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5 Ways Manufacturers are Using Analytics to Make Data-Driven Decisions


At times, any manufacturing enterprise can feel like a web of mysteries and riddles. Just keeping track of all the moving parts—from supplier relationships to compliance requirements, from inventory control to shipping—poses a major professional challenge for manufacturing professionals.

Trust the Numbers, Not Your Gut

A study of California executives by Corvinus University of Budapest demonstrated that even the most rational leaders make up to 80 percent of their decisions based on intuition. By using data analytics to break down the complexities of manufacturing processes and extract intelligence across the enterprise, management and stakeholders can make decisions based on hard facts for timely risk assessment and business improvement.

CEOs may look first to auditors to ensure compliance, but the greatest value may come in the areas of operational effectiveness and efficiency. For example, most organizations require a working fire suppression system that passes regular inspections. But an operational audit may reveal issues such as frequent false alarms, pressure leaks that require costly service calls, and even anomalies such as frequent motherboard failure on equipment in rooms where the leaks occur. In reality, how much is that “compliant” system costing?

Data analytics can help identify potential areas where manufacturers can reduce costs, eliminate inefficiencies, and make better decisions. The possibilities are almost endless, but here are five top areas where Audimation and our flagship data analytics software CaseWare IDEA® software can be used to provide critical information for planning, forecasting and action.

1. Purchasing

IDEA can be used to set up dozens of tests to monitor critical data fields. For the process of creating a purchase order from a requisition there are some areas where IDEA can help you examine the data in different ways:

  • Were any items sourced to multiple vendors on multiple POs?
  • Can you track where they all originated?
  • Were POs created from older requisitions (say, over 90 days?) If so, why did that occur?
  • Has the protocol for the purchase order’s requisition, approval, and receiving been properly observed?
  • On the other end of the life cycle, were the goods ever actually received?
  • Did the quantity received match the quantity on the purchase order?
  • Did they all match the vendor’s invoice?

2. Sales

Are company sales skyrocketing? This may be an area to investigate further to ensure the numbers are valid. For example:

  • Do any commissions, advances, or sales bonuses look excessive?
  • Monitor for common sales schemes, such as:
    • Shipping out goods to customers without a sales order
    • Recording sales for duplicate or canceled orders
    • Skimming from sales returns
  • Look for unusual or significant sales with month-by-month comparisons
  • Scan journal entries before the close of the year or a sales period
  • Investigate credit memos and deferred revenue accounts

3. Warranties

Dubious return practices can make profit margins unreliable.

  • How many warranty claims are you getting for goods sold?
  • Are they coming more often from certain service providers than others?
  • Do the serial numbers match up?

4. Subcontracting

Fraud and waste in the supply chain can be a major Achilles heel for any manufacturer. Labor violations, shoddy workmanship requiring product recalls, and intellectual property infringement are just a few of the costly issues that have recently splashed across the headlines to embarrass major manufacturers.

While this complex issue cannot be resolved behind a desk, data analytics can help.

  • Track the labor and materials cost you are being charged against the quality you are actually receiving.
  • When suspicions warrant, you can also set up more elaborate tests, such as checking shipment dates, cities, and time en route to see if they make sense or if shipments may have been rerouted to conceal any wrongdoing.

5. Inventory

You can set up almost as many tests for this vital area as your imagination can generate.

  • When it comes to stock levels, do you keep excess inventory on hand?
  • If so, how long do the excess items stay around?
  • How many items do you have that are obsolete or have an expired shelf life?
  • How are they scrapped?
  • Do you have items going out the door that cost less than the sum of their components?
  • Are you still purchasing components for items that have been deemed obsolete?

In addition to these five, there are many more areas in which using data analytics to the fullest can make a significant contribution to the bottom line, including pricing, cash management, and payroll. IDEA is helping manufacturers implement smarter and more efficient processes, increase predictability, and get on top of costly exceptions and fraud early.

Learn More About Audimation Services

Audimation Services is a data analytics company that combines deep industry experience and proven technology solutions to transform raw data into vital information. We are your single source for powerful data analytics technology like CaseWare IDEA®, purpose-built solutions to tackle pressing challenges and rapid-adoption resources for long-term success. Visit us at audimation.com.


Best Practices , CaseWare IDEA , Data Analytics , News



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