Industry 4.0 —the fourth industrial revolution that is bringing an increasing level of digitization, automation, and inter-connectivity to the manufacturing sector—is well underway. Cloud computing, big data, greater capabilities in analytics and business-intelligence, advances in artificial intelligence, as well as the continued development of the industrial internet of things (IIoT) are all driving change in the manufacturing industry.
Manufacturers need to both understand and embrace these changes in order to stay competitive. Companies that have already started to adopt new technologies, such as IIoT, are seeing a 7% revenue growth advantage over their peers, according to a report by McKinsey.
And the economic and social downturn caused by the current COVID-19 crisis will only deepen the divide between manufacturers who have just started to digitize, and those who are much further along on their digital journey.
Luckily many manufacturers already have a tool in their arsenal that is helping them to embrace Industry 4.0, and putting them on the right side of the digital divide: An ERP system.
Today’s ERPs aren’t just about replacing back-office functions and systems like inventory management, accounting, order fulfillment, and shipping: Today’s ERPs not only include these important functions but also automation, analytics, and business intelligence—all important elements of Industry 4.0.
ERPs—and learning to harness the full power of an ERP system—are one the most important steps manufacturers can take towards Industry 4.0.
The Digitization of the Manufacturing Industry
The first digital revolution to disrupt the manufacturing industry was in the late 1960s when computers were introduced and completely changed how manufacturers did business.
Now technologies such as big data, IIoT, and cloud computing are vastly increasing the connectedness of computing technology—and are changing the game again. As Industry 4.0 unfolds, computers will continue to connect and communicate with one another, and ultimately make decisions without human involvement.
Perhaps Forbes summed it up best when they said: “Industry 4.0 optimizes the computerization of Industry 3.0.”
Manufacturers need to take these innovations seriously and start thinking about how they will impact their business. According to Deloitte “Overall, just over 20 percent of manufacturers rated themselves as ‘highly prepared’ to address the emerging business models the fourth industrial revolution brings. The coming year is one that is expected to separate the digital leaders from the followers, and it could leave some companies dangerously behind.”
Forbes predicts that in 2020 spending on IoT technologies, solutions, and apps will reach 267 billion USD, with much of this boom in spending coming from the manufacturing industry—as manufacturers continue to digitally transform and connect their business processes. Expect everything from shop floors to supply chains to become more connected, making manufacturers more efficient and productive.
Embracing digital technology will be an important factor in determining which manufacturers stay strong and competitive, and which lag behind in the new world of Industry 4.0.
How to Use Your ERP System to Harness Big Data
Learning how to collect, but also transfer, store, and analyze data is one of the biggest things that manufacturers can do to embrace Industry 4.0.
Data is one of the key drivers behind industry 4.0, and manufacturers need to learn how to harness the data that they already have coming into their shops to both become more efficient now—and to set them up to deal with future trends and technologies.
If a manufacturer is using an ERP to manage their manufacturing shop, they already have access to a large amount of real-time data. But, unfortunately, when it comes to analytics, many plants still rely on manual processes and Excel spreadsheets to determine asset availability, draft maintenance schedules, or make critical decisions.
However, using the full capacity of an integrated ERP solution will connect a shop and give manufacturers better control over their data—and the important business processes and decisions that rely on it—making shops run smoother and more efficiently.
Without an integrated ERP system, manufacturers need to comb through numerous spreadsheets and systems to pull out relevant data, and then analyze the data to create meaningful reports and actionable items. Not only is this time consuming, but it also leaves a lot of data out of play, meaning manufacturers aren’t getting the full picture—or optimizing operations.
But an ERP makes it simple, as it can sift through data for manufacturers, and create customized reports to better understand operations and processes—and help manufacturers make better business decisions. Data can show where there are gaps or inefficiencies in production lines, and help improve manufacturing processes to increase cost-effectiveness.
Using the business intelligence features of an ERP to their full extent will help manufacturers become even more efficient, lean, and productive organizations—as well as will also help them to continue their digital transformation, and be prepared to adopt and embrace other digital technologies like automation and IIoT.
Using business intelligence to improve operations has a major impact on a business’s bottom line. According to the Aberdeen Group ERP software that provides accurate, real-time information about daily operations help companies reduce operational costs by 23% and administration costs by 22%.
Many manufacturers have been sitting on reams of data coming out of their machinery and systems for years but didn’t know what to do with it.
Learning how to use this data to create more efficient—and smarter—shops is what Industry 4.0 is all about.
Greater connectivity and analytics helps manufacturers avert quality issues, improve efficiency, and increase throughput—all while reducing costs. Additionally, getting comfortable with data today will help prepare manufacturers to use the connected technology that will come with Industry 4.0.
How does Cloud ERP Enable IIoT in Manufacturing
IIoT is all about connectivity, just like cloud ERP solutions.
Cloud ERPs give manufacturers more flexibility and connectivity to collaborate, manage operations, monitor production—and take advantage of new technologies like IIoT. At the end of the day, technology is about enabling manufacturers to become more efficient and more productive, to better serve their customers. That’s our goal and only goal.