Data is an increasingly important component of most businesses, and nowhere is this more true than for large enterprises that employ large amounts of employees and cater to the needs of an immense consumer base. In manufacturing, for example, data can be used for any number of functions, including finance management, inventory control, supply chain management, and cost management. This is why Business Intelligence (BI) is so important to the industry. Here are a few benefits BI offers to the manufacturing industry.
The Perfect Arrangement
Over the years, you’ve probably realized that some configurations of your warehouse are more time-efficient, while others allow you to maximize your use of space. Previously, there was a lot of leg work when it came to collecting and analyzing all the different data required to optimize logistics. With business intelligence tools, you have the ability to measure and analyze which warehouse configurations allow your business to operate at maximum efficiency. Comparative analysis of different layouts in terms of efficiency have never been easier.
Popular KPIs for Manufacturing Warehouse Efficiency
- Truck Time at the Dock: Everything within your warehouse needs to leave your unit to be profitable. If a truck spends too much time at the, dock it identifies possible staffing problems, low inventories, infrastructure or some kind of handling difficulty. Trucks should spend the least amount of time at the dock as possible so another truck can come in and load or unload.
- Honeycomb Percentage: The total amount of a warehouse cube space (i.e., a single storage area or container; measured in square feet or kilometers) being used divided by the total warehouse cube space available for use at the same point in time, as a percentage.
- Cycle Time: Component Picking: The number of minutes required to gather, or ‘pick,’ the materials or components necessary to begin the production of an order from company storage facilities, from the time order picking begins until when the materials are ready to move into the manufacturing process.
Identifying Supply Chain Weakness
Before the digital age, it was a lot harder to keep track of all the moving pieces in a supply chain. Few people within an organization were able to step-back and see an accurate, full picture of a supply chain – and that meant that it was harder to identify shortcomings. Business intelligence has changed that. BI can tell you, definitively, things like whether a certain supplier tends to be a bit more of a problem child or that another supplier is continuously charging higher or lower prices than their competitors. Furthermore, BI data makes it easier to demonstrate to those outside of of supply chain management, what changes should be made and why.
Popular KPIs for Manufacturing Supply Chain
- Supply Chain Cycle Time: This metric measures what would possibly happen if you had no inventory on hand whatsoever. Then you determine how long it takes you to fill an order. When this time is shorter, you have better supply chain management.
- Perfect Order Management: Indicates which links in the chain are broken, whether it’s procurement, production, transportation, labor or any stage of the warehouse process.
- Orders Completed Without Incident / Total Orders Placed = Perfect Order Rate
Improve Inventory Management
Another critical aspect of the manufacturing industry that has been revolutionized by BI is inventory management and delivery. As with supply chain, BI data makes it easier to look at the big picture and identify bottlenecks. For example, BI can show you that one of your order fulfillment teams are consistently under performing by comparing labor costs, efficiency, and productivity rates. Where the difference in productivity might not be noticeable when you’re on the floor everyday, you can use data to look at the scope of their overall performance. For those who are looking to really deep dive, BI data from inventory can even help you predict future sales opportunities by analyzing a customer’s pattern of behavior and making predictions about growth trends.
Popular KPIs for Inventory Management in Manufacturing
- Inventory Dollars & Turn Rate:
- Raw materials (RM)
- Work in progress (WIP)
- Finished goods (FG)
- Inventory Accuracy (Units/Dollars): The difference between reported and actual inventory levels (measured in dollars or units), as a percentage.
- Database Inventory Count / Physical Inventory Count = Inventory Accuracy
It’s inevitable that your machines are going to break down – there’s no way around it. With BI, you’ll be able to see reports regarding machine operational performance. BI can measure a machine’s operational cost (downtime, repair time, cost of repairs, etc.) and compare them with how much revenue it generates. When you have a machine that regularly malfunctions but has only minor issues, it might not seem like a budgetary issue to remedy them. BI can help you determine whether fixing a machine’s performance issues is going to cost you more in downtime than it would cost to replace the machine itself.
Popular KPIs for Machine Functionality in Manufacturing
- Production Downtime: A period when the manufacturing process is on hold and no products are produced. Such terms as: Idle time, downtime or off line period usually relate to the same KPI. Usually, this KPI shows a ratio of downtime to operating time, and is directly related to the availability of assets for production.
- Overall Equipment Effectiveness: One of the main KPIs among manufacturer, it shows how manufacturing assets perform related to their theoretical maximum capacity. FInding it combines several different data measurements:
- Availability – For how much of the planned timeframe was the machinery available?
- Performance – Measures the a gap caused by machinery not operating correctly
- Quality – Low quality output means lost output; that’s why quality is as important as availability and performance.
For the manufacturing company utilizing Business Intelligence technology, the endgame is to use data collected by your organization to improve operations and enhance product quality, without sacrificing manpower to analyze data and trends. Since BI technology collects and interprets this data for your company, you’ll have more time to devote to your company – all while improving what you do for your buyers and clientele.
Your enterprise can use Business Intelligence technology to its advantage, too. To learn more, reach out to IronEdge and ask us what we can do for your enterprise.