The initial wave of analytics is used to improve product growth and performance for manufacturing analytics unleashes productivity and profitability. The focus is generally on products, so common areas include supply chain optimization, sales and marketing budget control, warranty spending reduction, and overall financial management improvements. These uses of analytics can yield breakthrough insights and an incredible ROI. They can even promote new revenue models based on selling services. In this article, we’ll take a closer look at some of the most common methods of utilizing data analytics in manufacturing.
Predictive analytics
Predictive analytics in manufacturing helps manufacturers anticipate changes in demand and allocate resources accordingly. Using data from past sales, predictive analytics models sales data for the future. Modelers determine factors that influenced past sales and apply those to future sales models. In this way, manufacturing organizations can reduce costs and maximize sales revenue. For example, if the volume of a product is predicted to increase, manufacturing companies can reduce production costs.
Using data from sensors can help manufacturers maximize machine efficiency. For example, rather than waiting until a breakdown occurs, predictive analytics can detect the causes of breakdowns and help manufacturers plan preventive maintenance. This way, they can limit the impact on the production pipeline. It is also possible to use predictive analytics in manufacturing to enhance inventory position. Once the data is analyzed, manufacturing companies can adjust production schedules and optimize equipment usage. By using predictive analytics, manufacturing companies can improve machine reliability, efficiency, and timely delivery.
Demand forecasting
The use of data analytics in manufacturing enables manufacturers to better align their production capacity with demand. Using data analytics in manufacturing, manufacturers can predict future demand by studying customer purchasing habits, weather patterns, and availability of raw materials. It can help them better manage their inventory levels and improve their relationships with their suppliers. By analyzing these data, manufacturers can better plan their manufacturing processes and reduce unnecessary waste. But how do they make the most of the data analytics?
The process begins with identifying customer clusters based on their past behavior. It helps identify groups of customers who exhibit similar patterns over time. Clustering algorithms such as fuzzy clustering or self-organizing maps enhance the accuracy of SC demand forecasting. However, clustering methods tend to identify outliers. To reduce prediction errors, manufacturers can use neural networks with back-propagation to learn customer behavior patterns.
Inventory management
With inventory management, data is critical. Companies must know the current state of their inventory to adjust in time for optimal production. Inventory management technology must provide viewable real-time metrics to all staff members and leadership. Predictive analytics is particularly significant for companies in fast-paced markets because it also helps them avoid backorders and excess stock levels. These are just a few of the benefits of data analytics in manufacturing.
Analytical tools for inventory management can also help prevent overselling by knowing what inventory is on hand. By knowing the exact amount of inventory in a warehouse, the inventory management person can adjust the right amounts of inventory and still avoid overselling. With the use of these tools, inventory management can become more organized, which in turn leads to happier customers. Using data analytics in inventory management is a step-by-step process that pays off in the long run.
Order management
Manufacturing companies should not underestimate the power of fill rate analytics, which can prevent stock-outs. In a recent survey, more than half of the companies reported fill rates under 98%. In addition, service levels were cited as the top metric for success. With this data, manufacturers can make better decisions about their processes and meet their customers’ needs.
The 3-point order management framework involves three essential components of a manufacturing process: sales, returns, and procurement. It also helps online sellers. Being out of stock is one of the most common reasons for underperformance in any business, especially during busy periods like seasonal sales. That’s why it’s essential to monitor inventory levels closely. One of the best ways to do this is through ABC analysis. The three-point framework helps companies identify inventory discrepancies and improve their overall performance.
Swarm intelligence
Swarm intelligence has been used in manufacturing for more than 1.5 decades, with impressive results. This analysis has been used to improve business decisions and help companies increase their bottom lines. While many businesses still use statistical tools and surveys, swarm intelligence has proven to be highly effective for solving problems. Unlike these tools, swarm systems use input from multiple sources, including individual people and machine sensors, to optimize overall performance.
To illustrate how swarm intelligence is used in manufacturing, consider a case study with South West Airlines. This company used a swarm-intelligence algorithm to improve how its cargo is distributed. As a result, the company reduced its freight transfer rate by 80% while cutting down on the workload of its cargo staff by 20%. The company also saved $10 million per year using swarm-intelligence applications. These kinds of applications are now used in a variety of industries, including manufacturing and agriculture.
