Manufacturers Get Smart

Dec. 21, 2004
New business intelligence software helps manage daily operations.

There's a quiet revolution taking place in how manufacturers approach the use of information technology as a business tool, and ironically, it harkens back to an earlier era of corporate computing, but with a democratic twist. Known more than a dozen years ago as executive information systems (EIS), today a new breed of similar but more powerful and sophisticated business intelligence technology is helping companies operate more efficiently and profitably. Many manufacturers are embracing software that not only takes a daily pulse of operations, but also helps spot anomalies, analyze performance and initiate adjustments. What's more, access to key production data is no longer the purview of executives alone. Manufacturers today are pushing access to operational performance data down to the plant floor to enable better decision-making by operators. "The more available data is, the more you reap the benefits of that data," says Eric Kapinos, director of production planning and forecasting at Oberto Sausage, a leading manufacturer of packaged meat snacks. "We've found there is no level too low in the organization for people to use the data -- you just have to train them to understand it and use it." "It's very useful for management as well as those on the shop floor to be able to see what's happening with production and overall performance on a real-time basis," says John Hagerty, analyst in charge of enterprise manufacturing intelligence at AMR Research in Boston. "Manufacturers are using purpose-built applications to support their efforts to optimize equipment, staff and throughput." Often the daunting challenge of having to wade through all the data to find what's meaningful is a powerful enough incentive for manufacturers to want to find a better way. "We had nearly 30 disparate databases in the company, but when someone wanted to be sure they had the right information and that they weren't getting wrong data, we had to go dig for the information," recounts Robert J. Scott, vice president for manufacturing operations and IT and chief security officer at Possis Medical Inc. "We needed a data warehouse with consistent, fresh data that we could control and manage." A Minneapolis-based manufacturer of catheters and systems for removing blood clots, Possis is phasing in new software from Business Objects, one of the leaders in the business intelligence market. Others include Hyperion Solutions, Cognos and Microstrategy, to name a few. "We are using the software for reporting and analyzing business information," Scott says. "Now our people don't have to dig for information, and in many cases, they find they don't need a hard copy of a report, so long as they can see the data on their computer." Scott says the system allows Possis managers, particularly those in finance and engineering, to carefully track results each day. "It makes us more responsive to correcting problems as they occur," he says. "We save money by being able to solve problems early." Another group that benefits from the Business Objects application are Possis' staff of about 75 direct salespeople. "They can check customer accounts and purchasing cycles, and see what products hospitals are buying," Scott adds. "And they can measure exactly how their territory and customer base is buying against their goals for the year." Finally, Possis, which grew sales from $6 million to $70 million in the last seven years, is able to use the system to more effectively manage the budgeting process. "Department managers who are responsible for providing oversight to their budgets will get more accurate and timely reports on how they are doing," Scott says. This kind of in-process analytical capability is one of the big draws this software offers for manufacturing. "Companies can create dashboards and scorecards, and when they see something unusual, say, a metric that is off the mark, they can drill down into the supporting data to find the cause and take action," AMR's Hagerty points out. While a "dashboard" typically presents a snapshot of key metrics at a particular point in time in an easy to digest, graphical view, a "scorecard" tends to be more dynamic, allowing greater personalization geared to the particular user's role. Business information and analytical software is fast becoming a tool used by larger numbers of employees in the manufacturing enterprise, not just those in management. "There is a greater awareness in manufacturing that analytics are part of everyone's job," Hagerty observes. Typical data that manufacturers need to know about on a daily, or sometimes even hourly, basis include inventory, rejected items, throughput, sales, order status, on-time shipments, warranty levels and much more. In each of these categories, users often tend to need to get behind the numbers and the trends to see the root causes or find out what parts, products, geographic regions, dealers or customers are involved. Once armed with that more granular information, they can make better-informed business decisions. "Our problem was that we couldn't respond quickly to requests within the company for different views of the data," says Joe Greenhalgh, director of corporate planning and analysis at Logitech, a $1.3 billion maker of personal computer peripherals including mice, webcams, speakers and gaming peripherals. "We had no way for our senior executives to see where we were with shipments and where we were in relation to our goals for that month." In the past, Logitech IT staff extracted data into a spreadsheet, which took about three hours every Monday morning, to summarize company performance. Then the summary was e-mailed to various users in the company. The only problem was, executives often wanted different views of the data that could only be developed by special request. "It would be way too time consuming to create 15 or 20 different versions of the report for different constituencies," Greenhalgh says. For instance, something as simple as a breakdown of sales into trackball devices and cordless mice had to be done on an ad hoc basis. Today, the company's executives have access to all this data, and more, sliced and diced any which way they want. Using Hyperion Solutions' Essbase as a data repository, Logitech staff "are able to drill down into individual SKUs if they want to see what's going on with sales this month," Greenhalgh adds. Data security is better, too, he says, because employees are allowed access to specific aspects of the company's key performance data as needed. Rather than depend on others to get them the data and reports they want, top executives do it themselves now. "Our two heaviest users of the system are the CEO and the senior vice president of worldwide sales and marketing," Greenhalgh says. "It's extremely rare to have users asking someone else to get the information." Most of the company's nearly 100 users of the Hyperion Solutions business intelligence system are in finance, sales and marketing. At the Prodelin Group division of Tripoint Global, a maker of VSAT antennas, the primary uses of a new business intelligence system from Vanguard Solutions are analyzing inventory levels and sales. "Vanguard goes into the database each night and pulls the data, so that when we come in each morning and click on our PCs, we see our income statement, sales information, accounts payable and inventories," says Jim Bongiorno, division controller of the Newton, N.C., unit, which manufactures satellite dishes for DirecTV. "We can see our on-hand quantities, product movements, obsolete inventory and inventory turns." In addition, division sales staff can instantly drill down to check sales by country, state or customer, and can perform key analytics, such as sorting the top 30 customers by sales or profitability. Another company that's harnessing business intelligence technology is Oberto Sausage, a maker of beef jerky and other meat snack products based in Kent, Wash. "We have a very complex business, and we use the system to manage all demand for the company, including procurement for our meat products," says Oberto's Kapinos. The company sells to both Wal-mart and SAM's stores, and must manage a wide array of packaged products, including procurement, packaging and distribution. Using Hyperion's Performance Suite business intelligence system, Oberto planners and managers are able to dissect the company's operations into more manageable chunks, Kapinos says. "We can break down operations by product, customer or resource, or we can look at these according to four or five data elements and drill down to look at exceptions in the data," he says. Company planners typically will set a criterion, and manage that aspect of the business by focusing on the exceptions, Kapinos explains. These show up immediately on the Hyperion dashboard as irregularities. "We have a model to identify when there is an exception and to alert us when something is getting beyond the parameters we set. If there is a projected gap in availability of a resource, or a trend that exceeds what we can support, we want to know about it as early as possible." Because executives largely use the system, Oberto users unabashedly refer to it as an EIS. "We have links to all corners of our company in our EIS," says Steve Johnson, senior programmer analyst. Typical users are executives in sales, customer service and marketing. But Oberto has plans to push the EIS concept deeper into the company so that more people at more levels have access to key information that will enable them to make more informed and timely decisions. "We're working on taking that dashboard concept down to our production line, so that people on the line can see levels of efficiency as well as rejects and other valuable information," Johnson says. "We've tried to shift our paradigm from directing action downward to training people throughout the company how they should react and respond to data," adds Kapinos. "The idea is that when a bad trend is starting to happen, the person right where it's happening can make a change to fix it."

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