The State of Analytics within Manufacturing: Moving Beyond the Four Walls of the Enterprise

  • May 06, 2016
  • Feature

By Greg Goodwin, Research Associate, LNS Research

The 2015-2016 Metrics that Matter Research study, conducted jointly between LNS Research and MESA International, marks the fourth edition of the biennial study focused on identifying the key trends and performance measurements industrial leaders are using to really drive value today. In this iteration, the evolution of emerging technologies like the Internet (and Industrial subset) of Things (IIoT/IoT), Cloud, and Big Data Analytics proved to be a large factor in how organizations are investing in operational improvements. There were some particularly interesting results on how companies are approaching analytics these days. In this article, we’ll dive deeper into the methodology of the study, important trends around awareness and adoption, and how manufacturers are approaching analytics today to drive new value.

Study Demographics and the Changing View of Manufacturing

The perception of manufacturing as a discipline is becoming increasingly at odds with the reality. The traditional view that looked upon manufacturing plants as self-contained islands of automation, expertise, and control is losing relevance by the day in an ever more connected world. Coinciding with this perception is a marked increase of interest to both executives and IT staff than has been typical until now. As the relationship between manufacturing performance and profitability becomes more definable and articulable, the C-suite is perking up on how manufacturing can be leveraged to transform business and the bottom line.

This is reflected partly in examining who took the manufacturing survey (N = approx. 250 respondents). While the breakdown of companies by geography, revenue, and industry were largely in line with what we’ve come to expect in surveys, there has been a shift in the individual respondent roles that reflects this change evolution in how manufacturing is viewed within the enterprise.

We’re beginning to see more IT and operations management take interest in the survey while staff are tending to dominate in engineering roles.

The Gap in IIoT Knowledge Is Closing Rapidly

The added participation by IT executives makes sense given the coming technology changes. Though still at the nascent stage, there is evidence that the IIoT is really starting to factor into manufacturing considerations, as we’ve seen a big closing of the IoT awareness and education gap over the past year—the percentage of survey respondents who indicated that they did not understand the Internet of Things went from 44% in 2015 to 19% this year. As this education trickles down into investments and implementations, over the coming years, the use and sophistication of analytics within and outside the enterprise should continue to grow. Nevertheless, as we’ll see below, manufacturers are already beginning to use analytics in ways that are delivering new value to customers, suppliers, and enabling new revenue streams and product/service offerings.

Analytics Use Cases – Inside and Outside the Enterprise

As manufacturers move toward a world of changing software a central consequence of this concerns data—Big and different data. The survey revealed some interesting use cases of data, particularly in the ways companies are beginning to share outside the enterprise, with 35% of respondents with external data capabilities sharing with suppliers to check quality, delivery, and related, followed by sharing with customers to check quality, delivery, and related (31%). It’s a positive to see suppliers and customers both topping this list. Perhaps not surprisingly, many manufacturers are still hesitant about data sharing at this point as another 31% indicated that they will not share manufacturing data outside the enterprise. As analytics and safety capabilities continue to be built out, we expect to see this number steadily diminish in the near future as the benefits of data sharing outside become more concrete.

Within the plant, manufacturers are heavily focused on continuous improvement initiatives as “Continuing manufacturing process improvement” topped the list with 43% of responses, followed by “Better forecasts of individual production plants and multiple plants, and Operational Excellence programs (all at 27%) and “Continuous asset performance management (APM) across multiple plants,” at 23%.

The Financial Component – How Are Organizations Monetizing Analytics Today?

Looking at how companies are capitalizing on analytics capabilities today we see some encouraging signs of how industry will evolve over as smart technology gains an increasing foothold. Currently the most current reports of analytics monetization are around improvements in production efficiency, but we also see companies leveraging new products and streams of revenue through sales of data access and new service offerings, and 14% of respondents replying that they’ve begun to transform parts of their by selling products as a service (PaaS).

Advancing Analytics

As research shows, manufacturers are beginning to really grasp the potential that advanced technologies like IIoT and Big Data can deliver in making real-time intelligence available and actionable both inside and outside the enterprise, as leading companies are beginning to share improve operations, and better serve customers through both new and traditional product offerings. At this stage, it’s critical for organizations in the 19% of companies that still do not understand the IoT to cross the knowledge chasm to avoid being left behind by competitors. For organizations that have not already, it’s important to experiment with analytics beyond the plant environment. It has become easy for enterprises to try various Cloud, IoT, and Big Data tools at low or no cost, and ensure involvement of both engineering and business data experts so the variety of data extends beyond typical shop floor data.

For the full results of the 2015-2016 LNS Research/MESA International Metrics that Matter Study, including key challenges by industry, data on financial and operational metric improvements across industries, details on how manufacturers are evolving their manufacturing software suite to fit evolving cloud models, be sure to download a free copy of the eBook, “Manufacturing Metrics in an IoT World: Measuring the Progress of the Industrial Internet of Things.”

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