It All Starts with Data
Of all the areas of technology that Industry 4.0 has to offer, analytics has been identified (in a 2018 Deloitte Global CPO Survey) as the area with the most impact on business. Industrial manufacturers are moving to digitize their supply chains through data, integrating the plant floor and storerooms, in order to support their production reliability and asset management strategies.
And it’s no wonder. In the Harvard Business Review article titled, Only 3% of Companies Have Data that Meet Basic Quality Standards from September of 2017, it was estimated that defective data costs an organization ten times as much to complete a work task as it does when the data are perfect. MRO Supply Chain Management is no exception. Bad data comes in the form of inconsistent taxonomy, incomplete descriptions, inaccurate unit of measure, wrong bin locations, suboptimal order quantities, lack of manufacturer information, inaccurate lead times, wrong descriptions and wrong tax codes, just to name a few.
It’s not deliberate, but the root causes are very common: lack of investment, no governance, or operating in multiple systems – whether from a functional organization perspective or in a merger/acquisition scenario. From bad data stems numerous unintended consequences such as poor search capabilities, rush orders, expedited freight, unnecessary purchases, varying prices, increased processing costs, bloated inventories, obsolescence, poor working capital, production inefficiencies and increased equipment downtime.Combine all – or even just a few – of the root cause fails, and you not only get unnecessary plant downtime, but you also spend time doing non-value-adding or even negative-value activities.
Why the Status Quo Has Such a Strong Grip on the MRO Supply Chain
While a high volume of transactions – requisitions, purchase order processing, confirmations, validations and payments – are spent on MRO, it’s a relatively low spend when compared to direct materials. So, it seems not as important as managing the direct supply chain. But change is hard, and Industry 4.0 is driving towards embracing constant change. Some other reasons change in the MRO supply chain is particularly challenging without help:
- MRO is highly political because it touches so many stakeholder groups – from procurement to maintenance to reliability to finance.
- Companies have become dependent on their legacy systems. Those systems may have worked well in the past, but as industry has changed, bolting on to those systems eventually breaks the system.
- Risk! From a personal perspective, it’s always riskier to change when the reward doesn’t seem as great.
Overcoming the Data Problem with MRO Data Analytics & Master Data Management
In order to future-proof your business and embrace Industry 4.0, it’s important to first transform your MRO data into something clean and usable. It starts with analyzing existing data to identify key descriptors, normalizing to align existing data with additional fields, attributing using a combination of sources, and enriching the data by assigning each category/sub category a set of attributes to establish a consistent taxonomy necessary for cataloging.
Data is at the core of SDI, and we offer numerous MRO data services offered as time-based projects or as ongoing services.
- Data collection, validation, and storage
- Master Data Management
Our proprietary processes and technology have been developed and optimized over the last 50 years. SDI has a breadth and depth of MRO domain expertise. And our ISO 8000 Certified, Six Sigma culture means we are committed to data integrity, quality, and portability. While Industry 4.0 may feel like a distant concept, focusing first on data is a step in the right direction to reshape the future.
To learn more about how MRO data analytics and master data management can help digitize your supply chain, watch the on-demand webcast Industry 4.0: How to make it work for you.
And be sure to come to the April 11, 2019 Innovation Symposium: Industry 4.0 to hear from industry’s top minds how Industry 4.0 is enabling the digital supply chain and what the implications are for MRO. Register today.