Over the last 30 years, manufacturing in Romania has seen huge changes from a planned economy to a market-based one. It now has a very diverse manufacturing scene, with both large and small companies, and a wide range of products from steel through to finished goods. However, few manufacturers are really benefiting from analytics. I caught up with Senior Manager of Industry Consulting Lonnie Miller to talk about trends in analytics and manufacturing, and how they could help manufacturers in Romania.
Lonnie, thank you so much for talking to me. What do you think drives the adoption of analytics in manufacturing?
I think the initial driver is probably a need for more insights into the quality of manufacturing, and a growing recognition that it would be possible to optimise the process. Many companies are also looking for ways to improve production, and particularly to achieve better product quality, as well as productivity. Another big driver is warranty repairs. We see that a lot in the US and among some of our Canadian customers.
Why do you think warranty analytics is so important?
It has a big impact on cost of goods sold. I think this is especially important now because COVID means that companies aren’t spending, so reducing costs is essential. I think showing manufacturers how analytics can help them reduce costs – or rather, unnecessary spend – is crucial. Companies like Renault have a big network of dealers, and all those dealers expect to be reimbursed for the warranty repairs. We can help them with techniques like root cause analysis, to show whether it is the quality of the component or the final assembly that is causing problems – and that helps them to reduce spend.
Do you think this trend of reducing costs will continue in manufacturing?
I was looking at some data just before this conversation that suggested that this year has been a shrinking base for manufacturing. However, the projections suggest that things will pick up very rapidly next year. This chimes with my experience with our customers in the US: They’re optimistic that a recovery will return. I think it’s very similar here in Romania. Operations were not interrupted for long earlier this year, and they are hoping for a V-shaped recovery.
We hear a lot of talk about needing changes in the supply chain. How does that work?
There has been a major rethink of supply chains because the start of the pandemic exposed a lot of vulnerability. I think we are going to see a clear shift in strategy away from reliance on a supply chain that involves so many distant countries, such as China. Instead, I think manufacturers are looking to bring their supply chain closer to home. In Europe, that is likely to put Romania in a good position, because you have a lot of talented people who speak multiple languages, especially a very skilled engineering base. I think that is likely to be a very positive move for countries like Romania, although we are seeing a similar shift in the US as well given the push for upskilling the manufacturing workforce and recruiting more analytical talent.
We’ve talked about cost-cutting, recovery and supply chain. What other areas do you think manufacturers will be looking at as we move towards 2021?
I think there are perhaps three other big areas for manufacturing. I would say improving factory efficiency and starting to do predictive maintenance is crucial. This is all about improving operational efficiencies: getting the processes right to deliver better quality, and at speed. The second area is inventory management and demand forecasting. If 2020 has shown us anything, it is that it is hard to predict demand – but analytics gives us the best chance of getting it right. In the US, for example, Honda has shown that it can predict future demand for parts and servicing to within 1%. That’s hugely helpful in terms of inventory.
If 2020 has shown us anything, it is that it is hard to predict demand – but analytics gives us the best chance of getting it right.
And the third area?
I think the third area is around digital customer experience and marketing. This is something that maybe manufacturers haven’t really considered in the past, but it needs thinking about given recurring expectations for personalisation. They are moving towards selling services alongside telematics, say, or predictive maintenance. It’s part of the “X as a Service” (XaaS) movement. To make that work, you have to be able to sell the customer experience. Understanding how your product is used by your customers is crucial, or by the end-user, for manufacturers of components. This means that you can improve the product to address unmet customer needs, maybe even before your customers have identified those needs themselves.