Data-Driven Decision Making for Manufacturers
Published on by Bryan Gayhart in Manufacturing, Technology
Traditionally, business decision-making has relied largely on experience and intuition – but with the speed of business accelerating at what feels like the speed of light, making better decisions faster is critical for manufacturers who want to create a competitive edge.
Fortunately, the abundance of readily accessible data combined with amazing advancements in artificial intelligence (AI) are empowering a dynamic and data-centric approach that’s the new cornerstone of effective business strategy for manufacturers. Here’s what we’re seeing.
What are the advantages of data-driven decision-making?
Improved quality
Unconscious bias and emotional influences can have a substantial impact on judgment. Leveraging data reduces that influence by providing insights into trends, patterns, and relationships – and that leads to more objective, reliable, and ultimately successful decisions that enhance quality and drive business growth.
Boosted efficiency and productivity
Better analysis of customer and supplier data provides valuable insights into preferences, behaviors, and market trends that help you optimize resources and increase productivity.
Better accountability and enhanced transparency
Developing, implementing, and tracking Key Performance Indicators (KPIs) based on data analysis provides stronger, more objective measures of success that are often easier to communicate across all levels of the organization – empowering even more advancements.
What are some key use cases of data-driven decision-making?
Glad you asked. Here are a few of the top ones we’re seeing.
Cost optimization
Two of the primary areas where data-driven decision-making helps optimize costs are maintenance and inventory management.
First, maintenance. Think about the machinery used in your manufacturing operations and the revenue lost when those machines go down unexpectedly. Leveraging machine learning models provides the ability to turn a reactive maintenance plan into a predictive plan – so you can solve problems before they happen, have fewer emergency repairs and unplanned downtime, and ultimately increase equipment lifespan.
On the inventory management side – through the pandemic, inventory management largely shifted from “just-in-time” to “just in case,” resulting in higher than usual inventory levels for many manufacturers. Leveraging historical data through the power of data analytics is helping manufacturers optimize inventory levels, forecast demand, and identify supply chain bottlenecks. The end result? Minimized holding costs, lower transportation costs, and more timely order fulfillment.
Capitalizing on revenue enhancement opportunities
Price optimization and customer experience both present revenue enhancement opportunities in the data-driven decision-making model. First, price optimization: Leveraging data to analyze competitor pricing, identify the impact of price changes, and ultimately direct marketing efforts toward the most profitable products and customer segments.
Focusing on the customer experience strengthens customer relationships and drives loyalty – through data analytics, you can map the customer experience and tailor communications specifically to each customer, anticipating needs and identifying cross-selling opportunities.
Making data-driven financial decisions
Building predictive models leveraging historical data allows for more accurate financial results – which means improved accuracy in budgeting, assessing potential investment feasibility, and identifying potential financial risks. In short, better financial forecasting.
Determining the ROI in your data analytics program
When you’re getting started leveraging data analytics, the challenge comes down to the potential costs and ensuring that all the necessary data is aggregated. Once your program is up and running, quantifying your cost savings and measuring revenue growth that comes from data-driven decisions gets pretty easy pretty quickly.
The bottom line to an enhanced bottom line
A well-designed and implemented data analytics program is a strategic asset that can significantly enhance your manufacturing company’s performance – and build that elusive competitive edge. And while many organizations have started on the journey, relatively few have fully realized the potential – yet. Cultivating a truly data-driven organizational culture creates enormous opportunity – and keeps your business ahead of the curve in the ever-increasing race to results.
Related content
You may also be interested in our latest Manufacturing Compensation and Benefits Benchmarking Report, with data from different types and sizes of manufacturers throughout our region. It’s just one more way we’re helping manufacturers build a competitive edge. You can also explore how some manufacturers are leveraging cryptocurrency, the impact of Environmental, Social, and Governance (ESG) metrics, and trends in cybersecurity for manufacturers.
Want to talk further about how to enhance your manufacturing operations? Contact us today to schedule a free consultation with one of our top manufacturing financial pros. As always, we’re here to help.
