Predictive Analytics in Manufacturing: A Winning Edge
The modern manufacturing world is a delicate dance, filled with interconnected pieces that all need to work perfectly in order to produce the goods that keep the world running. In Moving Parts, we explore the unique data and analytics challenges manufacturing companies face every day.
Building an accurate predictive analytics model isn’t easy. It requires a skilled data team, advanced tools, and enormous amounts of clean data from the right combination of inputs. It’s a difficult process, but an effective predictive analytics engine is an enormous asset for any organization.
Big challenges, big rewards
Manufacturing companies are in a unique position regarding data: they create and capture tons of it every day. The process of producing goods is an enormous opportunity for data optimization. Raw materials need to be ordered, received, constructed, packaged, and shipped out for sale in the most efficient manner possible. Because the steps are repeated so many times through the process, a small edge created via predictive analytics in manufacturing will be magnified at every repetition to produce significant benefit.
Because of the cyclical nature of the manufacturing process, data-driven companies are building superior processes to create bigger and bigger advantages. Here are a few examples of companies using manufacturing analytics to win the future:
Predicting return rate
Skullcandy’s dive into predictive analytics started with the challenge of understanding return rates on new products. The logic was that if the team could predict certain features or aspects of a product that would lead to a return, they could optimize those policies around returning products. They used BigSquid to blend and analyze historical data related to returns and added their learnings to features and products on their roadmap. From there, the team could ask new questions of that dataset to understand the way customers were interacting with their products and ultimately build a better warranty policy for products before they were even released. This data was also useful for product managers, giving them a clear picture of what was making customers adopt Skullcandy’s products (or not).
Once the return rate questions were answered, the team focused their efforts on uncovering insights around reviews and warranty claims to generate insights about positive and negative drivers. Data like this is ideal for making decisions for product roadmaps. All those customer insights can be used in a number of creative ways to better focus resources and improve products.
Improve forecasts and maximize revenue
Gentex made the most of their budget to optimize their incoming revenue. Just six months after implementing predictive analytics, their ecommerce sales increased by 50%!
Gentex deployed Sisense to comb through millions of records after switching over from an outdated ERP system. They needed a platform that could churn through all that data quickly and deliver quick intelligence about both current and future revenues. Initially, Gentex created dashboards for their sales and operations teams that collected information about sales, quotes, and orders across the company. Those dashboards answered immediate questions about the current state of the business.
To answer more forward-looking questions, Gentex creates a sales forecast for an entire year using just a few months of data. They use predictive models to forecast revenues based on spending. They even incorporate trend data to improve accuracy over time. Currently, Gentex builds visualizations of year-to-date revenue data to forecast up to 15 months into the future.
Operating off those accurate forecasts, Gentex made the most of their budget to optimize their incoming revenue. Just six months after implementing predictive analytics, their ecommerce sales increased by 50%!
Improve inventory management with demand forecasting
Making a product that consumers want to buy is only useful if a company can find a way to get that product in front of the consumers who demand it. Several of today’s most cutting-edge manufacturers are blending historical customer data and external factors to predict demand for goods so they can increase production when demand will be high and decrease production when demand will be low. These companies aren’t just building for the future, they’re building the future.
The need to accurately forecast demand is crucial to these manufacturers. Assessing demand in real-time is ineffective since companies need to make decisions about demand far enough in advance to complete an entire production cycle and get that product in front of customers. With a solid predictive analytics model in place, manufacturers can create exactly the right amount of products (and the right variety of those products) to satisfy future customers.
These forecasts optimize sales revenue, but it also avoids unnecessary costs associated with producing, shipping, and stocking items that won’t sell. Accurate predictions are a win-win for any manufacturer.
Build your manufacturing business with analytics
Predictive analytics in manufacturing have gone from being science fiction to being a make-or-break addition to any company’s technology stack. Using a platform like Sisense for manufacturing analytics, combining internal and external information into a series of accurate forecasts is incredibly invaluable to any manufacturer. Improving any step of the manufacturing process is an advantage over the competition, but improving every step is a data-driven way to become an industry leader faster.
Adam Bonefeste is a veteran content marketing manager. When he isn’t writing copy, he’s probably reading books, running through San Francisco or getting lost in YouTube holes about math/logic problems.