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.

Maintaining Innovation

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 and competitiveness.

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.

Processes

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 processes.

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:

Supply Chain

• 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.

Profitability

• 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.

Operations

• Industrial packaging company achieved control over their ERP data
• 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 information world.

Business intelligence is being used in manufacturing to:

• Drive new value streams
• Support customised manufacturing
• Enable component based manufacturing
• Drive new manufacturing business models
• Reduce manufacturing timelines

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 customer.

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 price.

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 Manufacturing

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.

Digital Production

Producing a digital product involves three steps:

1. Creation of the underlying entertainment content or financial instrument
2. The digital construction, programming or development of the digital or software
3. 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 time.

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 manufacturing.

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 platforms.

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.

Next: Manufacturing BI Solution Vendors

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