Using Cloud ERP to Develop and Track Engineering KPIs

This article was written by Stu Johnson

Today, manufacturing is going through a revival, driven in large part by government investments made possible by recent legislation, such as the Inflation Reduction Act and the CHIPS Act.

Within this environment, manufacturing engineers have the responsibility of helping their organizations maintain a leader’s edge. To achieve this objective, companies need to ensure   engineers have access to the vital data housed within their company’s operations. It has often been said that a typical engineer spends 50% of their time looking for data they need. But this situation is changing...

IDC recently released an InfoBrief, entitled “The State of Manufacturing Technology Survey Results.” This brief revealed manufacturers’ key concerns and high-tech priorities. Many respondents worried that if they didn’t modernize their operations, they would face continued challenges in making optimal decisions using disjointed data.

In fact, in this age of digital transformation, manufacturing data is increasingly streaming into the organization as “signals,” such as demand signals. As a result, enterprise-wide integration is a key priority that many manufacturers want to tackle first. In this article, we’ll discuss how consolidating data on a common cloud platform can help manufacturers lay the groundwork to develop a comprehensive “signal chain” that can then feed a sophisticated decisioning platform.

Most manufacturers already utilize enterprise solutions, such as customer relationship management (CRM), enterprise resource planning (ERP), human capital management (HCM), and financial management (FINS) systems. But few have the sophisticated business intelligence (BI) capabilities to look under the hood and see how their businesses are performing.

The problem is that a lot of data is trapped in spreadsheets or departmental silos. Spreadsheets are difficult to keep updated, especially with the breakneck pace of modern manufacturing. With disconnected information, it’s nearly impossible to ensure data can be accessed and reported accurately and consistently across departments and divisions.

In addition, legacy analytics modules are often unable to provide enterprise insights. To remedy this issue, many manufacturers have been turning to cloud-based ERP solutions with built-in analytics. Such an ERP can act as intelligent hub that compiles data and connects the dots into a comprehensive, digital signal chain. These connections span sales, supply, and production—essentially linking the frontend to the backend of a company.

Since cloud ERP systems sit on sophisticated cloud platforms, such as Salesforce, Microsoft Azure, or Amazon Web Services (AWS), manufacturers gain access to native BI capabilities. These BI solutions have been purpose-built for manufacturing. As a result, they have pre-configured dashboards that engineers commonly need. Being highly interactive and dynamic, these dashboards enable engineers to delve into key areas of performance and make more strategic, data-driven decisions.

The Manufacturing Technology Survey found that more than three-quarters of manufacturers (75.2%) plan to boost software spending over the next 12 months, with more than one-third (37.8%) planning on double-digit increases. As mentioned, top-of-mind initiatives include projects that can maximize the value of data by enabling more collaboration across enterprises.

BI capabilities fulfill the historical component of this objective, as manufacturers have complete visibility into production rates, inventory levels, financial metrics, and past demand forecasts. The end result is that engineers can make informed, data-driven decisions based on past success or failures and won’t have to repeat the same errors that resulted in bad or costly decisions.  

Tracking KPIs in the following areas will be vital for manufacturers and their engineers:

Process Design and Development. With the right KPIs, engineers can continuously improve assembly, machining, fabrication, and other processes for greater efficiency and savings.

Production Planning and Scheduling. As engineers collaborate with production managers and planners, they want to monitor the many factors that can affect production schedules, including staffing, lead times, and demand forecasts. Having access to past performance information is a fundamental element of planning future activities.

Equipment Selection and Optimization. Engineers monitor equipment performance, production capacity, and cost-effectiveness. As such, they’ll be able to determine when it’s right to invest in new machinery versus keeping up with scheduled maintenance to ensure things continue to run smoothly. Or, insights might lead them to reconfigure the shop floor layout and workflow to enhance output.

Quality Control and Assurance. Since engineers must ensure that products meet quality standards, they want BI to help monitor quality-control processes and track inspection results. With this data, they can collaborate with quality assurance to perform a root cause analysis and address any issues with the right corrective actions.

Continuous Improvement and Lean Manufacturing. KPIs also help engineers identify opportunities to drive continuous improvements. And when engineers plan to implement kaizen events, they can run KPI reports before and after deployment to determine the impact these changes have made in terms of reducing waste or boosting staff productivity.

Cross-Functional Collaboration. BI capabilities provide proof points for cross-functional teams to better collaborate toward common goals instead of relying on opinions. Together, they can improve product design, supply chain resilience, and keep on top of demand forecasts regardless of whose team owns what activities.

Safety and Compliance. Engineers need BI to identify, document, and mitigate hazards, implement appropriate safety protocols, and promote a culture of safety.

BI provides benefits beyond just production. Data collected throughout the business can help manufacturers to monitor and make improvements in other areas:

Supply Chain

Visibility into the supply chain allows manufacturers to be able to prioritize the right customer orders at the right time and to leverage the best-performing suppliers. They can also utilize BI to negotiate better pricing, tighten up delivery lead times, prevent stockouts, and eliminate short shipments.

Accounting and Financial Management

BI can provide real-time reports on revenue, payables, and receivables. With real-time updates, companies can locate additional opportunities to reduce costs and keep customers happy.

Inventory Management

BI helps strike a balance in inventory, ensuring adequate raw materials are available to meet both customer demand and profitability goals without over-buying. For example, manufacturers can achieve a balance between excess carrying costs and the risk of missing customer commitments if inventory should run too low.

Sales

Sales leaders can use BI to monitor order quantities, duration in the various stages of the sales cycle, and the time to reach sales goals. Sales forecasts can improve order fulfillment rates, reduce inventory costs, and telegraph where revenue is headed. Manufacturers will then have a more complete picture of which products or services are driving profitability, and they can reallocate resources to achieve goals.

Customer and Field Service

Using BI, manufacturers can efficiently manage maintenance, warranty services, customer complaints, and scheduling of technicians. Because service reports detail the average time-to-resolve customer complaints, service managers will have the visibility to address service calls that take longer than expected or require a return visit.

Engineer-to-Order Environments

Engineer-to-order (ETO) manufacturing significantly increases the complexity of a project. BI can help organizations make accurate cost estimates and estimate the completion time to ensure project profitability. BI can also help with scheduling and tracking service contracts with customizable billing based on project milestones, materials, and time.

Today, smart manufacturers realize they can no longer operate effectively with spreadsheets, data silos, and legacy analytics. Instead, they’re investing in cloud ERP platforms to consolidate the data they have and prepare themselves for the signal chain of the future. Building a unified data platform is required and needs time to percolate to create patterns, but once established, manufacturers can make use of AI and machine learning to more accurately forecast and predict outcomes—and in a more efficient and effective way than their competitors.

These BI capabilities are custom-built for manufacturing, so pre-configured dashboards stand ready to provide actionable insights to help engineers improve product design, optimize production, enhance operational efficiency, and ensure overall cost-effectiveness. And these BI capabilities are driving benefits beyond just production, as they leverage end-to-end visibility to feed a sophisticated decisioning platform that can further optimize business strategies.

Stu Johnson is vice president of product marketing at Rootstock Software. Contact him at sjohnson@rootstock.com.