Big Data for Manufacturers: Customer Feedback Should Influence R&D
by Heather SmithIn 2001, The McKinsey Global Institute published a comprehensive report on big data, Big Data: The Next Frontier for Innovation, Competition, and Productivity, which explores the value that companies across various industries may yield as result of the big data explosion. So far we’ve explored the impact of big data on retail and healthcare companies, but today I’ll explore how big data analytics impact the manufacturing industry.
The manufacturing sector stores more data than any other sector, according to the McKinsey report. Manufacturers will likely get the most benefit from big data analytics since they have so much “raw material” to work with (from machinery metrics to sales systems). Manufacturing is a relatively efficient industry, with many advances made over the last few decades to streamline processes and improve quality through management practices like lean & six sigma (and lean six sigma!). But big data can be the impetus for the next wave of improvements in manufacturing, especially in R&D.
Research and Development
Streamlining the R&D process results in greater efficiency and reduced costs for US manufacturers and is important for products to be competitive in the global economy. But in 2012 and beyond, manufacturers should be going further, leveraging big data to influence design decisions. This means incorporating customer feedback into the process, designing products and adding features that customers actually want. McKinsey calls this “design to value” or “value-driven design.”
Surveys: I’ve taken consumer surveys that ask questions like “How much more would you be willing to pay for x feature?” and I now understand why companies are asking this. They are culling data from consumers about what features are desired and if they are included in the product/service, what is the value, i.e. how much are people willing to pay for it. Gathering concrete insights is one step toward big data analytics influencing R&D. Manufacturers should be listening to what consumers want and refining their designs accordingly. It’s just smart business.
Here’s a concrete example: Domino’s Pizza. You might not think of Domino’s as a manufacturer, but it is – the company is a serious dough manufacturer, producing and distributing dough to more than 5,000 US stores.
5 Steps to Better Supplier Quality
by Heather SmithWe work with a number of manufacturing companies around the world that need help staying on top of everything from daily production metrics (like machine utilization and on-time delivery) to complex financial calculations to ensure profitability. But as a business intelligence software provider, one of the most important processes we’ve been tasked with is helping our clients manage supplier quality.
Managing the performance of your suppliers is crucial for controlling costs and improving the quality of your outputs. Experts say that the cost of poor supplier quality may equal more than 10% of an organization’s revenue, so keeping that number under industry standards is simply a smart financial decision. But how do you embark on this journey?
1) Start with a subset of your suppliers.
One company may have potentially hundreds or thousands of suppliers, so determining a subset to begin measuring is imperative. You can roll out your supplier scorecards to every supplier in the future, but for now, let’s get it right with just a few. I suggest ranking your suppliers by how much impact they have on your product. The most critical suppliers that you can’t continue operations without are the ones that you rely on most heavily, so these are a good place to start. In the middle of the list are suppliers who directly impact your product, but you could seek alternatives if the need arises. At the bottom are suppliers that have no direct impact on your product.
2) Set expectations with your suppliers.
Your suppliers may know they have some poor processes that are straining their relationship with you and would relish the chance to improve them. Let your suppliers know that you’re beginning to track metrics that will help establish what needs improvement. This first step – just being honest – goes a long way toward building mutual trust and should force both sides to become invested in the success of the partnership. It is important that both parties communicate and document performance expectations, and have a mutual understanding of those expectations going forward.
3) Determine your metrics for success.
Your management team is probably already measuring a number of things that can be incorporated into your list of metrics. Your finance team is tracking costs; you may have six sigma principles in place to track defective parts per million; and your logistics system probably has metrics related to on-time delivery. I bet you’re even collecting a wealth of data in spreadsheets for monthly reporting. Gather these existing metrics along with any new information you identify as being important – this is the start of your Supplier Scorecards. Here are some sample metrics to consider and how they will help you:
The Case for Supply Chain Quality Management: Part 5 – Success at Graham Packaging
by Kathleen RohreckerThis article wraps up our series on supply chain quality management. Thanks for sticking with us while we explored the need for measuring supplier performance, how to implement a system to track it, and sample metrics to start the process. Today, we’re presenting a success story from our client, Graham Packaging.
Pennsylvania-based Graham Packaging Company manufactures more than 20 billion blow-molded containers annually from 81 plants in 16 countries, generating more than $2 billion in annual sales. The company uses hundreds of vendors in order to support its distributed production facilities and foster competition among vendors. However, in order to maintain high quality standards, Graham Packaging needed a consistent way for the plant managers and the Global Supplier Quality team to collectively drive performance.
The company’s Supplier Quality team worked closely with IT to implement an arcplan-powered Supplier Quality Dashboard and Scorecard that saved millions and vastly improved supplier performance.
The Case for Supply Chain Quality Management: Part 4 – Sample Performance Metrics
by Kathleen RohreckerIn our previous post in this series, we talked about the ingredients needed to create a fact-based culture among your internal supply chain teams and your external constituents (suppliers). Today we’re giving you the goods – sample metrics for your Quality Dashboards and Supplier Scorecards.
There are three critical performance drivers in the supply chain – Cost, Quality, and Time – all of which must be objectively managed. Some lend themselves to quantifiable metrics while others are more qualitative. In either case, supplier quality teams need a dashboard and scorecard(s) that makes all required information accessible and easy to consume. Let’s talk a bit more about cost metrics.
Cost:
As much as 60% of the cost of production is purchased material content and 67% of the cost of poor quality is in the non-materials cost. With the proportionately large amount of money being spent on business processes that support production, both the cost of parts and processes must be managed with metrics such as:
The Case for Supply Chain Quality Management: Part 3 – Creating a Fact-Based Culture
by Kathleen RohreckerLast time, we presented the challenges that quality managers face when trying to measure supplier performance. Today, we’re outlining how to create a supply chain culture based on facts.
Removing “supply chain” from the equation, how can any company expect to make decisions without the right data? arcplan’s view of business intelligence is that everyone should have access to the data they need to make performance-driving decisions. Without access to this type of data, decisions are often made using anecdotal evidence or data from individual locations, and not based on an aggregate view of quality.
If a fact-based culture is to be established between your internal teams and external suppliers, you need 3 ingredients:
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