Manufacturing Insights — Part 3: Getting Data Right

This is the third of our three-part series on the future of manufacturing. Check out Part 1: The Impact of the Internet of Things, and Part 2: Checklist for Successful ERP Projects.

Previously in our series on the future of manufacturing, we discussed the impact of the Internet of Things, and we provided a checklist for a successful enterprise resource planning (ERP) project. Now let’s take a look at data, a third and arguably most critical component of the future of manufacturing. More specifically, let’s talk about how to get data right.

Getting Data Right is a Critical Commercial Issue for Manufacturing Businesses

We meet many manufacturing CEOs who are frustrated about their data. Despite spending huge sums on new systems, their waste is much higher than expected, and they are still unable to get a clear view of inventory or the true cost of production.

When a project fails to deliver, often there’s a simple cause: the master data in the system is wrong. The technology may be fine (emphasis on may), but if the data is wrong, then everything else is built on sand. When new systems roll out with poor data, problems remain and a growing business becomes less profitable.

What do we mean by poor data? One example is duplication — when the same customers, finished goods (FGs), or raw materials (RMs) have been entered with different names, often multiple times. The bigger the company, the more likely it is that these mistakes can happen.

Poor data leads to some (or all!) of the following problems:

• Reports are wrong and time-consuming to fix
• Customers are upset by incorrect, incomplete, or late delivery
• Procurement must over-order to create safety stocks
• Sales can’t accurately forecast delivery dates
• Labels or documents may be wrong, which may have legal or safety implications.

Poor Data: Causes and Solutions

Broadly speaking, we’ve identified three root causes of poor data. We’ve explained them below as well as provided possible solutions:

1. Leadership is weak or ownership is unclear.

Data is difficult, detailed — and (let’s be honest) not very interesting. So who is going to take ownership of it? Solution vendors don’t really care about your data, and your people are too busy with their regular tasks. Often it gets left to the Finance or IT teams to sort out. And they may not have the knowledge to fix the issues or the authority to get people to change bad habits.

This issue has strategic implications, so an executive needs to take ownership. He or she also needs (a) time to get to the bottom of the issues, (b) experience in this kind of work, and (c) the authority to make decisions and get things done.

2. The strategy is confused or vague.

Processes need updating. Data problems often reflect process problems, or lack of alignment between people and departments. It may not be clear internally who is responsible for what, such as for updating data or correcting errors.

Perhaps this kind of thing falls to some very overstretched people. Or there may be no-one getting to the bottom of what goes on and why. So it’s a good idea to take a hard look at your processes. Fixing the problem may require process changes, technology changes and some retraining (or even “redeployment” if the real issue is an individual).

Multiple systems create confusion. We often see data issues when companies use multiple systems. There may be good reasons for this. But if you have separate systems there needs to be clarity as to which system owns what data, and interfaces need to be complete, tested and working.

Monitor systems and processes. You’ve straightened out your processes and standardized your data. Now you need to monitor these activities so you can make corrections when necessary. This will be easier once you’ve established who has authority and ownership.

3. You’re planning and reacting for the short-term.

Data issues often arise due to time constraints, and commercial pressures result in shortcuts. Getting data right may be a matter of diminishing returns, as fixing obscure problems can be very difficult and time-consuming.

If this sounds like your business, it’s time to make some rational decisions. Short-term pressures don’t necessarily mean that you can’t plan for the medium- or long-term.

List the data problems, estimate the necessary effort for each and the business impact. If there’s no time to fix something right now, can it be on the list for next month? Can you monitor the impact to ensure it doesn’t grow? Deciding to tolerate a problem for now is not the same as sweeping it under the rug.

Even poor systems can work effectively when the data is policed, maintained and structured. Most importantly, this is a good platform for system improvements. Well-structured data can eliminate a whole range of problems and inefficiencies, can boost profitability, and can give everyone new energy as less time is wasted on distractions and snags.

Read the rest of our special series on the future of manufacturing:

Manufacturing – Part 1: The Impact of the Internet of Things.

Manufacturing – Part 2: Checklist for Successful ERP Projects.

Manufacturing Insights — Part 1: The Impact of the Internet of Things

This is the first of our three-part series on the future of manufacturing. Check out Part 2: Checklist for Successful ERP Projects, and Part 3: Getting Data Right.

The Internet of Things, as you likely already know, is the idea of implanting Internet devices in everyday electronics, like your appliances—it’s having your fridge let you know when it’s time to buy more milk, or even better, ordering it for you.

Lately we hear a lot of talk about the impact of the Internet of Things on manufacturing. We’re seeing buzzwords like the Industrial Internet, Industry 4.0, and smart factories. So what’s really going on?

IT companies like to baffle the market with buzzwords. So it’s important to remember that the ideas are straightforward. In simple terms, the Internet of Things in manufacturing is all about technology on the production line—incorporating sensors and controllers to make production more visible, more efficient, and more controllable in real-time. It means that your staff can deal with customer requirements more accurately: managing stock, orders, and production to minimize costs, while maximizing output and quality.

In manufacturing, the Internet of Things will also help with reporting. Some companies use manually created reports, from weeks- or months-old data, for planning. The Internet of Things integrates devices into enterprise resource planning (ERP) systems to provide up-to-the-minute information accurately, with minimal manual intervention.

Of course, it’s not a huge step from there to automating some aspects of decision-making. This can be anything from a structure of simple rules to sophisticated machine learning and Artificial Intelligence.

For manufacturing businesses, the Internet of Things will impact on customers as well. Your customers will increasingly expect to follow the progress of their own orders through your factory. And with the Internet of Things, integration of production activities with customers, suppliers, and partners becomes possible at a far more detailed level.

For the manufacturer, though, perhaps the greatest opportunities will be monitor and communicate with your products after they’ve been shipped. You’ll get information about your products when they are in use, enabling new ways to offer maintenance and support, and new avenues for value-added services.

Looking further into the future, we believe that the more revolutionary changes in manufacturing will come via 3D printing. Rapid prototyping and iteration are already becoming the norm, but the real revolutions will be in mass customization. Endless product versions and variations will become commonplace.

3D printing will also massively reduce the need for stock-holding, especially for spares, which will free up cash. This may have a transformative effect on smaller companies and their ability to invest in new trends. We believe that ambitious mid-sized businesses will find huge opportunities in this change.

Finally, it’s worth noting that according to some experts, these trends towards local manufacturing will reverse decades (or centuries) of growth in global trade of manufactured goods. A recent ING report estimated a reduction in world trade by as much as forty percent by 2040! This will affect a wide range of industries from shipping to insurance, and may have very broad-ranging geopolitical ramifications as well.

Well, it won’t be the first time that manufacturing has changed the world. But before that happens, read on to find out how the Internet of Things can transform your business now.

Read the rest of our special series on the future of manufacturing:

Manufacturing – Part 2: Checklist for Successful ERP Projects

Manufacturing – Part 3: Getting Data Right.

Manufacturing – Part 1: The impact of the Internet of Things

The impact of the Internet of Things on manufacturing is often talked about, but as ever, IT companies like to baffle the market with new buzzwords and to spread fear and uncertainty!

We read about the Industrial Internet, Industry 4.0 and smart factories. What’s really going on?

In simple terms this is all about using technology on the production line that incorporates sensors and controllers to make the production activity more visible, smarter and controlled in real-time.

More visibility means your own staff can deal with customer requirements more accurately, manage stocks, ordering and production to minimise costs, maximise output and quality.

Rather than basing this on manually created reports a week or a month old; devices and sensors are integrated into ERP systems to provide up to the minute information accurately, with minimal manual intervention.

Of course, it’s not a huge step from here to introduce automation for some aspects of decision-making. This can be a structure of simple rules – it doesn’t have to be rocket science. Or it can be sophisticated machine learning and Artificial Intelligence.

If production information is available internally then it can be made available externally.

Customer expectations across all industries are being reset by people’s own domestic experience of ecommerce – your customers will increasingly expect to be able to see and assess the progress of their own orders through your factory. Integration of your production activities with your customers, suppliers and partners becomes possible at a far more detailed level.

Perhaps the greatest opportunities are to continue to monitor and communicate with your products after they have been shipped and are in use. This enables new models for maintenance, support and entirely new opportunities for value-added services.

3D printing will have a revolutionary effect on many aspects of manufacturing in the future. Rapid prototyping and iteration are already becoming the norm, but the real revolutions will be in mass customisation where customer expectations will undergo major change in the coming years. Endless product versions and variations will become the common place.

Equally significantly, 3D printing will massively reduce the need for stock holding, especially for spares, which will free up cash. This may have a transformative effect on smaller companies and their ability to invest in these new trends.

At a macro-level, these changes will all reduce labour costs which will reduce the attractiveness of low-cost economies, reduce economies of scale, and will enable a return to local manufacturing. We believe that ambitious mid-sized businesses will find huge opportunities in this change.

Finally, it’s worth noting that these trends towards local manufacture are forecast to reverse decades (or centuries) of growth in global trade of manufactured goods. A recent ING report estimated a reduction in world trade by as much as 40% by 2040! This will affect a wide range of industries from shipping to insurance, and may have very broad-ranging geopolitical ramifications as well. It won’t be the first time that manufacturing has changed the world!

You may also like to read the additional content on the Manufacturing series:

Manufacturing – Part 2: Board checklist for successful ERP projects.

Manufacturing – Part 3: Getting data right.

Freeman Clarke is the UK’s largest and most experienced team of IT leaders and we frequently work with manufacturing clients to help them deliver transformational programs of improvement and system efficiency. We are entirely independent of any technology or suppliers.

We work exclusively with ambitious organisations and we frequently help our clients use IT to beat their competition. Contact Us and we’ll be in touch for an informal conversation.