Every organization has its share of seemingly intractable problems—under-the-radar issues that have a continual, cumulative negative impact on the bottom line. But for small and medium-size enterprises (SMEs) in the industrial manufacturing space, dedicating in-house resources to track, scrutinize, and interpret daily operations is often impractical at best. So often, there are simply not enough resources to both troubleshoot and maintain the status quo, let alone explore or innovate. Even if team members can be spared, they may not know where to begin or what to do with the information they find. Fortunately, we have seen numerous industrial SMEs enhance their productivity and facilitate growth using a free resource—their own dormant data.
Data is generated across multiple day-to-day operations at manufacturing- and industrial-based SMEs and can be captured in on-site systems, team members’ expertise, and elsewhere. While companies collect the data required to conduct business and take great care to secure that data, they often do not analyze it to build capacity or capture market share. And yet, with a well-informed and structured approach, they could, in our experience, do just that—using data that would remain otherwise idle within their systems.
In this article, we discuss how dormant data can be identified, organized, analyzed, and applied to solve problems, improve processes, and add value to industrial manufacturing SMEs.
What dormant data is and how to harness its power
SMEs can use an array of costly software services to generate reports from the applications they use each day. Nonetheless, in our experience, industrial SMEs can achieve comparable results by instead analyzing their existing data, which is often abundant—and available free of charge. This invaluable source of insight into operations is commonly distributed discretely throughout an organization; its volume and potential value can be unclear or even go undetected.
Indeed, the data generated during day-to-day operations at any organization can be located and collected from numerous sources, including machine alarms and timestamps, vendor invoices, operator logs, quality assurance systems, and more (see sidebar “Sources of dormant data”).
SME leaders begin by locating a data set and then using that data to empower team members closest to its source to review and validate insights. These employees test the data against known scenarios to help create a coherent narrative and inform organizational strategy. For example, one industrial-sector manufacturing SME was seeking opportunities to reduce its cost of service in a highly commoditized market. Analysis of data—shipping logs, order quantities, and the ratio of shipping frequency to order volume—revealed an opportunity to reduce costs to serve customers. Based on the analysis, the company implemented a combination of quick-win initiatives and systemic changes to their logistics routing, creating a sustainable reduction in their cost to serve customers. (For more examples, see sidebar “Real-world competitive gains enabled by dormant data.”)
Before searching for dormant data to leverage, it is prudent for managers to identify issues they wish to address, hypotheses they wish to test, and their desired outcomes. In our experience, this helps management teams focus on the most potentially advantageous solutions.
Using mined data to shape executive level strategy and operational decisions
Dormant data’s value in testing tactical hypotheses and informing the resulting corrective actions or improvements is considerable. But perhaps even more beneficial is the data’s potential to enhance leadership oversight, increase agility, and inform strategic decision making.
Optimizing how industrial-sector SMEs use and share their data enhances organization-wide decision making and agility. Armed with data-informed insights, senior leaders can calculate appropriate strategies and encourage greater accountability. Consider the following situations regarding expensive decisions related to purchasing or recapitalizing equipment at manufacturing SMEs:
- CFOs and COOs can use existing data to understand their true capacity and potentially defer large capital expenditure costs (see sidebar “Identifying an in-house opportunity: One manufacturer’s operational gains enabled by dormant data”).
- Supervisors and line managers can escalate and respond to issues faster with access to real-time data and automated analyses.
- Engineers can develop more impactful business cases to reduce costs by reviewing spending data related to minor breakdown and maintenance. This enables them to guide organizational decisions to adjust safety stock levels or reduce requirements for spare parts.
When industrial SMEs identify, distribute, and deploy the data underlying their operations, they create a cost-effective yet powerful tool that informs and expedites daily decision making for all team members, whether they convene in board rooms or shift huddles.
Separating fact from folklore: Creating a single source of truth
Empowering employees to help realize dormant data’s value is critical to the success of any program. Fortunately, in our experience, employees are often eager to participate in this process, creating a natural path to leveraging their tacit knowledge. Dormant data can be the missing link, helping to identify any differences between what a company thinks it knows and the fundamental truths of the organization.
In our work with industrial SMEs, we often find individual employees who hold immense knowledge about day-to-day business operations but lack a mechanism for sharing their knowledge to inform organizational or process changes. We have seen this, for example, with line operators who can anticipate breakdowns or purchasing team members who know which SKUs tend to require higher-than-expected order quantities. What such individuals need is a means of translating their insights into improvements.
In the absence of verified facts, senior managers’ decisions can be hampered by common misperceptions—or folklore—regarding the broader organization. For instance, they may view equipment downtime as random and unpredictable or assume that supplier contracts are negotiated to the best rates possible based on accurate expectations for standard order quantities. By unlocking the dormant data in their employees’ tacit knowledge, managers can identify opportunities to improve their day-to-day operations while acknowledging change agents within their organization. Starting with facts rather than folklore is essential for industrial SMEs to achieve performance-enhancing advances in their operations.
Industrial SMEs have a long history of overcoming challenges unique to operating at their scale: they are in tune with customer expectations and well-versed in adapting their business models to meet customer needs. But as operations scale up and customer expectations evolve, an organization-wide ability to make informed, strategic decisions in real time and implement new ways to serve customers on time at competitive cost is imperative.
As the foregoing examples illustrate, organizations can achieve these critical improvements—before deploying significant resources—when leaders do the following first:
- Identify a few core objectives to focus resources and efforts.
- Pinpoint dormant data relevant to advancing core objectives.
- Empower employees as change agents to create sustainable operational paradigms and reduce tacit knowledge risks.
A best-in-class organization does not develop overnight. But over the long term, SMEs that optimize and automate data analysis and reporting can realize continuous improvements. Simply engaging existing internal resources and activating dormant data can give rise to enhanced profitability and customer experience, greater workforce engagement, and other critical competitive advantages in the evolving industrial marketplace.