How manufacturers can secure their digital future over the next 12 months
by Paulo De Matos, Chief Product Officer at SYSPRO
Most midmarket manufacturers have limited the digitalization process due to perceived capital commitments and a lengthy implementation and payback process.
Over the past year, manufacturers and distributors have needed to contend with multiple supply chain disruptions, huge operational inefficiencies and a lack of integration between disparate systems. Although these businesses are still in the midst of a short-term stabilization process, the smart manufacturer is already busy with preparations to ensure future readiness for the long term. Many organizations have realized that a fundamental shift needs to take place by revising operational strategies and embracing digital technologies. The drive towards Industry 4.0 is truly underway.
While the market has spoken about Industry 4.0 for quite some time, most midmarket manufacturers have limited the digitalization process due to perceived capital commitments and a lengthy implementation and payback process. Every conversation regarding Industry 4.0 begins with enthusiasm at the endless possibilities available, but when the reality of the costs involved in setting up some of the more basic requirements like Shop Floor Data Collection (SFDC), Industry 4.0 initiatives are reconsidered. Additionally, there is trepidation when it comes to investing in emerging technologies that will be replaced by newer technologies in the near future, even before the current investment has been recouped.
Despite the hesitations of the past, the disruptions of the pandemic have proven that the uptake of Industry 4.0 is now indispensable in translating efficiency and productivity gains back into the business. The question is, where do manufacturers strike a balance between competitive advantage and unnecessary expenditure?
Building a case for Industry 4.0
Ultimately, the drive towards Industry 4.0 needs to be a unique project addressing the requirements of the business. Manufacturers need to think about which business pain points they need to resolve, what these pain points are worth to them, and how their digital strategy needs to maximize ROI.
When approaching industry 4.0 to become future ready, manufacturers and distributors should consider digital changes to their enterprise on two dimensions:
- Customer experience, and
- Operational efficiencies
Applying the customer experience lens to industry 4.0
For any business planning an Industry 4.0 initiative, the plan should start with the requirements of the end customer in mind. During the pandemic, manufacturers realized the importance of connectedness to both suppliers and customers within their eco-system. Any delays in customer delivery could have resulted in long term reputational damage and revenue loss. Here Industry 4.0 plays a vital role in real-time engagement.
Careful application of Industry 4.0 can also reinvent the customer experience altogether. Over the last few months, supply chain restrictions meant that manufacturers needed to think ‘out of the box’ to secure ongoing profit margins. According to our recent CFO 4.0 study, 70% of businesses indicated that they would be exploring new revenue models with the aim of increased customer engagement through digital channels. B2B leaders started embracing new digital selling models, resulting in accelerated adoption of eCommerce.
Improving customer service has always been a major priority for successful manufacturers, and the continued integration of technology within manufacturing should assist in improving it even further.
Applying the technology lens to Industry 4.0 to enable operational efficiencies
Most manufacturers are aware that Industry 4.0 involves the implementation of revised processes, redesigned operations and integrated automation to create the factory of the future. At a basic level, the rollout of Shop Floor Data Collection, is regarded as one of the cornerstones of the Industry 4.0 initiative. It involves the real-time tracking of jobs against schedule, and identification of any delays.
Most integrated SFDC capabilities require an ERP, the SFDC software, the appropriate adapters, and software drivers to get all the information to where it needs to go and assist the business with real time decisions. As the data collection and monitoring tools of Industry 4.0 become more common in the factory and across the supply chain, customers will have more visibility into production status and tracking of their deliveries. Over the last year, manufacturers have realized that with supply chain disruptions, data was of value in understanding their businesses’ stable source of supply and ability to maintain healthy inventory levels.
The last year also resulted in the rise of totally new business models involving remote working and dark factories. As a result, there has been an increase in the uptake of automation in almost every industry. IDC expects that by 2023, 75% of Global 2000 IT organizations will adopt automated operations practices transforming their IT workforce to support it on an unprecedented scale. Automation has been around for a while – so what has changed? With the introduction of connected services and APIs, systems have become far more integrated, often using the cloud as the vehicle for this inter-connectedness and orchestration. The market is therefore seeing an evolution of point-to-point systems talking to one another, rapidly improving the effective execution of business processes for those that have adopted it.
Beyond the application of SFDC and automation, the recent SYSPRO-led CFO 4.0 study also showed that 52% of businesses identified the investment in enterprise technology such as ERP, BI, and CRM as a key strategic focus area to improve operational efficiencies. The goal being to achieve better clarity and transparency of information across the whole business to enable enhanced decision-making in real-time.
With both operational and customer experience lenses in mind, Industry 4.0 needn’t be an unnecessarily expensive investment, but rather an opportunity to transform the business for enhanced growth and long-term sustainability. Strategic and focused shifts in Industry 4.0 investments in the company can help to ensure success in the near future and beyond.