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How effective is data warehousing for the manufacturing industry?

By
  • Sid Adelman, Chuck Kelley, Scott Howard, Nancy Williams, Steve Hoberman
Published
  • May 02 2003, 1:00am EDT

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)

  • Control of global price competition and cannibalization
  • Inventory management – integrate demand, supply and production planning
  • Understand supply chain globally and across business units
  • Understand customers globally
  • Understand channel partners globally
  • Increased speed of product commercialization
  • Supplies data to the corporate web site
  • Monitor effect of price changes
  • Monitor effect of marketing programs

Company #10

  • Generate leads for sales
  • Create marketing programs
  • Customer service

Automobile Manufacturer 1

  • Tracks assembly and warranty quality information by supplier
  • Plans to use this information for product planning and design
  • Supplier quality information will give the manufacturer a better position for negotiation with supplier
  • Plans to provide suppliers with information on their products through the Internet. The goal is to give them enough information so they will improve the quality of their products. [The supplier could be provided with data on the cost of defective parts to the automobile manufacturer.]
  • The data provides a quantitative measure of quality for both the manufacturer and the supplier

Automobile Manufacturer 2

  • Integrate HR and cost accounting
  • Trend analysis

Automobile Manufacturer 3

  • Dealer quality
  • Customer satisfaction by dealer
  • Dealer comparison
  • Cost/VIN serviced
  • Defects/VIN
  • Duplicate repeats/repairs
  • Outside services for repairs (upholstery, glass)

Appliance Manufacturer

  • Customer service
  • Suppliers’ quality
  • Negotiation with suppliers

Clothing Manufacturer

  • Analyze sales and product trends by location to understand customer buying patterns
  • Analyze sell through, what was selling at retailers
  • Analyze and understand cancellations, the reasons for the cancellations to identify steps to remedy manufacturing problems

Computer Manufacturer

  • Market demand projections

Dental equipment manufacturer

  • Determine future production requirements
  • Forecasting product mix
  • Minimize inventory
  • Minimize cost to expedite shipments
  • Minimize cost to purchase raw materials.

Food Manufacturer

  • Measure against competition
  • Ability to project how a new product will do
  • Sales analysis by region and by store
  • Ability to show grocery managers how product is selling at competitive stores, at stores within the same chain and against competitive products
  • Using agents, monitors conditions that require attention including variances in prices and volumes in company’s and competitors’ products
  • Analyses fixed costs, equipment utilization
  • Analyses manufacturing costs and performance
  • Analyses productivity
  • Analyses inventory levels
  • Planning and forecasting

Pharmaceutical Manufacturer

  • Analysis of physicians (along with managed-care connections) and their prescribing patterns
  • Target marketing
  • Identify emerging prescribing trends

Pharmaceutical Manufacturer

  • Generate reports for pre-clinical approval stage
  • Measurement of toxicology parameters
  • Research analysis
  • Testing analysis

Steel Manufacturer

  • Control (reduce) inventory
  • Understand item-level detail by cost, revenue, profit, inventory, customer, location
  • Analysis of production problems
  • Reduce accounts receivable
  • Understand profitability by customer
  • Understand margins and profitability by manufacturing facility leading to decisions about where to manufacture each item
  • Evaluate possibilities for renegotiating contracts with customers
  • Identify opportunities for new products
  • Identify opportunities for new locations
  • Compare plans to actual performance
  • Improve product and customer mix

Large equipment manufacturer

  • Import tariffs
  • Supply chain
  • Customer access to data warehouse
  • Supplier access to data warehouse
  • Customer service
  • Understand impact of partner’s bankruptcy
  • Health and safety
  • Risk abatement strategy
  • Taxes
  • HR

Data Mining

  • Quality analysis
  • Profitability and problems with suppliers
  • Profitability and problems with customers

Manufacturing – General

  • Supply chain measurement and analysis
  • Customer profitability
  • Product profitability analysis
  • Strategic partnering - Negotiating with suppliers, customers
  • Customer purchases to identify who should get new Material Safety Data Sheets

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