Measuring business performance
With thousands of SKUs and up to 12 quality control tests being run on each one, BGF Industries, a manufacturer of fiberglass and other high-performance fabrics, had collected approximately 5 million data points solely through its lab testing operations. But getting the data out so that it could be analyzed was virtually impossible, making it difficult for the company to determine if there were...
With thousands of SKUs and up to 12 quality control tests being run on each one, BGF Industries, a manufacturer of fiberglass and other high-performance fabrics, had collected approximately 5 million data points solely through its lab testing operations. But getting the data out so that it could be analyzed was virtually impossible, making it difficult for the company to determine if there were problems with a product.
To solve this issue, the company looked to statistical process control (SPC) procedures to monitor for potential problems. But without effective analytic tools in place, says Bobby Hull, a BGF systems analyst, "you would have to have a team of a thousand people looking at control charts every day, trying to see when a point goes out of control or when a process is trending toward a negative area."
In the fall of 2007, BGF achieved its dual goals of easily extracting quality control data and enabling SPC when it implemented SAS Enterprise BI for Midsize Business, a business intelligence software solution. In doing so, it was able to create a type of quality control early-warning system.
The system uses the SAS software to analyze a running year’s worth of data and to create control charts that help determine if a process is under control. It also lets users know of potential problem areas.
"It’s prevented us from having failures because when we start to see a problematic trend beginning, we can take corrective actions before the trend becomes a reality," says Hull.
While BGF is using analytic tools to focus on only one area of its business at the moment, other manufacturers are applying analytic technology on a broader level—and are looking at SAS performance management solutions for support.
The goal of performance management, says Michael Newkirk, marketing manager for manufacturing supply chain, SAS, is to help companies "align strategic goals with tactical implementation."
Performance management solutions help accomplish this by applying deep analytic and data mining capabilities to large pools of data.
Intractable conflicts resolved
Companies typically consider implementing a performance management solution due to an inability to solve seemingly intractable conflicts, says Newkirk. For example, "on the one hand, I want to reduce inventory costs; on the other hand, I want to increase my fill rates. Those seem mutually exclusive. But with optimization techniques and advanced analytics, it is possible to do both. There is a point in the analytics process that is theoretical, but the solution’s tools help actualize it to achieve the maximum fill rate and minimum inventory levels at all of your different distribution points or levels."
The supply chain is one in area which manufacturers are relying heavily on analytic tools to resolve such conflicts. Today’s supply chain reflects a delicate balancing act: Companies are trying to run their supply chains as lean as possible. At the same time, they are building global supply chains that face a greater range of risks, from political turmoil to natural disasters, that threaten to disrupt the carefully calibrated flow of product that enables a lean supply chain.
Vendors such as Management Dynamics are focused on solving such problems. The provider of global trade management solutions recently released performance management components for two of its offerings, Supply Chain Visibility and Trade Compliance, that are designed to tap into the information generated by the applications.
Many of the company’s customers use the performance management component of Supply Chain Visibility for their Six Sigma initiatives, says Nathan Pieri, senior VP of marketing and product management, Management Dynamics. "Six Sigma is based on continuous improvement, but it’s focused on being able to measure a process, to monitor whether or not it’s in control and then, based on the data collected, to try to figure out how you can improve that process," Pieri says.
People are also using the software to answer a range of questions: Where are the bottlenecks in my international supply chain? Where’s inventory building up? How can I use this information to continuously improve my operations?
With the performance management module of the Trade Compliance solution, companies can look for ways to improve their import and export operations.
"We have a large pharmaceutical company that’s using performance management to take a look at its entire entry process," Pieri says. "They’re taking a look at all shipments from the time they’ve left the boat and they’re moving through customs; they’re trying to determine what’s the cycle time through customs, what are the clearance rates by brokers, if they’re living up to their service level agreements, do they have any issues in a port community, are they falling outside their established control limits for turnaround time, and if it’s something they need to get involved with."
Small companies benefit too
But what if you’re a smaller company? You may not have a global supply chain or concerns about import or export issues, but you still want to get a better idea of where your company is going.
Infor believes even small companies can benefit from analytic capabilities. That’s why, in the fall of 2008, it released Infor PM Business Edition, which it describes as a cost-effective performance management solution focused on providing support for planning and budgeting processes for small and mid-size businesses.
"Primarily it’s designed to get them up and running on budgeting, because that’s usually the biggest pain point. And especially with smaller organizations, that’s where they want to start when they start with performance management," says Christina McKeon, director of product marketing, Performance Management, Infor.
Another tactic Infor has taken to enable performance management is through its Infor MyDay user interface, which it began rolling out earlier this year. Designed to give business users within companies of all sizes access to data critical to their jobs, the interface is integrated with certain Infor solutions.
"It’s role-based. It has dashboard elements. It has reporting elements. It has portal elements," McKeon says. "It’s relatively new and doesn’t really fit into any industry definition, but it contains all these different sets of capabilities."