With “big data” supplanting “sustainability” as the big manufacturing buzzword of the current era, we wanted to get more insight into just how manufacturers can better set up their facilities to capture the amount of data necessary to make meaningful business decisions. Beyond that comes the capability to analyze that data, and then make moves based upon it.
MBX Systems, a manufacturer of made-to-order server appliances for enterprise software vendors who deliver their applications pre-loaded on custom hardware, has made big strides based on its use of data. We got in touch with Jill Bellak, President and COO, to discuss how the company utilizes data, and what they’ve achieved from it.
When did MBX come to the conclusion that gathering and analyzing data could be useful to its future business practices?
Jill Bellak: MBX has always used data analytics to make business decisions. In 2000, we re-engineered our business model based on data that supported our decision to eliminate the SMB side of our business and manufacture exclusively for the OEM appliance market. The emotional side might have kept us where our roots and our comfort zone were, but the data clearly stated the appliance market was the right direction for MBX.
How did you all begin to roll out a solution that would collect enough data but not be too taxing on individuals in reporting?
Bellak: MBX employs a team of software developers, allowing us to create reporting based on business need without relying on manual processes, which can be taxing on individuals. This is not to say we don’t ever collect data manually, but it’s generally done as an isolated event in preparation for something we’re considering automating. This methodology allows us to test out scenarios before we decide to invest time, money and resources in software development.
The foundation for our current software system is an SQL-based ERP solution implemented in 2000. We have continued to develop most of our own software on this SQL database. Not only does this let our technology evolve, it also allows us to customize our processes and the type of data we collect. Every software development decision is evaluated based on ROI: how the software will improve operations and whether it makes good business sense.
Can you run me through the fundamentals of the system as it stands right now?
Bellak: Fundamentally for manufacturing, it begins on the demand planning side. The sales team inputs customer forecasts at the BOM level. The software then aggregates that information down to both the SKU level for the supply chain team and to the labor-requirements-per-work-center level for production planning. With this data manufacturing management can anticipate the number of labor hours needed on a work-center basis and our supply chain team can provide forecasts to vendors, negotiate better pricing, and keep our inventory turning.
What kinds of trends or insights are you looking for in monitoring the time for assembly, testing, and so on?
Bellak: On the assembly side, we use our trending book-to-actual ratio to further hone our labor requirements so we can increase or reduce labor. We also analyze the average build time per platform, which is dependent on complexity and custom variations, and strive to reduce it. (Because we are a custom build-to-order shop we manage over 650 unique platforms and, on a monthly basis, build thousands of systems based on approximately 250-300 different platforms at various volumes. With good insight every incremental improvement improves our capacity.)
Our technology allows us to analyze production flow and capacity in real time, to project bottlenecks, reallocate labor on the fly, and keep the line moving. All our assembly technicians are cross-trained to effectively work in different work centers.
We also monitor the most frequently produced platforms in order to identify opportunities for operational improvements that will yield significant results based on economies of scale. Conversely we monitor the effects of lower volume orders and how they create workflow bottlenecks. For example, we studied the data and determined it would be more operationally efficient to set up a dedicated work area with a modified assembly line and fewer touches, exclusively to handle smaller orders.
In terms of testing, our analysis of component failure rates dictate what parts our engineering team will recommend during the design phase for future platforms, improving both quality and manufacturing efficiency. We are also able to further improve quality and efficiency during the hardware/software burn-in process by using data to determine the optimal amount of time required to rule out future defects in the field.
Is there a distinguishable return on rolling out a system like this, or are these more “soft” returns?
Bellak: Absolutely — the most distinguishable returns come from better quality and overhead cost reduction. For example, anticipating labor needs allows us sufficient time to right-size and train our contingent workforce to manage peak periods without affecting quality. We are rarely “taken by surprise,” so accurate labor planning also helps reduce the costs and potential fatigue related to overtime.
One of the most important soft returns is how the data aids our short- and long-term planning. We can break down our customers by size, vertical market and others factors to forecast capacity and labor requirements for the next three years. We can slice and dice the data to analyze both revenue and profit by labor hour by segment. This data drives decision-making and allows us to redirect our sales efforts towards markets and customer demographics that we can serve better, are less resource-intensive, and therefore more profitable.
Soft returns also come in the form of customer acquisition. Companies see how technology-driven our entire operation is and often cite the consistency of our shop floor processes as the deciding factor for choosing us as their contract manufacturer.
How are you planning on adding to the system, or increasing its capacity, in the future?
Bellak: We don’t add anything to the system that doesn’t meet key criteria. Will it: (1) increase quality and customer retention, (2) improve efficiency, and/or (3) meet specific customer requirements. Things that are “nice to have” don’t make the cut. The reality is that we are constantly adding to the system because our software development team works for us. But we keep an open mind. Sometimes it makes more sense to buy versus build because a third-party solution already exists that fits our needs at a lower cost than developing it ourselves.
What are some of the first steps that another manufacturer could take if they wanted to implement a similar process?
Bellak: Not every manufacturer can or wants to employ a software development team to customize their software. But having manufacturing software with a data analytics component is a good first step. Like every decision, ROI is the key criteria. In the absence of an internal team, consulting with an outside software developer who can roll out custom elements to your software will help with relevant reports to aid decision making.
The key is having the ability to make frequent small changes to the software: enabling the system to continuously evolve rather than rolling out big infrequent changes. This allows employees to more easily adapt and both the company and the customers to reap benefits in real time.
MBX Systems is a manufacturer of made-to-order server appliances. Learn more about their company atwww.mbx.com.