By Deepa Sankar
As a leader in the electronics manufacturing services (EMS) industry, Celestica is at the crossroads between many global supply chains, which puts the company in the unique position of having access to a significant amount of cross-industry supply chain data.
Celestica recognized this data could deliver competitive advantage, and in 2009 launched an ambitious, company-wide analytics program with the objective of leveraging business analytics to drive business improvements and deliver value to its customers.
Launching a new initiative of this scale during a time of economic uncertainly, when most companies were cutting IT budgets, is testament to the importance of aligning the IT strategy with the business strategy. By working with Celestica’s business leaders from the beginning, the IT team was able to demonstrate the value a Business Analytics Centre of Excellence (CoE) could deliver to the company and received approval for the investment.
To gain senior executive buy in, the IT team needed to take the BI program beyond simple reporting and dashboards, and use proof of concepts to demonstrate business value and relevance. As such, Celestica started with analytics, right from proof of concept, in a number of areas at once.
The business analytics team worked closely with senior business leaders to identify key business areas to focus its efforts. Three examples include demand forecasting, component pricing, and reducing / preventing customer returns.
For the demand forecasting proof of concept, a customer would give Celestica the forecast of what they needed in a given period. Manufacturing partners typically take that forecast to plan delivery. However, forecasting product mix accurately is tricky. Low forecast accuracy will result in high inventory and affect service delivery. This is where the company wants to add value using business analytics; by analyzing large amounts of historical data, it is able to build proprietary models and help its customers improve their demand forecast.
Component pricing is another critical part of the business where Celestica is applying analytics. The objective is to analyze data to figure out how it can get the best pricing for our customers. By using SAP BusinessObjects solutions on a portal, the company can share the analytics with hundreds of Celestica employees worldwide to bring value to its customers.
For the Preventive Return Analytics project, Celestica analyzed value chain data to create $10 million cost savings for a customer. In return-repair operations, “repeat returns” refers to cases where the same item is returned by customer many times due to repair failure, affecting the profits of Celestica’s customers and damaging brand loyalty. To solve the problem, one must first harmonize data from multiple parties including customer call center data, return/repair operation data from multiple, and other manufacturing companies. Working with this particular customer, Celestica’s Preventive Return Analytics Project combined 80 million records of product lifecycle data from the customer, competitors, and Celestica to identify and remedy the repeat return problem.
Business analytics’ success in tackling real business issues such as demand forecasting, component pricing, and preventing customer returns in the proof of concepts, demonstrated relevance to the senior leadership team. It also started changing the conversations at the table with customers.
Achieving this level of impact in a company also requires the right organizational approach. Celestica focused on combining advanced analytics or quantitative modeling with traditional datawarehouse/BI to achieve predictive insights. This not only enabled Celestica to deliver information quickly by leveraging a BI platform like SAP Business Objects BI Suite including SAP BusinessObjects Web Intelligence, SAP Crystal Reports, SPA BusinessObjects Dashboards, SAP BusinessObjects Data Services, and Analytics Workbench, but also combined traditional BI with advanced quantitative analytics to provide predictive insights in a wide range of business areas.
Celestica’s Business Analytics CoE is a hybrid team that consists of talent with background in operations research, data mining, statistical analysis, data modeling, business analysts, and IT developers. While in many other large companies the advanced modeling team and IT development team are often in separate organizations, Celestica combined them into one to maximize speed and efficiency.
Today, Celestica’s Business Analytics CoE is a strategic element of Celestica’s business and continues to deliver analytics across virtually all key business functions, consistently offering unique insights into business challenges.
In fact, customers are so interested in the data that Celestica is building a forecast analytics service to customers through the use of BI tools to harness data, analyze it and make their findings available.
While Celestica’s business analytics CoE is still in its early years, it is viewed as a strategic differentiator for the company. Business analytics helps Celestica to achieve the speed, flexibility and transparency that could drive further improvements in innovation, productivity, and responsiveness for its customers.