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Whether a global giant or an SME, the effectiveness and agility of your supply chain can have significant effects on business performance. Keeping tabs on your suppliers is the only way to control the impact they have on your business, and analytics are a key player in that. As supply chains evolve to become more slick, so the analytical tools employed need to grow too. Recent shifts in supply chain management theory suggest the need to challenge accepted analytical approaches.
Most manufacturing time and materials based projects assume a certain rate to account for costs incurred from manufacturing overhead. Many federally funded grants or projects expect small businesses to conform to a set price range for overhead costs. However most companies know that their manufacturing overhead costs are far from being fixed, let alone predetermined.
Some manufacturers of luxury products, even though they do produce in mass, tend to follow to a build-to-order process. For example, it is known that BMW customers can change the specification of their car up to 6 days before their car gets produced! Other luxury car manufacturers also do it this way. However for a large number of manufacturers that produce commodity goods, build to order is not the preferred production planning model.
Companies of all sizes and types have the need to develop proper estimates of their spending for future periods. Budget forecasting is obviously essential to running an efficient business.
In any business, strategic decisions can be made only after we know what factors have the greatest impact on the bottomline. Key performance indicators or KPI are a term generally reserved for those factors which signal the health of a business. The business in question could be the overall functioning of an entity or it could be a specific division within a larger activity. For example, for the CEO of a large corporation the "business" interest is the overall profitability of the company. But for a manager of production in a smaller organization, the business interest would be number of defective units, number of days of accident free production, average throughput volume, average time for repairs and so on. So the quantities of interest would be some metrics or KPIs that succinctly summarize the division's performance in those terms.
A common issue among manufacturers that build to stock is to determine how much inventory they should produce in a given period of time. This clearly requires estimating future demand. For most companies, sales people have specific quotas which may be used as a baseline figure. However these quotas are nothing more than goals and more often than not sales people miss these goals. A far better estimator of future demand is obtained by using time series forecasting of past years' actual sales data.
There is a lot of expectant talk about the potential of analytics applied to sensor or machine
We recently delivered a custom dashboard to one of our customers - a small manufacturing company. Their analytics maturity level was really low (try the free analytics maturity grader for your business) - so low in fact that only very recently they obtained a license for a basic database system! But as a company they have been around for more than 25 years and employ around 30 people.
One of our customers has a not so unique problem. They are responsible for transportation - a supply chain related function within their company and their costs fluctuate on a regular basis - which is of course quite common in all business. Their costs are a result of the amount and mix of products they ship, as well as external factors such as fuel costs. As a result of this fluctuation their quarterly budgeting becomes a non-trivial problem. I am sure you can relate to this sort of scenario in your own company.
The term "Smart Manufacturing" is today a niche phrase that only a few experts in manufacturing are conversant with. However this is likely to change very soon. Particularly with more and more people becoming curious about something called "3D Printing", which The Economist first blew the lid on by calling it the Third Industrial Revolution. According to Google Trends, the interest in 3d printing has sky rocketed in the last one year!