Let’s look at a simple products company example right now. They have a supply chain that extends half way around or three quarters away around the globe. There may be 5, 10, 20 different partners contributing some way, shape or form to it.
What that means is that you’ve got thousands of different information inputs, and what we’re seeing right now is a number of manufacturers, even small to mid-sized firms looking at okay, what can we do to get a handle on that?
Business intelligence capabilities that were often thought to just for larger firms are now being looked at. How do we choose business intelligence technologies, data mashups, executive dashboards, et cetera, so that we can make some more informed decisions.
One of the things that companies have to start with is, okay, what is the truth. And of course, not the truth in a metaphysical sense, but the truth in terms of what is going on in terms of taking a look at our data.
One of the striking things that when manufacturing companies and companies of any kind start to look at this, is they find out that there are all these different versions of the truth. There is inconsistent data which leads to inconsistent reporting which means it is not uncommon to have different departments, different facilities, different units, taking a look at information and finding vastly different ideas of what’s going on.
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Ideal Business Intelligence Setup
The ideal business intelligence setup here, and I want to stress that this is the ideal is that you would have every employee working from the same version of truth. Now, this is a ideal of perfection. There are hardly any companies out there who have that one perfect, single version of the truth, but the idea is that manufacturing companies are starting to take a look at. They realize that good information is the most valuable commodity. If this is the way they were going to compete going forward, then shouldn’t they have a higher quality of information. It should be thought of just as they strive to create quality products.
If you can even move that ball forward a little bit in terms of getting better quality information, you can make sure that sales staff are aligned around incentives, which is a line with your production, which is in line with your suppliers. You make sure that everything is moving more efficiently and creating more value for you and the customer. And this is incredibly important.
Let’s go to the next slide for leaky information. Leaky information means that information is dribbling out on the plant floor, or on to the office floor and people aren’t able to analyze or take a look at it. This also creates leaks in the profit stream as well, all kinds of things. And we’ve mentioned a couple of these before. You create all kinds of problems within your supply chain where you can synchronize the facilities or staffing to meet your actual demand and to meet that demand at the total lowest cost.
You don’t know what your exact customer needs are. If you’re not getting good forecasts, you can’t coordinate your processes. Profits are leaking out. You can’t make sure that even changing customer orders are incorporated into the system in such a way that you minimize work-in-progress, that you minimize inventory. You frankly don’t ship stuff that isn’t wanted.
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Enormous Amounts of Problems
Enormous amounts of problems arise, and the thing that’s interesting about this new view of taking a look at information as one of the valuable or the most valuable commodities in manufacturing is when you look at the correlation between lean manufacturing and lean manufacturing issues.
Let’s go to the next slide about lean information. You can make a very good argument that what is happening right now on the information technology and the business intelligence side is really an extension of lean thinking into the information arena. Lean, of course, means you want to make sure that the right product is shipped to the right customer at the right time and what you’re trying to do with this is that internally you’re trying to make sure that the right information is being used.
The right information means that is it actionable and is exactly what’s needed for that role or function in the right volume, not too much, not too little, with the right longitudinal perspective. This means it’s good to know what’s happening now, but it’s also good to have some trend data going backward and also some idea of what demand is going forward. And this has to made available to the right employees at the right time, and really, really importantly in the right format. We’ve all been in situations, we’ve all worked at firms where there was tons of information and it might have been called business intelligence.