Impact of Analytics in Manufacturing: The Key to Improving KPIs

Industrial Internet of Things (IIoT) technology isn’t magic (contrary to what some software vendors proclaim). Manufacturers can’t just connect all their machines to a database, unleash an artificial intelligence (AI) platform on that data, and expect results. We all know that’s not how tech works. However, at LNS Research we've seen some remarkable impacts from technology and how companies use it, and IIoT analytics have been showing strong results ― when it’s paired with a shift in how the organization views and uses data.

When food and beverage, CPG companies outpace same-sector peers

We have reported on the lower rate of IIoT technology adoption in the food and beverage and CPG sectors compared to other industries. When we zero in on just those that have adopted IIoT analytics, our research data shows a dramatic impact on operational KPIs. Companies that have adopted IIoT analytics and related tech have outdistanced competitors in some of the most important operational and financial metrics. From on-time delivery to capacity utilization and key financial metrics, these organizations outperform peers by a wide margin, we expect them to widen the gap in the coming years.

The magic is in how companies use the analytics―and that’s what drives improvements. When we dig down to examine who has access to analyzed data as required to make smart, timely decisions, we find an interesting trend among most companies in the CPG and food and beverage industries: companies trust managers to make decisions with data, with a particular emphasis on quality, but not shop floor operators.

This is a dramatic contrast to trends we see across other industries, where companies report they are further along with Industrial Transformation (IX) programs (3+ years). Industries beyond CPG and food and beverage empower operators and their direct managers with the data and analytics―and the authority―they need to make decisions immediately, without waiting for senior management to weigh in. At LNS Research, we view this as a sign of operational maturity among manufacturers. We cannot emphasize enough: providing plant floor operators with visibility into data analytics has a marked impact on operational metrics, improving throughput and quality, and reducing costs. This trend holds true for companies in food and beverage and CPG that have adopted analytics.

The path to improve operational performance and business KPIs

Our recommendations for companies in CPG and food and beverage that have not yet started using IIoT analytics are straightforward but urgent: first, recognize the benefits that this technology is providing your competitors. We expect that these advantages will compound over time to create an even greater performance differential between the adopters and the non-adopters. Use these facts to create a sense of urgency among your IT and operational technology (OT) organizations around the use of IIoT analytics. Second―and perhaps more importantly―the most impactful decision a company can make is to rethink its rules of data visibility and decision-making authority. Our research over the last few years shows that operational performance improves as decision-making authority moves closer―in both time and physical distance―to the point where production is taking place. Here are some steps to take:

Ultimately, every company should focus on a specific set of performance measurements. As the culture shifts across the organization, the company will improve operational KPIs, increase uptime, improve quality, reduce scrap and waste, and enhance compliance and safety.

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