Manufacturing and Distribution Group Newsletter – Winter 2022
Harry Fox, Joel A. Herman
Got Data? Use It To Transform Your Manufacturing Business
HARRY FOX, CPA
What if you could improve product quality, increase productivity, reduce waste and minimize variability with only minor adjustments to your manufacturing process? That is the promise of advanced data analytics.
Data analytics are not new. Businesses have always gathered data about their operations and used it to drive informed decision-making. But today’s advanced technologies and cheaper computing power make it possible to quickly collect and analyze vast amounts of data from both internal and external sources. Armed with “big data,” you can identify patterns, trends and correlations among various manufacturing process steps and inputs. This analysis can lead to valuable — and often unexpected — insights that you can leverage to improve your manufacturing process and boost profits.
Related Read: Big Data Strategies for Manufacturers and Distributors
There is little you can do to prevent machines and equipment from breaking down or failing. But predictive maintenance systems allow you to anticipate and prepare for these events, minimizing downtime. These systems use a combination of embedded sensors, artificial intelligence and big data analytics to gather historical information on hundreds or even thousands of parameters. This helps the systems identify and monitor the factors most closely correlated with breakdowns.
By anticipating when breakdowns will occur, predictive maintenance enables you to schedule maintenance for times that have the least impact on your operations (at night, for example). You will also be able to minimize downtime by having the necessary personnel, parts and materials on hand when you need them.
Predictive maintenance systems can reduce machine down time by 30% to 50%, according to estimates by global management consulting firm McKinsey & Company. These systems are also estimated to increase machine life by 20% to 40%.
Even if you have minimized or eliminated unscheduled downtime, other operating inefficiencies may be more difficult to detect. Big data analytics can reveal hidden inefficiencies and bottlenecks by examining hundreds of production parameters that affect efficiency and throughput and applying sophisticated modeling techniques.
Often, relatively simple adjustments to these parameters can help you streamline operations and maximize your output. For example, simply rearranging the plant floor or relocating often-used parts to be more accessible can help eliminate bottlenecks.
Managing the supply chain
The COVID-19 pandemic has demonstrated the devastating impact of supply chain disruptions. Big data analytics can provide manufacturers with greater control over their supply networks.
Using data analytics allows you to monitor and analyze a wide variety of internal and external factors that affect the performance of the supply chain, including inventory levels, customer demand, economic and political factors, weather and road conditions, and supplier quality. This information helps you anticipate potential problems and formulate contingency plans to minimize their impact on your production process.
Related Read: The Future of the Supply Chain Is Digital
Big data analytics can help you identify opportunities to enhance productivity or yield. In many cases, these opportunities are hard to discern using conventional techniques. For example, a chemical manufacturer used advanced analytics to measure the relative impact on yield of various production inputs, including coolant pressures, temperatures, quantity and carbon dioxide flow. The analysis uncovered some surprising relationships. Specifically, variations in levels of carbon dioxide flow caused significant declines in yield. By adjusting its production parameters in light of this information, the company was able to reduce raw material waste by 20%, lower its energy costs by 15% and improve overall yield.
Likewise, pharmaceutical manufacturers can use big data analytics to optimize production. A major challenge for these manufacturers is often the variability inherent in botanical raw materials and the manufacturing process. Relevant factors include climate, fertilization methods, harvest time and storage conditions for raw materials, as well as variations in manufacturing processes, such as heating or adding certain chemicals. Big data analytics can be used to adjust production processes to ensure product efficacy and quality.
Leveraging the power of data
Data has become the world’s most valuable resource, according to the international business newspaper The Economist. Manufacturers that collect and analyze data about their operations can enjoy significant improvements in productivity, efficiency and profitability. In addition to the areas discussed above, big data analytics can be used to optimize a variety of other processes, including finance and budgeting, scheduling, marketing and customer service. Contact your ORBA CPA for more information on how your organization can better capture and manage big data.
Sidebar: Is your ERP system obsolete?
Most manufacturers use some form of enterprise resource planning (ERP) system. These software systems help centralize and integrate the management of various interdependent business activities, such as sales, marketing, finance, human resources, customer relations, procurement and supply chain operations. By creating a centralized repository of business data, ERP systems and big data analytics can work hand-in-hand to help manufacturers optimize performance.
Because analytics are only as effective as the underlying data being analyzed, manufacturers wanting to take advantage of these techniques should ensure that their ERP systems are not obsolete. For example, your ERP software may be due for an upgrade if it:
- Does not provide access to real-time data;
- Requires certain manual processes;
- Doesn’t communicate with your suppliers’ and customers’ systems; or
- Relies on multiple platforms.
It is also important to consider whether your system is user friendly and whether the vendor provides needed support.
For more information, contact Harry Fox at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Manufacturing & Distribution Group.
Labor Shortage: Four Strategies To Help Manufacturers Win Talent
JOEL A. HERMAN, CPA
In the current economic environment, competition for manufacturing workers is fierce. So it is critical for manufacturers to use all of the resources at their disposal to attract and retain talent. Here are four key strategies to consider.
Related Read: Labor Shortage: How Manufacturers Can Attract and Retain Qualified Workers
- Sell Your Technological Advantages
Cutting-edge technology — including internet-connected devices, artificial intelligence, machine learning, automation, robotics and virtual reality — is rapidly transforming the manufacturing industry. These tools not only enhance productivity, efficiency and quality, but they can also be powerful incentives for recruiting new employees — and retaining existing talent.
Manufacturing workers — especially younger ones — are hungry for opportunities to learn about and use the latest technologies. According to a recent survey by Parsable (a developer of connected worker platforms), 45% of frontline manufacturing employees across five countries (the United States, the United Kingdom, France, Germany and Spain) say the opportunity to work in a more modern, digital environment would be part of their decision to leave their current employer. The statistics are even higher for workers aged 18 to 24 (55%) and 25 to 34 (49%). The study also found that 53% of U.S. workers across all age groups would factor the opportunity to work in such an environment into their decision to change jobs.
Related Read: Are You Ready for Industry 4.0?
- Facilitate Remote or Hybrid Work Arrangements
During the COVID-19 pandemic, remote work has become commonplace for many jobs. It is likely that remote work or hybrid remote/in-person arrangements (for example, two days in the office, three days at home) will become the norm. To compete in this environment, you will need to adopt technologies that facilitate these flexible work arrangements, not just for office staff but also for certain plant employees. For instance, manufacturing operations that take advantage of technologies such as automation, robotics and internet-connected machines make it possible for plant managers to monitor, and even control, operations remotely. Certain research and development activities can also be performed remotely.
Offering remote work opportunities also allows a company to expand its recruiting efforts beyond its geographical area. Manufacturers can dramatically expand talent pools by considering applicants who live in other parts of the country, perhaps areas with lower cost of living, without necessarily relocating them.
Related Read: Remote Work May Be Here to Stay — Are You Ready?
- Leverage Shifting Demographics
A factor that is turning up the pressure on manufacturers to embrace digital technology and remote work is the increasing prominence of younger people in the workforce. Millennials and members of Generation Z already make up nearly half (46%) of the full-time U.S. workforce and that percentage is rising rapidly.
In addition to being tech savvy, these younger generations also tend to place a high priority on environmental, social and governance (ESG) issues. To distinguish your company from the competition, you will need to address sustainability, diversity and other ESG issues to attract workers who are becoming increasingly socially conscious.
- Create Career Opportunities
To attract the best talent, you need to understand the perspectives of today’s prospective employees. Competitive salaries and benefits are important, but job seekers also value a work environment that provides flexible work arrangements, exposure to cutting-edge technology and tools, training, mentorship, growth opportunities, and corporate policies and practices that reflect their values.
According to the Parsable survey, a significant percentage of Generation Z workers (29%) plan to stay at their current jobs for less than two years and 39% intend to stay for two to five years. To retain these workers, create an environment that allows them to pursue their career and personal growth goals within the company rather than looking elsewhere.
Stay ahead of the competition
Finding and retaining skilled workers during the COVID-19 pandemic has been a challenge for many businesses, including manufacturers. Stay ahead of the competition by expanding recruiting and retention strategies.
Related Read: Manufacturing Evolving from COVID-19
For more information, contact Joel Herman at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Manufacturing and Distribution Group.
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