Today I am in Steamboat Springs attending the SAS analyst conference on emerging analytics. The tree boughs are heavy with the evening snow, and the view from my window is pristine. During the day, I am expecting to hear about new advancements in the insurance, finance and hospitality industries. My mind will swirl thinking of possibilities for manufacturing, but the reality is that the manufacturing segment is behind. They lag in understanding, providing funding, and building organizational capabilities for new forms of analytics. Bottom line: they are cheap. There is tension. Manufacturers want a definitive ROI before they commit to spend, and exploring the potential of these new forms of analytics requires a focus on investment with an unknown ROI. While the services sector has made the leap, the manufacturing industry has not. The gap is growing....
The opportunities stretch before us. This includes: Hadoop, Cluster Analysis, Streaming Data, Machine-to-Machine Flows, Pattern Recognition, Cognitive Learning, Sentiment Analysis, Text Mining, Visualization, and the Internet of Things. However, I don't find these concepts on the road maps of the manufacturers who I work with. When I talk about the use of these new concepts in the world of manufacturing, most executives scratch their heads. Their focus is on yesterday's investments with a focus on Enterprise Resource Planning (ERP), reporting, and deterministic optimization. I believe investment in these new analytical concepts is the foundation for digital business.
It reminds me of my conversations with my plant manager in 1985. At the time, I was the plant engineering manager in charge of capital spending at the Dover, DE factory for General Foods (now merged with Kraft). My plant manager, Dick Chalfant, and I had a running debate on the investments in personal computers. At the time, no one in the plant had a personal computer. I believed that we should begin to invest in employee productivity through a focused investment in personal computing. Dick would argue with me. He would rant and say, "Where will we reduce labor and headcount based on this investment? What is the ROI?" I would smile. The arguments were heated. Our visions were different. I believe that companies need to invest in technology to drive a competitive advantage, and that not every project will have a well-defined ROI.
Today, I don't think that anyone I work with can imagine a world without PCs on the desk, in our briefcases, and in our homes. It redefined work, and was foundational to driving higher levels of productivity for manufacturers in the past decade. I can see it in the numbers of revenue per employee (note the impact on consumer value chains for the period of 2006-2013).
I strongly feel that our traditional views of applications--ERP, SCM, CRM, SRM--limit our ability to be more open in testing and learning from new forms of analytics. While people talk big data concepts, current investments are tied up in maintenance funding for legacy applications. My challenge to manufacturers is to free the organization to invest in new forms of analytics by giving them investment funding. I am not advocating financial irresponsibility. Instead, I am advocating to start with seed money and a focused team to learn the power from new forms of analytics. I would challenge them to self-fund the future through small test-and-learn strategies.
So today, as I look out my window at Steamboat, I wonder if this post will fall quietly like the snow from the boughs of the fir tree outside my window? Or will it stimulate some organization to rethink the future? I hope the latter. If nothing else, I hope that some organization somewhere will stop and think about analytics and the future and ponder why financial and insurance industries are moving faster than manufacturing. That is my hope... I would love to hear your thoughts.
What do you think? How do we embrace new forms of analytics? Any tips to share?
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Lora Cecere is the Founder of Supply Chain Insights. She is trying to redefine the industry analyst model to make it friendlier and more useful for supply chain leaders. Lora has written the books Supply Chain Metrics That Matter andBricks Matter, and is currently working on her third book Leadership Matters. She also actively blogs on her website Supply Chain Insights, the Supply Chain Shaman. and for Forbes. When not writing or running her company, Lora is training for a triathlon, taking classes for her DBA degree in research, quilting for her new granddaughter, and actively taking ballet.
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