Manufacturing Sector Set for Significant Change in 2018

Manufacturing Sector Set for
Significant Change in 2018

By David York, regional vice
president, UK and Ireland at Epicor Software

Manufacturing,
along with virtually all other industries, is going through a significant
period of change. Driven by rapid technological development, manufacturers are
having to work smarter, operate more efficiently and be prepared to innovate.

Over
the next 12 months, these factors will be supplemented by a combination of
political and economic upheaval that is likely to have far-reaching
ramifications, such as fluctuating currency rates and slowing down Britain’s economy.

In
order to be able to respond to these changes and remain competitive, embracing innovative
technologies is now more important than ever. For manufacturers specifically,
relying on outdated software when competitors are adopting Internet of Things
(IoT) and embracing smart technologies, will hold them back. Procrastination
will make it significantly harder for a manufacturer to thrive and grow in
today’s fast-paced business environment.

As
an enabler of growth, technology will play a key role in empowering businesses
to innovate and embrace the opportunities that will present themselves in 2018.

But
where exactly are these opportunities likely to come from? Here, we identify
the top trends that we believe will be central to success in the upcoming year.

The need for
flexibility

A key factor for manufacturing growth
in 2018 and beyond will be whether businesses are flexible enough to be able to
deal with the amount of predictable and unpredictable change coming their way.

Chief among these changes are Brexit
and incoming Global Data Protection Regulations (GDPR). While many organisations
are concerned about the impact they will have on industry, they are both
predictable to some extent so can be planned for.

Flexible businesses will then be able
to ride out the potential issues that such political or legislative changes may
cause, such as having to adapt internal processes or employ personnel with
different areas of expertise.

The even greater challenge comes from
responding to unpredictable changes that can appear at any moment. By taking
the view that change is constant, well-prepared manufacturers will be able to
take advantage of the opportunities, mitigate the threats and control the
impact of something as big as Brexit or GDPR.

One of the biggest barriers to
flexibility for many manufacturers is having to rely on an outdated enterprise
resource planning (ERP) system. Too many businesses are still using legacy software,
which can hold them back in several ways, such as making it harder to scale
production up or down.

They will also miss out on the
valuable competitive advantages that a strong ERP solution can provide. For
example, integrated ERP systems enable manufacturers to rapidly respond to
last-minute order changes and improve resource management to control spending
and reduce waste.

Having a flexible IT solution will be
the engine of growth for forward-thinking businesses.

Industry 4.0
comes of age

The growth of ‘Industry 4.0’ has been
a widely discussed topic in 2017 and its steep upward trajectory is certainly
going to continue. For example, the International Federation of Robotics (IFR) predicts that more than 1.7
million new industrial robots will be installed in factories worldwide by 2020,
representing an annual growth rate of 14 percent.

Essentially, Industry 4.0 is about combining
artificial intelligence and data science to realise the potential of the
Internet of Things (IoT), but just having access to large pools of information
is no longer enough. The important thing that manufacturers need to take
advantage of over the coming year is using that data to gain insight, inform
decisions, and drive better business outcomes.

As more and more ‘smart’ devices are
integrated into organisations in 2018, Industry 4.0 will continue to dominate
the manufacturing industry, offering valuable benefits including predictive
maintenance of machinery and increased levels of automation to help
manufacturers optimise their operations. One example of this is for inventory
control of spares and raw materials. Sensors are being used to identify stock
levels and, based on historical information, automate the replenishment of
these items. This innovation decreases production down time and ensures an
optimised delivery schedule.

It’s about being able to build upon a
loop of intelligence that feeds into a cycle of continuous improvement. In
layman’s terms, this involves gathering as much data as possible, turning this
data into insight and finally into intelligence which can be used to improve
business processes.

This is the mindset manufacturers
should adopt when it comes to ERP. However, making the move towards a smarter
ERP system can require a cultural shift for manufacturers as well as financial
investment.

ERP systems are already collecting
more business data than ever before, but making sense of this data and taking
action on it will be the key differentiator in the year ahead.

Customer
experience is king

With the increasing amount of data
being created by Industry 4.0 comes the opportunity to significantly enhance
the customer experience.

This is an area that, thanks to
increasingly competitive business landscapes, is now more important than ever.
Success in 2018 will boil down to how well companies can differentiate
themselves from the rest and focusing on the customer journey will be a key
aspect.

Customers today expect the same
service in their work life as they get in their personal life, which means
‘business to business’ companies need to start behaving more like ‘business to
consumer’ ones and treat the customer experience as sacred. For example, people
are used to features such as same-day delivery and one-click ordering in their
personal lives, which is making them more demanding in their professional
capacities.

For manufacturers dealing with a
complex supply chain, a robust and modern ERP system is now widely recognised as
playing a crucial role in improving the customer experience. IDC research reports that 85% of
manufacturers with more than 5,000 employees identify ERP as being a vital
platform to delivering positive customer experiences.

A flexible, fully-integrated ERP system
that streamlines operational processes and connects back-office with
front-office functions throughout the lifetime of an asset or product enables
manufacturers to offer a much higher level of service. A level of service that they
are able to charge more for and will set them well apart from their
competitors.

AI-driven
future

Linked to improving the customer
experience is the role of Artificial Intelligence (AI), which is set to have a
profound impact on ERP systems in 2018 in several diverse ways.

For example, AI-driven ERP is being
used to create dynamic workflows that learn the various ways in which an
organisation and its employees interact with the software, before suggesting
different optimisations for individual users.

In terms of improving customer
service and support, AI is for example allowing business to provide always-on
customer service that isn’t constrained by time zones or holidays. It is also
quickly scalable and enables an unparalleled level of personalisation
throughout the customer journey.

Furthermore, AI in the form of
predictive analytics can be used to produce deeper insights for specific
business outcomes and make more sense of the mountains of data manufacturers
are now collecting and storing.

More use cases will become apparent
as the technology continues to develop, but what’s already clear is that the
potential of AI when it comes to ERP is significant.

With
political and economic upheaval on the horizon, businesses are facing an
unclear future. There are turbulent times ahead, but those organisations that
concentrate on making themselves smart and agile will be the ones that are best
positioned to take advantage of growth opportunities in 2018.

For
manufacturers, this process starts by ensuring that internal software systems
are fully supported with the latest updates, thereby enabling them to react to
change and view the likes of Brexit and GDPR as opportunities rather than
threats.