How To Become A Data-Driven Manufacturer
Updated: Sep 23, 2022
Are you doing enough to leverage your data to drive continuous improvement?
How do you measure up to your competition?
Leading manufacturers understand the strategic value and role that data plays in helping them drive modern Lean practices, maintain sustainable competitiveness, innovate to develop new products, and increase profits.
Today, all companies must recognize the qualities of a data-driven culture and map out opportunities in their value stream to introduce changes that enable the transition to evidence-based decision-making in the workplace. Not doing this is suicidal because the competitive landscape has evolved. More and more competitors are using data analytics and business intelligence to supercharge their manufacturing processes. This shift to a data-driven culture is a central component of the 4th Industrial Revolution.
Barriers to becoming a data-driven manufacturer
Access to talent and technology are not the main reasons why many manufacturers fail to become data-driven, and having a business intelligence solution does not automatically translate into the intelligent use of data.
A 2016 survey revealed that 50% of Americans trust their gut more than evidence when deciding what to believe. A lot of people still favor intuition over facts. Changing this fundamental bias is the key to eliminating the resistance to adopting a data-driven corporate culture.
According to a NewVantage Partners study, “people, business processes, and culture, ” are the main blockers to becoming “data-driven.” And manufacturing is all about processes. Change is hard, and it's standard human behavior to resist it. You need to come up with creative ways to address this. Once you overcome the cultural barrier, your company is going to evolve into a modern data-driven organization.
To borrow the words of Alan D. Duncan, research director, and Frank Buytendijk, VP and distinguished analyst at Gartner, “Data can only take an organization so far. The real drivers are the people.”
What does it mean to be a data-driven manufacturer?
A data-driven manufacturer relies on data as an unbiased common source of truth and basis for all decision-making. Data is collected at all points of the value stream and carefully analyzed to draw insights to drive change, innovate new products, and fuel sales.
For an industry that depends on many workers to deliver value to its customers, the COVID-19 pandemic hit manufacturers very hard. As the world ground to a halt and people stayed in-doors, manufacturers all over the world failed to keep up with demand for basic items such as toilet paper, while many more saw a sharp decline in demand for their products.
Understanding how to respond to all these dynamics requires good situational awareness. Managing the flow to prevent oversupply and the risk of financial exposure was only possible with data insights. Fortunately, many retailers and wholesalers quickly switched to ecommerce as their main sales channel. By analyzing the data from their sales and interactions with customers, business leaders were able to obtain a clear picture the situation on the ground.
These new data sets greatly helped manufacturers navigate the realigned market terrain. Every manufacturing leadership team must spend time discussing these fundamental objectives and actively seek ways to implement them:
Leveraging data and analytics to maintain a competitive advantage
Managing data from all parts of the value stream as a business asset
Using analytics to implement modern Lean practices
Fostering a top-to-bottom data culture
Becoming a data-driven manufacturer.
5 steps to enabling a data-driven manufacturing company
1. Get the leadership team on board
Leadership buy-in is a critical first step to getting the ball rolling. The people at the top need to take the lead. Good ideas succeed when supported by senior management. This is the primary reason why our work at L2 Brands- a decorated apparel manufacturer in Pennsylvania - was so successful.
When Satya Nadella became the CEO of Microsoft, he introduced a data culture at the company. His directive provided the stimulus that made Microsoft the leader in data analytics and business intelligence today.
In his historic blog, Satya said, “The opportunity we have in this new world is to find a way of catalyzing this data exhaust from ubiquitous computing and converting it into fuel for ambient intelligence. This fuel will power improved experiences, understanding, and interactions. When these devices around us gain the capacity to listen to us, respond to us, understand us and act on our behalf, we enter into an entirely new era. The era of ambient intelligence.”
When top management adopts a data-first approach, the people under them find it easy to adapt to the new culture as there is no pushback from the top. Get your leadership to start demanding a data-focused approach to handling meetings, reporting, and day-to-day business decisions.
Becoming a data-driven manufacturer is a transformational process - a journey. And like any journey, you need someone to point the rest of the crew to the True North. This is why leaders are so crucial to the success of this process.
2. Develop a clear data strategy
What are the key “pain points” impacting your efficiency? What are the data “use cases” that will drive specific and substantial value for you? These are key questions that needed to be explored.
Before you spend money or put together a data management team, you need a solid data strategy to guide your data acquisition, management, and utilization.
This is where most companies get it wrong. They buy data analytics products and use them in silos to execute specific tasks. It's not enough, and the results do not warrant the investment. For example, the marketing department may purchase a packaged off-the-shelf solution to manage their work but their data is not shared with the production team. The production then has to search for information on their own.
There is a whole ecosystem to factor in. If each team in the value stream has a separate tool with independent data that’s not shared, this actually creates more work for everyone and doesn’t translate into any useful value for the business. This leads to the third point.
3. Understand your value stream and identify data use cases
Always keep the end in mind. Your value stream provides you with a complete overview of your operations from idea inception, to production, sales, and customer service.
As you continuously review and refine your value stream, you will identify gaps that can be covered using data analytics and business intelligence. This process will yield data use cases that will propel your organization forward and enable you to realize the benefits of your data strategy across the whole organization.
4. Foster cultural transformation
The real drivers of a data culture are the people. Make deliberate moves to get everyone involved. Go beyond providing training and access to tools and data. Encourage your staff to explain their decisions using data.
When you require your teams to design their decision-making process based on analytics as a common source of truth, you are building their capacity to be accountable. This framework guarantees they will utilize data more effectively.
5. Set organizational goals
Changing your corporate culture is not easy. One gigantic undertaking will not deliver the results you seek. An agile approach with well-prioritized milestones will help you achieve more.
At Adaptive, we call this the Lean-Agile Digital Transformation. We designed and perfected this approach, and have deployed it to deliver data analytics and business intelligence solutions always with a careful balance between costs and benefits.
It has been five years since the Economist published an article declaring to the world that data has replaced oil as the most valuable resource. The economic changes of the past few years, and the COVID19 pandemic, confirm the truthfulness and significance of this fact.
You cannot put off becoming data-driven. Partial digitization of some of the tasks in your value stream is not enough. As your competitors adopt a data-driven approach to doing business, your ability to remain competitive and continue to delight your customers depends on you effectively leveraging data to derive valuable business insights.
Download our case study to learn how we used this approach to transform L2 Brands - a 9-figure decorated apparel manufacturer in Pennsylvania - into a data-driven organization in 100 days.