5 Ways Manufacturing Companies Can Find the Deeper Secrets Behind the Numbers & Data That Don’t Lie

Editor's Note: This is a guest blog from Paul Aureli a Marketing Associate at Crossroads RMC, a company who optimizes current manufacturing systems through the use of their technology products. As a technology company ourselves, who offers a transportation management system for manufacturers and shippers, we value this post as it talks about the importance of using the data we all find in our business. However, it goes deeper to unveil how to best go about understanding the data by further collaborating and putting trust into your internal and external business relationships. It's a great read!

Numbers don’t lie; it’s their secrets you have got to know

Did you ever notice when you read an article, or study a report, that the numbers are always very logical and get right to the point? We assume because it’s logical that the numbers don’t lie, but could there be more to the story than revealed? So, what’s the big secret? You are captivated by the metrics and the proof that the numbers support the ideas presented, and like most statistics, the numbers at face value don’t lie. But, there are secrets within the numbers that impact your thought process and the decisions you make as a result. When you look at the numbers, they show an immediate logical connection, but how the numbers are derived is more important. You must pay attention to the sequence of the logic offered in the data. While most of us may know this, how often do we question this process? How often are we questioning the logic and facts? There’s something else behind the numbers that is buried for a reason. So consider this…

All numbers need to be validated. Sometimes they seem to magically appear from nowhere.
Numbers are viewed in relation to other numbers, and can change depending up on the context of how they are used.
Numbers are viewed with respect to past events. They are historical by definition, but a number has no bearing or meaning on future events, and is thereby less relevant than you might think.
How do the numbers translate into a real actionable perspective, which may be more important than the numbers themselves?

So, what does this mean to you? The problem with numbers is not numbers, per se; it’s how they impact our thinking going forward. Too often we see them as an end point – the holy grail of research, evaluation, analysis, planning, rather than a step along the journey of better understanding. When numbers become the end game, the pressure to manipulate their journey - fiddling, adjusting and otherwise reconfiguring them is immense. And as much as we might like to pretend they represent infallible scientific rigor, those of us who’ve ever filled a banker or investors form know that even a figure calculated to the Nth decimal place still has significant room for interpretive flexibility, when you need it to be.

When numbers serve as replacement for trust

“Proof in the numbers” can effectively replace the kind of accountability that mutual trust provides in relationships. The work needed to build this trust is immense. Numbers have traditionally been seen as an alternative when trust doesn’t exist, providing a way of measuring whether someone has done what they said they would. Or so we tell ourselves. Unfortunately, as this became the norm for contracts, evaluations, grant monitoring and organizational audits, we have taken the assumption of dishonesty that underpins the push for numbers, and trumped it… with more dishonesty! And this dishonesty appears wherever we have imposed what David Boyle calls ‘The Tyranny of Numbers’. When organizations need to reach a goal, they double-count beneficiaries and shift budget lines. When an organizations needs to justify cuts to a department or to the organization as a whole, they pick and choose the statistics that will help them to do so, ignoring those that don’t. When CEOs want to receive bigger bonuses, they hide liabilities and inflate profits to produce short-term gains in stock prices…they create numbers that succeed only in hiding the truth and most of the time we have no practical way of telling the difference! In doing so, each of these examples create long-term problems in their wake; organizations fail to adequately learn from both success and failure; companies suffer when the bubbles, so many questionable bonuses have been built upon, invariably burst…

How big of a tarp do you need to hide something?

So these practices occur, with more or less altruistic intent, across all types of organizations. It is impossible to effectively gauge their true prevalence because when they are fiddled with, they look (at least superficially) pretty much the same as when they are honest and true. Thus there is no simple and reliable way of checking if people are fiddling with the system, and therefore the truth or falsehood of the numbers is impossible to determine without digging considerably deeper, by which point it may be too late to affect change. Headline numbers are underpinned by statistics, which have consolidated totals beneath them, and tallies and raw data from sample surveys still deeper down in the process. Most of us don’t see, or are unable to understand these numbers on top of numbers, making it impossible (within most of our means) to effectively refute them. Yet, they justify most of the decisions affecting our position and organization and the positions of employees we support. In the sea of numbers we may cross paths with on any given day, distinguishing between the ‘authentic’, the ‘questionable’, and the ‘wrong’ is an unfeasible task. One of my favorite recent finds, via Henry Mintzberg, looks at the creation of statistics which justified British World War II aircraft expenditure: “As Eli Devons (1950:Ch. 7) described in his fascinating account of planning for British aircraft production during World War II, ‘despite the arbitrary assumptions made’ in the collection of some data, ‘once a figure was put forward… it soon become accepted as the “agreed figure”, since no one was able by rational argument to demonstrate that it was wrong… And once the figures were called “statistics”, they acquired the authority and sanctity of Holy Writ’ (155).” [Mintzberg, The Rise and Fall of Strategic Planning, The Free Press, 1994]

Newspapers and when the dog leaks on the floor

One response to these pitfalls is to produce new numbers which serve to either validate or disprove the old ones. In doing so, it is like we caught the puppy doing what he is supposed to do outside. We then place new newspapers over the old newspapers that we use to cover up the spot where the dog did it the last time. The truth is still there, but we think we don’t have to acknowledge it anymore… …And the new layer seems effective for a period, but then the damp begins to soak through and the stench begins to sneak around the edges as we find yet more resourceful ways to manipulate the new system and achieve the results we wanted in the first place. The examples of this approach are endless: categories get regrouped, ‘impact’ redefined, responsibilities’ get redrawn, titles reclassified, and we’re back to square one with little idea of what we have done, whether or not it has actually worked and how it compares with what we did before. Trusting relationships don’t produce this kind of effect, but requiring numbers to achieve accountability comes from a mistrusting place, and thus the behavior that follows is likely to reinforce this insinuation.

The elusive idea of building trust

The inclination (perhaps unsurprisingly to regular readers) is to place our focus on building trusting relationships, rather than trust in numbers. This is a mammoth task, to frame it conservatively, yet one which I feel is at the core of better and more meaningful learning, accountability and understanding. Raising trust invariably raises questions of power, but without venturing into such depths, our results will invariably be shallow ones. How can trust change the dynamics between those with more, and those with less power in the in a manufacturing organization? In the organizations I’ve worked with, when you ask the question ‘how do you know you’ve made a difference?’ it is common to hear from those most in tune to local issues: ‘We just know – we can tell’. The professional management team tends to scoff at this response for a whole range of obvious reasons you might expect; namely that it’s ‘not evidence-based’. But often within this seemingly simple response can be a series of profound truths, whose detail and subtlety is not easily translated into reports. It’s often a series of small changes, anecdotes, stories; the things you notice when you know the ins-and-outs of a shop floor…its strengths and its problems, like the back of your hand. These anecdotes create a broader ‘feeling’ which may well serve as a more effective gauge than any metrics ever can, of the shifts taking place in any particular operation.

What to do, what to do?

So why don’t we ask the people involved in production how they know what kind of impact they’ve made and how they would choose to show us? Why don’t we also ask the shop floor manager what they’ve learned during the process? And the bold part... we accept what they tell us. When we ask for numbers, we don’t want to undermine the judgments of those who do the work. If we give them the chance, and the tools and the skills, and wait to obtain the true figures without the pressure to produce figures (not stopping them if they feel numbers do help to tell their story), we may find that we have encouraged a more honest understanding of the issues and the challenges they face. This approach shifts the power dynamics by offering trust; giving them the chance to provide a narrative that makes sense within their experience, rather than the frameworks we have created for our own convenience or preferences. Those who are trusted are more likely to be trust-worthy. When those that work for you are evaluated to be trustworthy, you’re more likely to hear the important stuff from them, rather than a finely-tuned “propaganda piece” (i.e. reports), invariably filled with the kinds of selective numbers which succeed only in giving us the false impression of knowing what’s going on. Five steps to help:

Error on accuracy when reviewing material
Don’t let the numbers define a pre-assigned agenda
Find the truth in the story
Add twice the perspective when the numbers are obtained or shared
Become very skilled interpreting and communicating the numbers and consider using other tools to communicate the results

Help is on the way…

As the shop floor manager at ABC Manufacturing Company, you and the management team prefer paper reports in the “traditional” manner, though you always felt the numbers on the reports generated were always computed with aggregate data summarized by the day and week, and did not provide details that you thought were important. You questioned what is the “real” issue behind these numbers? Is there something missing? You realize the company needs a way to really find out the operational issues that are impacting the production lines like throughput, downtime, scrap, efficiency, and OEE (overall equipment effectiveness). The current reporting method is like the dog stained newspapers, providing a static incomplete over-layered view and doesn’t offer a real-time dynamic view of what is happening on the floor and impacting the company. So, the company decides to use a process approach and starts by putting in place a real-time data collection system. And low and behold, you began to see a new set of numbers based upon the actual low level detail that makes up the operational report data. With this new data in real-time, all members of the team were able to see where and when any bottlenecks were created, and any backlogs throughout the day. In addition, the team saw downtime lags, volume of scrap and other important data they had not seen before. With this information, and the ability to see what the numbers for what they really mean and not summative, the team could then make adjustments to the system and gain even more control over the floor operation. Later, by adding a Dashboard and MES system, the resulting process offered more collaboration with other team members on how to monitor the production in real-time. The data was analyzed by everyone to keep the plant flowing smoothly and reduced many of the issues that could have created larger company problems while revealing greater efficiency. Adapting a process and providing collaboration within the team helped to build trust and participation, which resulted in greater efficiency and improved production line output. By incorporating processes, systems, tools and dashboards you will be able to refine the numbers to best ferret out the real information, and recognize the real truth on the shop floor and overall production. By fine tuning the team’s skills in using this new and clear data, they were able to see action points to create real impact in the operations and provide a stronger picture on how to optimize the operations of the business on a whole. The imperative to become truthful, factual, and clear will be accomplished through the use of people who utilize technology based processes that push to this desired outcome. The intersection of these two components will lead the process of achieving this goal and will attain the optimization of your manufacturing operations. You can learn how to achieve a high level of Manufacturing Optimization (M.O.), by talking with you system providers to show you the way through both processes and tool sets to reach that goal.