Can you read the tealeaves of your organization and predict what the future will hold? We may not be able to look into a crystal ball and know the next big fad in manufacturing; however, new technology is on the rise that will help manufacturers improve how they monitor their equipment and production lines.
Predictive analytics is the gathering of data to predict unknown future events. The idea of predictive analytics is a very broad topic, can be used across many industries, and has many purposes.
How does predictive analytics assist the manufacturing industry?
Manufacturers are typically applying this concept through a system of connected equipment. Predictive analytics uses techniques such as data mining, statistics, and patterns found in the data collected to predict future outcomes and potential risks. In the manufacturing arena, this type of analysis could identify opportunities to schedule machine maintenance, reduce waste, notify management when to order inventory, improve quality and streamline a production line. Implementing such processes can help an organization to become more forward thinking and proactive.
Here are three ways predictive analytics can help manufacturing:
Every production line requires maintenance – even Henry Fords! While use of the assembly line brought us great strides in mass production, the equipment/machinery will not work into perpetuity without maintenance. Preventative maintenance is preferred over emergency or unexpected maintenance for a number of reasons and provides the opportunity to maximize production and minimize downtime when done strategically. However, imagine if you could keep working until the exact point before maintenance is needed. Then imagine that instead of troubleshooting you already know exactly what the problem is. The ability to identify the exact problem with a specific machine or production line process can cut costs associated with time spent troubleshooting and can reduce the cost of inventorying parts kept on hand for preventative maintenance .
All manufacturers strive to limit production downtime, especially unplanned downtime. After all, minimized downtime maximizes production.
As discussed above, predictive analytics can help an organization to better anticipate breakdowns and needed maintenance. This allows a company to minimize idle time between scheduled preventative maintenance thereby enabling the company to reach its goals associated with decreased overall downtime, increased productivity and improved on-time delivery. If planned correctly, a manufacturer could potentially eliminate production shutdowns and avoid system failures between planned preventative maintenance. Use of a predictive analytics system will provide an immediate notification of an upcoming failure as well as the cause of the problem and will aid in preventing significant downtime.
Thus far we have discussed how preventative analytics can help with trouble areas, but it can also assist your organization when there is no trouble on the horizon. The data provided by predictive analytics can be used to identify machinery or processes on your production line that need improvement and can also enhance resource utilization. Gaining an understanding of machine utilization can help an organization achieve maximum ROI on its equipment. For example, predictive analysis can determine the best time to start a large customer order that will necessitate taking regular orders off-line, thereby minimizing disruption to your regularly scheduled production.
Now that you have decided to implement a system of predictive analytics, what are your next steps? Do you simply purchase the software, get it running and wait for a notification? While having the correct software in place is essential to an organization using predictive analytics, there is much more to this implementation. For example, it is important for an organization to have a clear business objective and a management team that supports the objective. Information gathered by predictive analysis software that is not acted upon has no value and is a waste of resources.
Organizations should continuously challenge themselves to think about what data produced by their operations can be analyzed in order to keep taking strides forward. Your CPA is a great resource to help you identify data to analyze that will help your organization anticipate unnecessary downtime in the manufacturing process.
“Information is the oil of the 21st century, and analytics is the combustion engine.” – Peter Sondergaard
Article Contributed by Jennifer A. Barrett
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.