IT in manufacturing – Opportunity ahead

Posted on 5 Jan 2012 by Aiden Burgess

At a conference to highlight the returns offered by Business Intelligence, Malcolm Wheatley finds solid evidence of the technology’s benefits for manufacturers.

Ten years ago, few manufacturers had heard of Business Intelligence. Large retailers and financial institutions knew of it, to be sure – and were already banking the profits earned from the insights into consumer behaviour that they had gleaned. But manufacturers? For the most part, no.

Roll the clock forward, and a lot has changed – as was made abundantly clear at a conference organised by The Manufacturer in London in early December.

Speaker after speaker strode to the podium and confidently outlined how their businesses were using Business Intelligence, and the benefits that they had gained.

Rolls-Royce, Concord Filing Products, Tata Steel, New England Seafood: each had ventured on a voyage of discovery, and each had a clear view of the value of the investment that they had made in Business Intelligence.

Chaired by Peter Thorne of Cambashi, observers of the Business Intelligence scene, too, had something to contribute.

Richard Brown of Capgemini, Pierfrancesco Manenti of IDC Manufacturing Insights, John Hammann of SAP, The Manufacturer’s own Nick Hussey: intelligently positioning Business Intelligence within the broader context of the general challenges that manufacturers are facing, each helped delegates to look beyond the hype to see the very concrete ROI that could be lurking, unlooked-for, in their data.

So what were the messages to emerge? Several broad themes were clear.

First, Business Intelligence delivers. Richard Brown of Capgemini, for instance, pointed to a study byAmerica’s Massachusetts Institute of Technology that highlighted how ‘data driven decision-making’ could explain a 5-6% increase in corporate output and productivity beyond that predicted by traditional IT inputs and outputs.

Second, today’s ‘new normal’ is a competitive environment of greater complexity than ever before. To survive and prosper, argued Pierfrancesco Manenti of IDC Manufacturing Insights, manufacturers needed to be customer-centric, agile, and robust. And to Manenti, that sounded like a call for something suspiciously like Business Intelligence – a judgement with which it’s difficult to argue. It certainly doesn’t sound like a call for traditional and notoriously cumbersome systems like, for example, ‘old school’ ERP.

And third, Business Intelligence can help manufacturers not just deal with the future as it comes upon them, but to predict it as well. As John Hammann of SAP noted, a single Business Intelligence dashboard was helping oil refiner Valero to save $200 million a year – a meaty return in anyone’s book.

John Hamman, SAP

But how realistic are such ROIs? And how attainable are they for the average manufacturer? Here, the manufacturers who presented at the conference helped delegates to ground the claims made for Business Intelligence with some solid hard-won experience of their own.

Rolls-Royce’s Steve Whittle, for instance, spoke powerfully around the theme of data quality, and putting in place a data governance framework. And if that sounds dry, his engaging examples soon painted an all too convincing picture of the problems potentially faced by a business with cross-border operations. Currency settings, part numbering conventions, date settings – very easily, it turned out, was it possible for Business Intelligence to be flawed by data inconsistencies. The moral: time spent at the start, ironing out such issues, was an investment, and not a cost.

That said, delegates confirmed the power of Business Intelligence in overcoming another commonly-found business scenario: “spreadsheet hell”, as Russell Robinson, speaking on behalf of New England Seafoods, put it.

Russel Robinson, New England Seafoods

An accountant working as an independent Business Intelligence consultant, Robinson related how a Business Intelligence system had helped New Englandget to grips with forecasting and product profitability – in the process replacing a spreadsheet with six tabbed worksheets, 518 rows, and 468 columns.

“A spreadsheet of that magnitude was complex, error-prone, completely undocumented and liable to splinter into multiple versions,” said Robinson. Its replacement was an animal of a very order – a Business Intelligence application that offered clear user interfaces, ease of use, ease of administration, and the power of “a single version of the truth.

Or, as New England’s finance director Charles Noble puts it: “We now have a system that shines a light on all areas of the business, from the sales trends of product lines to the profitability of individual products. We now also have sales team members doing a lot more analysis themselves, safe in the knowledge that they are dealing with reliable data from one source.”

Nor need the costs of that clarity be excessive. Kevin Allen, chief executive of stationery manufacturer Concord Filing Products, painted an impressive picture of why his organisation had opted for a Business Intelligence solution hosted – together with Concord’s data – on the cloud.

“We wanted a solution aimed specifically at manufacturing and distribution companies, and selected a cloud‑based Business Intelligence solution from Matillion,” he explained. Why? Look no further than speed of implementation (4-8 weeks, instead of 6-12 months), no hardware or software to purchase, and no need for IT support or extensive training. The message wasn’t one that sat comfortably with every delegate, as subsequent questioning made clear, but the logic was hard to refute.

Nick Reeks of Tata Steel, too, had a powerful message – and one that took the range of proffered Business Intelligence examples outside the often-found departmental deployments in sales, marketing, and finance. The procurement function within Tata Steel, it turned out, proved fertile ground for Business Intelligence’s insights.

And in a twist that highlighted the wisdom of Rolls-Royce’s Steve Whittle’s emphasis on data quality, Reeks showed a slide containing a pile of crane wheels, intended as spare parts for steel mill cranes at Port Talbot. Their collective value? Half a million pounds. And why so many? Different part numbers, it turned out, and different ordering systems.

“We just kept reordering – until Business Intelligence showed us that we didn’t need to,” summed up Reeks.

And what of the future? Among other topics, a lively question and answer session probed the barriers that prevented Business Intelligence being deployed more extensively on the factory floor, where most delegates agreed a huge opportunity existed.

Yet it was an opportunity that not every manufacturer saw: Matillion’s Matthew Scullion, for instance, powerfully described possessing a factory floor solution, yet seeing manufacturers seemingly more interested in sales and finance rather than boosting yield, OEE and quality.

Inevitably, it was an argument that couldn’t be settled there and then, and conference chairman Peter Thorne of Cambashi drew the proceedings to a close. A debate for next time, perhaps.