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The world of manufacturing has undergone massive changes since the start of the industrial revolution. Technological improvements have been the catalyst that has transformed simple mechanization into cyber physical machines. This expanse, known as the fourth industrial revolution (or Industry 4.0), has given rise to the Industrial Internet of Things (IIoT) – increasing connectivity and improving efficiency, all through data.
Multiple studies have proven the positive effect analytics has had on productivity within the manufacturing space. ITIF research reports that IIoT applications for monitoring machine utilization can increase productivity by 10-25%. IBM has also backed this by reports demonstrating IIoT insights from manufacturing procedures can lead to upwards of 20% higher production rate from the same product line. Lastly, Gartner has reported after studying a variety of manufacturing companies that 80% of the surveyed organizations reported better than expected results after adopting manufacturing analytics.
This article will go over how manufacturers can increase operational productivity and boost understanding of their operations with analytics, ultimately gaining a competitive advantage and increasing their bottom line.
1) Develop a sound data and analytics strategy
Manufacturing, like car-racing, is all about trying to finish first and beat your competition. In racing, if you have the best tires, brakes, and engines in the race, you can assume that you will finish first. However, if your headlights, dashboards, and windshields are not working well, you are essentially driving blind, and will end up lagging behind your competitors. In a business and manufacturing sense, you can have the best machinery and employees in the space. However, if the information you are receiving is lagging behind, your business will fall behind the competition. In the end, in both manufacturing and car-racing, whoever has access to better information and has the clearest idea of the optimal path to reach the finish line will win this race.
Through collaboration with operators of varying levels of data sophistication in the manufacturing space, it became clear that successful organizations have a few common traits. They have tight operations, great inter-company communications, are well versed in various strategic initiatives, and have a strong focus on their data and analytics strategy. Data and analytics helps organizations communicate measurable goals, keep track of what is working and what is not, and get a clear understanding of the past, present and future.
Here’s a really interesting question to think about. In your business/team/operations, what would perfection look like? How would you measure that? What are the levers you can control? What can you not control?
2) Deliberate data and performance tracking for continuous improvement.
There is no doubt that one of the key philosophies in manufacturing (and really any business/team) is the idea to strive for continuous improvement. Of course, you can’t improve what you can’t measure. Data tracking and reporting, mixed in with continuous improvement programs, is key to a successful operation. From a data and analytics sophistication standpoint, the following is a typical progression for a manufacturing operation:
1) Simple tracking of your key performance indicators: quality, incidents, productivity, cost, etc.
2) Analysis that the management, operations and continuous improvement teams use for reliable reporting (trends, anomalies, deep dives).
3) Centralized and aggregated data that runs in recurrence (weekly, monthly, or quarterly target checks), granting full perspective of your operation at a single glance.
4) Proactive use of analytics to find opportunities to improve various metrics, and ultimately increase profitability (predictive analysis, large scale systems optimization, long term seasonality effects, morale, attendance vs productivity, etc.).
3) Finding your key performance indicators (KPIs)
Ever had arguments with your fellow managers about what are the best indicators to measure for your team, operations, or company?
You’re not alone. While it may seem trivial, this process is extremely difficult, yet absolutely essential in order to properly understand what key performance indicators you should really care about and prioritize. Something as simple as “down time” could mean different things to different levels of people, using different time durations and intervals.
It is extremely important for executives and managers to communicate what are the key, measurable goals and metrics that they prioritize (in what time frame), and make sure that every team member understands why they are important and why such metrics are tracked the way they are. Every effort of each team member should directly affect those metrics, and they should have the power and incentivization to improve those metrics..
4) Establishing a data culture
Using data to assist your strategic decision making is a minimum in today’s fast paced and competitive environment. Yet, many teams are stuck in the old ways and still using tools like Excel to track their most important operations. Why is that? Well, if the management and executive team aren’t signalling and investing in data and analytics, the front line and middle managers won’t put the effort into it either.
We understand that establishing a data culture and changing the way you work is difficult, but it is absolutely essential for future success. One simple solution to increasing your data and analytics capabilities is to educate your workforce on the importance of data and analytics through educational workshops. Give them the tools and data analysis they need, and let them use those tools to automate their work and gain a deeper understanding into their operations. Fortunately, organizations like AAARL are able to come in and help your organization make this transition by designing, developing, and implementing an improved data strategy, fast-tracking your organization's path to data excellence.
Conclusion: analytics initiatives are high ROI
To close off, data and analytics is essential to compete in today’s digital economy. It doesn’t matter if you make high tech components or plastic spoons - more data and analytics will only make your team perform better.
At a minimum, any investment in analytics will help your team learn new things about your business, and at a maximum, it can unlock almost unlimited potential for continuous improvement. Our team has helped organizations gain new insights into their operations, help save 15-25% in costs, and even helped companies transform their operations into the digital age. Please feel free to check out our website to learn more, reach out with any questions, and join our mailing list for updates on our upcoming manufacturing analytics webinar!