Avoid the high cost of siloed data
Silos develop in industrial manufacturing companies for many reasons, including competition between groups or functions for limited resources, misinterpretations of goals and priorities, management indifference, and an individual’s desire to stand out as an expert.
The results for the C-suite are costly because silos interfere with the free flow of data critical to decision making. Data that is not accessible, reliable, and timely leads to mistakes, misunderstandings, bottlenecks, firefighting, and lost opportunities. Moreover, any hint that data is unreliable or incomplete can frustrate joint public-private projects and risk regulatory or consumer backlash.
By asking three questions, you can determine the extent of silos in your organization and begin the process of eliminating them.
Question 1: Who holds the information?
Failure to ask this question has a direct financial impact. At a manufacturer of railroad machinery, retirees from operations left no one trained to take over their work, causing a major drop in productivity.
At a company providing clean manufacturing alternatives, legacy knowledge was held by suppliers—not employees—making it impossible to find new suppliers when needed or negotiate with the current ones.
Many companies often do not realize that a block in information flow is at the root of a productivity, quality, logistics, operations, or cost-control problem. Procurement, for example, is often thought to be purely transactional: someone orders Part A and procurement buys Part A. But leaders need to ask why a particular source was chosen, how often that source is evaluated against others for quality, efficiency, and price, and what alternative sources might be available if necessary, among other questions. Who has the answers to questions like that, if anyone?
Question 2: Who is meeting at the decision making table?
The entire company should understand that every link in the plan-buy-make-move supply chain is connected to and affected by every other link. A change in the size of a product affects the type and size of its packaging; a change in the type and size of packaging affects the choice of suppliers and the delivery system; and a change in the delivery system might affect the cost to serve, regulatory compliance, or ESG scores.
When any function of the company is excluded from the decision making table, decisions are inevitably flawed. At one manufacturing company, isolating logistics from decision making meant that opportunities for cost savings were lost. By working with the logistics organization to transform it into a trusted partner, SGS Maine Pointe delivered a sustainable reduction of 18% in rail freight costs and a 7% annualized cost savings in air freight.
Question 3: What data is important to your decisions?
Data is inundating executives in every industry. A study in Europe revealed that 96% of executives are overwhelmed by data and a third make decisions based on “gut instinct.”
Supply chain simulation, based on trustworthy data analytics, is one way to shore up that gut decision. By running a decision through the model first, you can see exactly how it affects each link in the plan-buy-make-move supply chain before you initiate a change.
To ensure trustworthy data, you need common metrics, such as KPIs, that apply throughout the company and a common language to what you are measuring: quality, productivity, efficiency, and so on. To establish common metrics and a common language, you may need help negotiating between functions and work units. However, SGS Maine Pointe has found over and over that the results are worth the effort: enhanced collaboration that tears down silos; data that improves decision making; and a clear path to meeting your EBITDA, profit, and growth goals.