Efficiency is an important competitive advantage for any business. One way to improve processes is through analytics, which is why business giants invest heavily in analytics. Analytics give business giants an advantage when it comes to efficiency, but how are they leveraging analytics to improve their processes?
Firstly, because they invest in data collections systems, they collect data on all aspects of their operations no matter how small. Take a warehouse for example; in a typical sophisticated warehouse, you will find a data system to track inventory movement, MHE usage, labor hours, productivity, and inbound and outbound loads. Secondly, they combine data from various systems and analyze it to formulate process-improving insights.
So, what are the benefits of analytics?
1. Identifying and reducing hidden idle time
Small windows of unnecessary idle time are productivity’s silent killer. More often than not, businesses experience small windows of idle time. These windows of idle time can go unnoticed, but over the course of a year, they can add up to a lot of wasted time. For example, 15 minutes of hidden idle time a day for a team of 100 people can add up to 6,500 hours wasted in a year, which can amount to losing between $120K and $150K. Analytics can help identify these small windows of idle time.
2. Identifying and avoiding possible bottlenecks
In most cases, bottlenecks get noticed after they occur. These backups usually start slowly. Analytics can help you identify a dislodge in operations processes ahead of time by using historical or real-time productivity data. For example, if two subsequent operational functions have different processing speeds, the likelihood of a bottleneck is high if the first function is the fastest. Analytics can help you identify subsequent processes that are susceptible to dislodging so you can reallocate resources from the faster function to the slow function and avoid a possible bottleneck. Without analytics, you might not be able to identify and prevent an impending bottleneck.
3. Ability to control operations
Analytics can give you an objective overview and understanding of your business activities. Having an objective understanding of operations enables you to optimally allocate team members to job functions, postpone non-core functions during peak times, and call for optimal overtime or time off. Poor allocation of team members can result in bottlenecks or additional operational costs. Failing to call for sufficient time-off during slow periods can result in unnecessary additional costs, while failing to call for enough overtime can render you unable to deliver orders to customers on time.
4. Improve asset purchasing practices
Analytics can shine a light on how you use assets and thus can be crucial in your purchase decisions. If you don't analyze assets usage, there is a possibility of over-investing in assets, which leads to idle capacity, or under-investing, which can slow down your operations. Analytics help you to systematically optimize asset purchases as well as maintenance schedules to reduce downtime.
5. Ability to set objective targets
Analytics encompass demand planning to inform your inventory, hiring, and capital investment decisions. These types of decisions take time and resources, and analytics can give you a head start in the planning process.
In conclusion, consider investing in analytics as you would consider any other business investment decision: If you pay $80K a year for analytics, but in return you gain more than $80K, then it is a worthwhile investment. Big industry players invest in analytics because it gives them a competitive advantage and furthers their growth.