The changes we have seen during 2020 have prompted a lot of soul-searching. Around the globe and across industry sectors, companies are looking at ways they can improve how they do business. My conversations with clients suggest manufacturing companies recognize we have reached a tipping point. Adopting analytics and using it effectively to improve processes and operational efficiency is no longer a "nice-to-have. It is now essential.
I’m seeing eight key areas where manufacturers are targeting improved outcomes with analytics.
Factory operating efficiency and process optimization
Improving operating efficiency has long been a target in manufacturing, right back to the days of Henry Ford and the first production line. However, with analytics, companies can take this to new levels. Micron, in Taichung, uses an integrated analytics and Internet of Things (IoT) platform to identify manufacturing anomalies in real time and provide automated root cause analysis. As a result, labor productivity has increased by 20%.
Inventory management and demand forecasting
Being able to forecast demand is a huge part of addressing customer needs. For many manufacturers, this does not just mean sales demand, but also parts and service demand. American Honda uses analytics on service data to forecast demand for repairs. The company sees this as a way to improve its relationship with customers by significantly reducing wait time for repairs. Alibaba has used analytics to predict demand in the fashion industry, shortening delivery times by 75% and reducing inventory levels by 30%.
Digital customer experience and marketing
Analytics is pivotal for assessing customer experience and needs. American Honda uses survey data to understand how customers use their vehicles. The company then uses the behavioral insights from the data to drive changes in the design of its vehicles to meet additional customer needs. It sees this as a mechanism to increase future customer satisfaction. Manufacturers are also experiencing a transition of their sales to online channels. This makes personalized digital experiences a critical component to maintain and grow revenues.
Warranty analytics and warranty cost control
Warranty claims can be a significant cost for manufacturers, so reducing these costs is important to the bottom line. For example, American Honda uses analytics to make sure warranty claims meet warranty policy guidelines and flag potentially suspicious claims for investigation. The time required to find potentially noncompliant claims has gone from three minutes to just one minute, and the accuracy of identification is considerably higher – around 75% instead of 35%. The average repair labor costs have been reduced for half of the company’s labor codes.
Predictive maintenance of factory equipment
The rise in connected sensors has enabled new approaches to the maintenance of factory equipment. It is no longer necessary to wait for something to break before it is fixed or to plan maintenance on fixed schedules from past experience. Sensors can now provide real-time information about the state of factory equipment to enable predictive maintenance before a breakdown. This limits downtime and enables repairs to be scheduled at the most convenient moments.
The disruption everyone is facing can be the catalyst to change from the status quo.
Telematics for revenue generation
Telematics, or the technology used to monitor vehicles remotely, is a growing industry. It is increasingly being used by vehicle manufacturers to create new revenue streams. The data is valuable in understanding product performance and insuring uptime by anticipating issues before a failure occurs so repairs can be planned. The data is a valuable commodity that can be shared with third parties chosen by the customer like insurance providers. Insights from the product can also be used for customized marketing messages to promote certain parts, accessories, or services just when the customer needs them.
Supply chain optimization
Analytics has been used around the world to increase supply chain visibility – and then improve operations from end to end. For example, Janssen Large Molecule, in Cork, Ireland, has used process control analytics to deliver near-real-time visibility of its supply chain. This has improved supply chain reliability by a massive 50% and reduced costs by 20%. Similarly, work by Schneider to optimize its supply chain has resulted in a 20% increase in customer satisfaction.
Service subscriptions and predictive field maintenance
Finally, analytics can enable manufacturers to provide additional services on subscription to those who have bought their products. From wind turbines to cars, everything needs maintenance. Predictive maintenance – identifying when something is about to break and fixing it first – is the equivalent of just-in-time manufacturing. Who better to provide that prediction and maintenance than the manufacturer?
The challenges of 2020 can be turned into a positive by accelerating analytics adoption to improve operational efficiency and pursue new revenue streams. The disruption everyone is facing can be the catalyst to change from the status quo. Which of these areas would create the most value for your business? How can you jump-start your analytics efforts? Let SAS know how we can help.
Read more about how analytics helps manufacturers reduce costs, improve productivity and minimize risk.