these additional items can be outsourced, meaning
that IP can be secured around the core content product.
Digital product manufacturing also has its own value add supply
chain. The evolution of digital products has merged collaboration
and digital production to foster open source software - where innovation
is distributed amongst the developer community, layered upon a foundation
program source code provided free of charge by the primary vendor.
BI Driven Business Models
BI tools can fundamentally alter underlying business models on
which firms operate, such as when:
- Market knowledge and new communication tools transform a product
business into a service business.
- Thought capturing and extending tools merge with data communication
and data processing technologies.
This results in the ability to manipulate, organize, transmit,
and store information in digital form.
As a firms BI capability matures the firms strategies become more
focused on capturing value and market position from data assets.
Production becomes a strategic asset which is sufficiently agile
to change rapidly to adapt to manufacturing new products and services
to meet new market needs and wants.
BI is supporting the increasingly complex and ever-expanding manufacturing
sector that must establish a concise path to follow to remain competitive,
whilst meeting different needs different stakeholders. This requires
logical decision making and highly predictive market insight.
BI Reducing Manufacturing Timelines
A key stream of manufacturing technology is focused on reducing
time-to-money cycles, continually seeking new solutions to driving
more efficiency into the manufacturing process, thereby reducing
Manufacturing, as a process, has a direct flow beginning to end,
with the product increasing complexity as the process moves through
its cycle. This process is irreversible, time flowing in one direction
only. Time is relative to different parts and people involved in
Data and information knowledge control the ability to expand complexity
and processes in manufacturing. Interdependency and interaction
between knowledge objects is increasing with interdependencies,
having an increasing impact on manufacturers and customers in terms
of both cost and quality.
As manufacturing processes evolve along with data and information
knowledge, insight and wisdom also evolve. Numbers become increasingly
meaningful, being transformed into control, action and decision
Manufacturers must continue to develop systems to store and analyse
massive volumes of data and relate this data to its design, development
and production proceses.
Detailed process design and planning will be self managed by working
teams, with minimal input from management. Workers will determine
when and if process and decision automation will contribute to the
speed and quality of production.
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More Detail on Manufacturing BI Strategy, Program & Technology
Index | General Sector | SMB
Sector | Contract Sector |
| Technology Used | IT
Roadmap | Business Benefits
| BI in Manufacturing
| Concurrent Manufacturing | BI
Solution Requirements | BI