By Gary Allemann, MD at Master Data Management
As with any business in a challenging economy, organisations within the manufacturing sector are looking for ways to optimise the way they operate. Typically, this focus has been around the factory and the physical manufacturing processes, but there are limits to what can be achieved without insight. Data is the missing ingredient to inform better decisions and unlock greater value and optimisation across not only the factory, site, and machinery, but throughout the supply chain including the customer, vendor and the end product.
Make money by saving money
Data impacts every area of every manufacturing business and is generated through many different mechanisms, from suppliers and customers to the machinery itself. There is substantial opportunity to be had from leveraging this data, both from optimisation and cost-saving perspectives as well as from the view of increasing revenue.
Many manufacturers are investing in solutions to assist with integrated planning, but the reality is that without the right data, this investment will be wasted. If manufacturers cannot access and leverage the various pockets of data from typically siloed Enterprise Resource Planning (ERP) systems, customer-facing systems and sales information, the capabilities of integrated planning cannot be leveraged. This particularly affects larger manufacturers that have grown via acquisition, as they are now faced with the challenge of running multiple systems with inconsistencies, complexities and siloes that need to be addressed to leverage value.
Understanding the actual cost
Effective use of data empowers manufacturers to allocate their resources, capital and inventory to build the most desirable goods at the right time to maximise end-customer purchasing. It also helps manufacturers to gain a more granular understanding of the actual costs involved with manufacturing a product, incorporating all elements from the cost of raw materials and equipment to electricity, the cost of running the factory, the cost of packaging, delivery, staffing and more.
Without data, and without managing data effectively, it is impossible to gain insight into these areas. This means that products that are thought to be profitable may actually be costing more than they generate, and products that were not thought to be money makers could become greater sources of revenue. What initially began as a data problem can quickly become a business problem, impacting long-term sustainability.
Manufacturers are also now faced with the need to perform Anti-Money Laundering (AML) initiatives on their suppliers, as part of a global effort to reduce financial crime. This means that data becomes more important than ever, as there is also a compliance risk.
Data as a strategic business asset
Optimisation relies on data. From supply chain optimisation on the buy side, ensuring that bulk discounts and buying on contract are effectively negotiated, to optimisation on the sell side through delivery schedules and just in time delivery. Even optimisation at the factory level cannot be guaranteed unless it can be measured. Every area of manufacturing requires data to be effectively managed so that performance can be measured and improved.
Data needs to be seen from an executive level as a strategic business asset that has a significant impact on the goals that are set for a business. If the goal is to improve sales, is the strategy to obtain more customers or to better serve existing customers? Do we fully understand how much it costs to manufacture goods and which areas need to be improved? How will data impact the goals we set for the business?
Ultimately, the key to unlocking value lies in understanding critical business objectives and the relationship that improving data integrity will have in achieving this. Data lies at the heart of understanding business, which in turn is key to making better decisions across all areas.