Malaysia’s manufacturing industry is picking up momentum following a year of stops and starts as a result of the health pandemic. In the first quarter of 2021, manufacturing sales value registered an increase of 8.5% to RM368.2 billion as compared to the same period in 2020. But manufacturing companies are challenged to keep the momentum up while operating amidst the continued global economic uncertainty. The same challenges manufacturers faced pre-pandemic – optimize production processes, reduce operating costs, raw materials sourcing, workforce management and increase profitability – are heightened today.
By and large, manufacturing companies are burdened by manual data processing tasks, legacy IT infrastructure and systems that do not easily integrate, if at all. Many manufacturers are getting information from different systems and sources, making it difficult to determine one version of the truth. This in turn handicaps decision makers from accurately assessing the impact of disruptors on supply chains, demand fluctuations, cost structures and other crucial components that drive profitability.
Fortunately, this is not the reality for manufacturers who were early adopters of technology and the data analytics concept. Based on our experience and observations, the application of data and analytics have been key for manufacturers to reap benefits across the value chain, including:
- Enhance manufacturing processes and supply chains
The foremost benefit commonly seen is enhanced manufacturing processes and supply chains. In this technological era, production processes and supply chains can be interconnected and are becoming more complex. To maximize production volume and efficiency, manufacturing companies need to examine every minute detail of the processes and supply chain. This is possible with insights generated from data and analytics. With an effective application of data and analytics, manufacturers can stay apprised of their essential business performance in detail, with just a few clicks of a button. This allows them to monitor vital KPIs such as production volume, production downtime, defect rate, production costs and capacity utilization rate. With this monitoring, they can create alternative plans to avoid pitfalls and identify underperforming components throughout the whole manufacturing process.
- Maximize the value of assets
Data and analytics enable greater visibility of asset performance and reduces unexpected asset breakdowns. For example, with data generated from Internet of Things (IoT) technology, manufacturers can measure the performance of assets in real-time. This can help them develop machine learning models for predictive maintenance, which allows them to predict asset downtime, hence preventing expensive asset breakdowns.
- Reduce manufacturing costs
Another important benefit is cost containment. Manufacturers will be able to track their production costs in real-time using a business intelligence software. Any anomaly in production spends can be flagged for further analysis. For example, abnormally high production costs may be correlated with the increase in defect rates in the production line. Moreover, timely access to data insights will enable manufacturers to assess the quality of products manufactured in the production process.
- Predict the demand for products
Customizing to customer demands has become more critical today and serves to be a differentiator to competitors. In the past, there was little product customization as many products were manufactured to serve the mass consumer market. But by leveraging on business intelligence (BI) tools, manufacturers can collate and analyze customer feedback from various platforms. This allows manufacturers to innovate and customize their products according to the customers’ demands and market trends.
- Measure multiple production inputs
Quality is a crucial metric for manufacturing companies. To manufacture quality products, it is essential to measure several production inputs simultaneously. Unless a proper data solution and tools are implemented, the management may find themselves having to make sense out of a mountain of raw data resulting in duplication of assets and resources, thus increasing costs.
With a better understanding derived from insights through data and analytics, manufacturers can transform and re-engineer their business processes to enhance efficiency, monitor costs, predict demands for resources and optimize production planning – all of these done at the speed of market requirements. Ultimately, it is the company that is able to adapt the fastest that will gain the coveted competitive edge.
 “Monthly Manufacturing Statistics Malaysia, March 2021” - Department of Statistics, Malaysia. Source