Sam Needs, Strategic Account Executive & A&D Sector Lead, Tableau, discusses the role of data within modern manufacturing companies and how those organisations can get the best out of it.
Having access to data across the supply chain is a fundamental part of any modern manufacturing business; they can’t function efficiently, if at all, without it, particularly given the volatilities that currently exist such as Brexit, US/China trade war, the continued fall out from COVID-19, the conflict in Ukraine and escalating energy costs.
Despite the importance of data’s role within manufacturing operations, many organisations are still wrestling with the problem. However, it is fair to say better visibility across the supply chain is now something that the vast majority of businesses are invested in. “Ultimately, as we have discovered, supply chains are fragile and volatile by their very nature and a number of external factors have had a massive impact over the last few years, so it’s an area of a business that inevitably has a lot of risk,” Sam commented.
The upshot of these challenges, as Sam explained, has seen a rapid acceleration in the pace at which people need to make decisions. Monthly reviews are no longer up to snuff. People today need to be making intraday decisions, and in order to do so accurately, they need data to understand where risk sits across the supply chain and to mitigate it.
“Ultimately, that starts from better understanding your own business,” he added. “What’s your demand vs inventory vs lead time across your suppliers for all of your parts? That will give you a better understanding of what you need from your supply chain, where your risks are, and how you can get ahead of them.
“We supported one of the largest manufacturers in the UK in doing exactly that. This simple use case enabled them to see double digit reductions in shortages across production lines. Your data is absolutely fundamental to identifying risks and mitigating them.”
Managing risk beyond the boundaries of the organisation?
The more other entities or organisations are added to the mix, the more elements will be beyond the control and influence of a manufacturer. The key is about knowing how to manage those ‘uncontrollables’ and Sam highlighted that the manufacturers he is seeing do this effectively are focusing on two key principles.
Number one is about becoming a better business partner; having a complete picture of demand, which can then be shared into the broader supply chain, thus creating better relationships with suppliers. While this can introduce competition among suppliers, ultimately, it leads to supply chain optimisation. “It all comes down to trusting suppliers with your data to enable them to better service us and for us to better service them,” added Sam.
Secondly, the manufacturers who have been successful are the ones who have been able to overlay different datasets, many of which are publicly available, in order to harvest more intelligence around who their supplies are and the market dynamics that could disrupt that supply chain.
“It’s about harvesting enough data to build a better picture which makes you more resilient,” Sam continued. “For example, understanding which suppliers may be impacted by regional COVID-19 lockdowns or who are in a part of the world where there is civil unrest. A manufacturer is totally incapable of controlling those types of market dynamics, so you need to understand how they are going to impact your supply chain. The manufacturers who are doing that are the ones leading the charge.”
Changing supply chain strategies
The disruption of the last two years has seen a shift in supply chain management and the cadence of decision making. As mentioned, monthly inventories are now a thing of the past and manufacturers have become far more tuned in to becoming better business partners with their suppliers.
Additionally, the manufacturers that have achieved success over the previous two years have been the ones who have diversified their supply chain. So, if an unpredictable or uncontrollable event does occur, a number of different strategies are available to remove that risk, such as having multiple suppliers for key components or ensuring that the supply chain is geographically diverse to avoid challenges within one particular region.
Finally, supply chains are seeing increasing levels of investment. Supply chain disruption can cost a manufacturer up to 45% of a year’s profit over a decade, so it is an expensive risk. “It’s just another reason why manufacturers are investing in technology to enable multi-tier transparencies within their supply chain,” Sam added.
Realising data value
The level of data granularity available to manufacturers is a relatively new phenomenon and of course, it is not just about collecting data, more importantly it is about extracting value so that it has real use within an organisation. The reality is that manufacturers are scattered through the data maturity journey.
“Some manufacturers are super in tune,” added Sam. “One of our customers went on a data journey and now drive far more insight through engagement, adopting a do or die ethos when it comes to data. And that wasn’t a small business that needed to change, it was one of the biggest manufacturers in the UK. While some manufacturers are undoubtedly at the complete opposite end of the scale, we’re seeing manufacturers across the board starting to move up that data maturity curve, but it’s a long journey.”
Sam added that a commonality among those leading-edge manufacturers and those who are driving the most value from their data, is that their approaches are consistent. First and foremost, they trust their people, who are in turn empowered to acquire value out of different datasets; making data an opt out, rather than an opt in element of the business. “A good example of that is one of our automotive customers,” said Sam. “Their CFO was looking to drive savings across their business and so opened up all of their commercial data to everyone and set staff the task of exploiting that data.”
Extracting real value from data is also about differentiation, rather than simply leveraging static data sets; building a culture around data and most importantly, enabling people to ideate and validate gut feel. Many manufacturing professionals have been in their role for a long time and as such often have an instinct about certain processes and elements of the business. If data can be deployed to validate that gut feel then the business can ensure the decisions being made are the right ones.
It is important that data is democratised and leveraged by the many not the few. “The real leaders see data as a tool to enable ideation,” Sam continued. “It can create something of a culture rub with some manufacturers, and the ones that are doing this well accept that not every hypothesis is going to be correct. Manufacturing is all about precision, but actually, failure is okay because you’re not always going to extract value from every piece of data. However, real value is reliant on empowering your people with the right technology, enablement and support from every tier of the business.
By managing risk, manufacturers are enabling themselves to become more resilient and are far less likely to feel the impact of the market issues that can cause disruption in the supply chain. Mitigating risk before it arises removes inefficiency and cost from the business which ultimately drives profitability.
“If there’s a risk outside of your control or you didn’t spot until it arises, and weren’t able to forecast or foresee the impact, by using data to achieve true visibility across your business you will be much better equipped to react and respond to that risk as effectively as possible. And in some cases, realise opportunities that your competitors may not be able to act on,” added Sam.
Is all data useful?
It is Sam’s belief that there is value to be found from all collected data. However, a data set on its own may not prove valuable so it is important to understand what the data is and to combine it with other relevant data if required. This will enrich it and deliver further insights, potentially changing the value quite significantly.
“For example, a set of data that shows spend against individual suppliers is not going to drive too much individual incremental value,” he added. “It might indicate that you’re putting too much business one particular supplier’s way and are therefore too reliant on them. However, it’s not going to tell you anything that you don’t already know.
“However, if you overlay that data with the parts they are supplying, the demand in the supply chain and your inventory list, then you can very quickly build a picture of what you need, what suppliers you are overly reliant on, what parts you are short of, where you’re storing too many and what you need to do to maintain production.”
This journey shows how a set of data in isolation, which doesn’t drive much incremental value, can be combined with other data sets across the business to be hugely impactful. Furthermore, partnering this with the people piece around enabling staff to interrogate as much data as they can get their hands on to quickly understand whether the value is, can be a hugely important exercise.
Sam added: “It’s important that you have the ability to rapidly understand this, because without the right pillars in place, interrogating data can be expensive. It can be time consuming if you don’t take the right approaches or have the right capabilities. And if the results aren’t delivered quickly (and sometimes not at all), appetite dwindles right across the business.”
Sam hosted a discussion table at the Industrial Data Summit in April, hosted by The Manufacturer, where a variety of manufacturers came together to discuss how data can be monetised within their respective organisations.
“The concept of monetising data means different things to different people. But what was interesting at the event was how few of the manufacturers we spoke to were truly capturing the value their data programmes were delivering. Everyone knew that enabling data was the right thing to do, but very few could actually quantify the ‘why?’.”
Sam explained that there are three ways manufacturers can monetise their data. One is harvesting internal value from the outcomes of what you deliver via enabling employees to ideate data – better enabling people to understand, for example, production down-time and machining efficiency to spot issues before they occur. Forbes estimated that an hour of production down-time can equate to several million pounds of cost impact.
By understanding this cost and giving people better insights into how machines are running (in order to optimise their performance and spot a problem before it occurs), enables a business to retrospectively see, via the introduction of data, a reduction in production down-time which of course has an intrinsic value. Not only does this vindicate the journey a business is on, it also drives excitement by showing what can be achieved by investing in data and interrogating it in the right way.
The second method to monetise data comes back to the piece around becoming a better business partner; sharing insights with suppliers and driving competition transparency through your supply chain.
Finally, and what most people associate with data monetisation, is how you can build and sell a product to your customers. “There’s perhaps less opportunity for manufacturers to sell data as a product,” added Sam. “They can use it to enhance their products and give customers more insight but selling it is difficult.”
As a consumer you might want to see analytical data from the manufacturer of the car you drive for example, to see how it is performing. Undoubtedly that data forms part of a better service to you as a customer, but is it something you are likely to pay for? Unlikely.
However, it can be done. “GE leveraged Tableau to deliver insights on top of the data they collected,” added Sam. “They aggregate data and predict machine performance using digital twins, and they leveraged us to deliver insights on top of that. That’s a really good example of a manufacturer using data and selling it as a product.
“Regardless which element applies to your business, by far and away the most important is to make sure you’re taking a methodical approach to capturing the value you’re delivering. Doing that enables you to build a business case, drive adoption, drive excitement, and continue to evolve. Iterate to a point where all of your business is using data to make decisions. Ultimately, a data driven decision is three times more likely to be impactful.”
About the author
Sam has worked in data for 12 years, through a variety of roles including consulting, strategy and sales. He has been supporting manufacturers to leverage insights from data at Tableau for the past two years with a particular focus on the Aerospace and Defence industry.