How to Use Operational and Production Data to Lower Costs

Increased overhead costs and supply chain issues are unavoidable today’s economic climate. Everyone is affected, from job shops to discrete processes and batch manufacturers. We are all looking for ways to reorganize, reprioritize, and strategize to navigate overbearing challenges and maintain profitable margins. What if we told you your business already has a key solution, just waiting to be unleashed?

That solution is data-driven manufacturing, a methodology that ensures facts guide decision-making. Think of your manufacturing management system or enterprise resource planning system as the central hub where cost-cutting measures can be implemented.

Decisions made by the plant manager, VP of operations, or even a line worker should always be based on facts and data, not guesses. Data visibility and utilization is the most important factor in getting a clear picture of your operations and production. This is where you find out where the inefficiencies are, what resources are not being utilized, and which machines are the most or least productive. Data-driven decision-making can help to maximize cost-efficiencies across the board if you use it the right way.

Utilize every resource and reduce waste

The first and most impactful step toward cost reduction is cutting down waste and utilizing your resources efficiently.

Consolidate supply chain issues

Make sure you consolidate your vendor, shipment, and inventory data. It sounds easy enough, but ordering from multiple vendors and suppliers without data visibility creates the perfect storm of data chaos. This triggers a business-killing domino effect of late jobs, disgruntled customers, unmet demand, inventory waste, and high material costs.

Knock out job data with BAM

Business Activity Monitoring, or BAM, uses automation and alerts based on historical and real-time purchasing and job order data. Watch as BAM brings reductions in inventory waste, time, and costs associated with purchasing, inventory, and ordering. Many manufacturers are starting to use BAM to reorganize and optimize their supply chain practices, allowing them to reallocate the saved costs to more important areas of operation.

Production floor visibility

Data visibility into machines’ inputs, outputs, labor, and downtime can help floor managers make quick and informed decisions to make sure every machine is maxing out its capacities. What does this look like? Displaying real-time data at every machine or section on the production floor allows managers to get a quick view of the current status of jobs, machines, and labor. It also lets the workers see their own performance data, empowering their decision-making. Cost efficiencies are realized in the ability to meet demands without investing additional resources in low-performing processes.

Job costing

Where do many manufacturers typically lose money? The losses begin in quotes, estimates, and job orders. Usually, companies have a few people who run job costing. This leads to either under-quoting and bleeding profits or over-quoting and losing out on potential customers. Data can be used in real-time to show current inventory levels, pricing, historical jobs of similar size and type, and various other points that would create accurate and quick quoting practices.

Base decisions on key performance indicators (KPIs)

The ability to derive actionable insights from data for accurate predictions and smarter business decisions is essential to successful operations. The first step toward gaining this ability is tracking manufacturing companies' most vital metrics or key performance indicators. These include downtime, yield, cost, throughput, customer rejects, lead time to customer, inventory turns, maintenance metrics, and overall equipment effectiveness.

By tracking these metrics over time (especially OEE), you will understand your equipment availability, performance, and quality and have the information you need to optimize your manufacturing processes. The data KPIs reveal enables your business leaders to reliably and consistently improve product quality, reduce downtime, make maintenance practices more efficient and cost-effective, and meet key business objectives. You will also learn through the process which metrics achieve critical business objectives.

Utilize machine intelligence to plan capacity

Data-driven strategies can support two types of automation, automated data, and automated decisions. Data collection no longer requires manual effort if an operation has the right data collection devices and software to process them. Second, data can be used to make automated decisions. Manufacturers move from descriptive to predictive analytics as they progress in their analytical journey.

Choose to rely on operational and production data

Data-driven decision-making is impossible without the processing capabilities of advanced manufacturing management systems or access to data. The use of data complements lean manufacturing because it provides manufacturers with the information they need to streamline their production processes and minimize waste. Conversely, a lack of hard data makes it impossible to accurately measure production improvements and prove cost savings.