By Sid Adelman and Chuck Kelley and Scott Howard and Nancy Williams and Steve Hoberman
MAY 2, 2003 1:00am ET

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How effective is data warehousing for the manufacturing industry?

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Q:

How effective is data warehousing for the manufacturing industry?

A:

Steve Hoberman’s Answer: Data warehousing can be extremely effective for the manufacturing industry, provided that the right business questions are captured and part of the warehouse's scope. I work for a manufacturing company and depending on the business' needs there are many valuable reports and queries waiting to be discovered and produced. Examples of business questions that can prove valuable are: what are our total sales by region, by product, etc. or how many consumers contacted us on a given product by region and month? The better you understand the business questions and how to extract the data that answers these business questions from source systems into a data warehouse design, the greater the effectiveness of the warehouse. If you'd like to learn more about applying business questions in your data warehouse design, you might want to look into The Data Warehouse Institute's (TDWI) data modeling course (www.tdwi.org). Good luck!

Scott Howard’s Answer: Data warehousing is often only associated with the financial and retail industries. However, it is also very effective for providing enhanced information about supply chain and the manufacturing process itself. Defect counts are a very appropriate measure and when carefully modeled in the appropriate star schema can provide significant insight into optimizing the manufacturing process and reducing costs. The same could be said about the transportation and warehousing components of your industry.

Chuck Kelley’s Answer: Extremely effective. But, of course, that depends on how well you understand your user communities’ requirements, the design of the data warehouse, the acceptability of your meta data, the quality of the data, how well your chosen ETL tool works with your data, etc. There have been many data warehouse application in the manufacturing industry including 1) process control (how well are we doing with repeat work), 2) quality control (how is the quality of our products given certain parameters), 3) financial, 4) human resources, etc.

Nancy Williams’ Answer: Data warehousing can be very effective for the manufacturing industry. There are many types of analysis that the data warehouse can provide to support the optimization of manufacturing operations. Examples include:

  • Supply chain management analysis to support the reduction of costs and improvement of service throughout the supply chain;
  • Improved sales and operations planning based on historical sales analysis to better synchronize manufacturing with sales forecasts. This can provide many business benefits, including improved customer service, inventory cost reduction, reduction in obsolete raw material costs and reduction in shipping costs through improved routing and distribution;
  • Supporting quality initiatives, such as Six Sigma, through analyzing trends in defects and by enabling the early detection and active management of defects;
  • Supporting product improvement through analyzing warranty claims; and
  • Measuring worker productivity.

There are many other business units within a manufacturing company that could also benefit from data warehousing. For example, across all industries, data warehousing has been used to support sales and marketing and financial analysis.

Sid Adelman’s Answer: The data warehouse is extremely effective in the manufacturing industry. I keep a list of applications by industry. This is my list for the manufacturing industry.

Company #1

  • Analyze emerging business trends
  • Examine product bookings
  • Determine product shipments, backlogs and cancellations
  • Better manage product portfolio
  • Sharper contract negotiations
  • Better manufacture forecasting
  • Earlier detection of warning conditions
  • Ability to eliminate products from portfolio
  • Allows product mangers to more quickly identify product lines that are not longer required or profitable
  • Information about margins, product backlogs or historical sales data to critical decisions.
  • Visibility to its customers – on an individual customer level, what products the company sells, where it sells the products and at what price point.
  • Worldwide view of marketing developments
  • Common global language

Company #2

Departments that would use the DW: Sales, Marketing and Finance

  • Marketing executives are better able to manage their product lines
  • Better visibility into product and customer profit margins
  • Information on customers, products, costs, invoices

Company #3

  • Access to market demand data (orders and shipment data) by both finance and materials groups
  • Legal department used DW to substantiate trademark claims in foreign markets

Company #4

  • Sales analysis for product movement
  • Sales decision support
  • Are the company’s products not being stocked?
  • Market share
  • Competitors market share
  • When our company increases its share of the market, it is coming from competitors or are we cannibalizing our own line?

Company #5 (computer component manufacturer)

  • Provide selected DW access to both customers and suppliers
  • Extensive measurements of the quality of the product, quality of components supplied by their vendors
  • Extensive feedback from customers on quality of the products

Company #6

  • Sales history/sales trends
  • Customer profitability

Company #7

  • Plant capacity management
  • Variances between standard and actual product costs
  • Inventory turnover
  • Human resources
  • Core competency, skills and distribution of skills

Company #8

  • Analysis of production patterns to improve inventory and pricing practices
  • Demand forecasting to determine optimal inventory
  • Analysis of product pricing to establish discounts and margins

Company #9 (international)

Filed under:
Data Warehousing

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