SMT007 Magazine

SMT-Apr2015

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84 SMT Magazine • April 2015 downloading information into Excel and spend- ing many hours creating the final report that pro- vides the key business insight, only to repeat the process a week later? What exacerbates the situa- tion is that the information that is being sought is often time-critical and so being inefficient in obtaining the information is a double whammy. Dig a little deeper and you will see more hid- den dysfunctional effects of not having the right analytics solutions in your business. Frequently, underinvestment in such systems manifests itself in lack of consis- tency in analyzing key business metrics that need consistent at- tention. For example, manag- ing excess and obsolete inven- tory is an important mainstay of a healthy manufacturing business. A healthy business should have an analysis of their excess and obsolete inventory available on a moment's notice with the necessary infrastruc - ture in place to drill into any particular part number to study the dynamics that are driving its excess position. Too often, the process of putting this information together is so labori- ous and time consuming that businesses do not conduct the analysis often enough to minimize their exposure to excess inventory. So as an ex- ecutive, ask yourself this question: If you became convinced that an advanced business intelligence solution would reduce your excess inventory by 10%, how much would that system be worth? You don't need a dramatic example like excess inventory reduction to find value in an advanced business intelligence system. In a manufacturing environment, everyone from the operator on the floor to the president of the company will spend at least part of their day (for some functions the majority of their day) analyzing different part numbers. What if you could obtain real time information about all of the dynamics of a part number (inventory, orders, shortages, excess, ap - proved manufacturers, etc.) 50% faster? The ef- ficiency gain may come from a combination of not waiting as long for reports to run or running one report rather than having to run several re- ports and combining the result. What is the value of doing something that your organization does 300,000 times a year 50% faster? This is an opportune time for me to debunk an old fashioned and severely flawed approach to investment analysis in general and ROI analyses in particular. This flawed reasoning goes along the lines of, "Well if investing in a system allows my resources to be 20% more efficient, I will not recognize any gain because I cannot reduce my headcount by 20%, so the savings are imagi - nary." Underlying this type of rea- soning is a defeatist attitude that assumes a stagnant business that has no growth potential where economic gain can only be achieved through cost reduc- tions. Making your workforce more efficient allows you to be prepared for new opportu- nities. It allows your people to get all of their tasks done, rath- er than focus on only the es- sential ones because there is no time to do the other important stuff. And it allows your profes- sional work force to have band- width to look at process improvement and driving quality throughout your business. Another ROI analysis mistake that pervades assessment of business intelligence solutions is comparing their costs to nothing (i.e., zero). The line of reasoning goes something like "we get the reports and analysis that we need now without this new wiz bang system, so why should we spend the money." This thought process is based on the false premise that the organization is cur - rently producing reports at no cost. In fact, the time spent downloading information, organizing it, combining it and formatting it to be presenta- tion-ready is significant and involves the efforts of multiple, often expensive resources. Add to this the factor that these efforts need to be re- peated on a regular basis and the implicit invest- ment in reporting is enormous. Remember this fundamental tenet of analytical processes: The time spent gathering, combining and organizing information is necessary but is 100% non-value add; only the decisions made based on that anal- ysis are value add and drive change. Your strat- egy should be to automate the non-valued-added aDvaNCED BuSiNESS iNTElliGENCE SySTEMS arE NOT a luxury continues smArt business solutions well if investing in a system allows my resources to be 20% more efficient, i will not recognize any gain because i cannot reduce my headcount by 20%, so the savings are imaginary. " "

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