Leveraging ERP to overcome three industry 4.0 challenges

Andy Coussins, senior vice president and head of sales, international, Epicor Software, says  regional manufacturers are addressing digital transformation challenges by investing in key supporting business technology—specifically, the right kind of ERP software—as one of the first steps.

Andy Coussins, Head of International Sales, Epicor Software

Not long ago, Industry 4.0 and digital transformation were the domain of first movers only. Today they are high on the agenda for every regional manufacturing business. In fact, 62 percent of Middle East respondents to a PwC survey on Industry 4.0 were expecting to be at a high level of digitization and integration in 2020, compared with only 41 percent reporting such a high level in 2015 . This investment is driven by the expectation of results. At the top end, around a third of respondents expected Industry 4.0 implementations to result in both cost savings and revenue gains of more than 20 percent within five years.

As organizations in the Middle East start executing their Industry 4.0 agendas, a major focus will typically be on applications that use artificial intelligence (AI), big data, cloud, and the Internet of Things (IoT). While the advantages are well-documented, they do come with technology challenges of their own, specifically around the continuous need for vertical and horizontal integration, effective management, and use of all the data generated, as well as the need for more complex risk management.

Many regional manufacturers are addressing these challenges by investing in key supporting business technology—specifically, the right kind of ERP software—as one of the first steps on their transformation journey.

While the right industry-specific ERP solution will fast-track your implementation, right out of the box, it will still need to be integrated with other systems—such as your IoT implementations—to achieve the depth and breadth of integration and automation called for by Industry 4.0. To simplify this integration—both internally and with suppliers, partners, or customers, the architecture and interfaces of your chosen ERP solution must to be streamlined, flexible, and based on standard open protocols. It also helps if the solution is designed specifically to take advantage of cloud computing frameworks, because a cloud-based platform can be ideal for integrating different business entities and locations, and in extending integration to suppliers and customers.

But don’t forget the human element―as much as integration in Industry 4.0 is driven by automation, it isn’t always about robotics, IoT, or AI. For the foreseeable future, most of the functions you’ll be integrating will still rely on human interactions. It’s therefore important to think about how easily your ERP solution supports the human side of integration. Good mobile and social capabilities in an ERP solution will help your people integrate more effectively into your factory of the future. They’ll be able to work smarter and more productively, making your business more efficient and responsive as a result.

Actionable insights
For the small-to-midsize manufacturer, analytics can be one of the biggest stumbling blocks, as it takes specialized skills to turn data into insight that you can act on. Ideally your ERP system won’t ask you to do all the hard work to pull actionable insights from data.

Look for easy-to-use, pre-built, analytic functionality that is already mapped to your most likely common needs, such as materials handling, financials, sales, or production. This is particularly important when it comes to analytics that help you answer those all-important ‘why’ questions. If the ERP solution is designed specifically for manufacturing and this extends to its embedded analytics, you’ll be able to get going quickly with analytics that deliver real insight. Make sure you have the flexibility to customize and build your own views, queries, reports, and dashboards, as you gain confidence and discover new needs.

Risk management
No ERP system is going to eliminate all potential risks, but it helps if your chosen ERP solution—the backbone of your business—is itself secure, reliable, and scalable. It should also give you the visibility to simplify governance and compliance.

Many small-to-midsize manufacturers choose software-as-a-service (SaaS) ERP because they can’t devote nearly as many resources to infrastructure, application, and data security—or to IT maintenance and support—as a specialized IT service provider can. As well as offering a more reliable and secure service, a SaaS ERP solution can give you automatic access to updates and upgrades that keep you compliant with regulatory changes. This means you can stay on top of new financial controls, tax laws, reporting requirements, and international trade requirements. Businesses often point to SaaS models as a way of keeping pace with technology-driven change to remain competitive with the best, forgetting that there are significant risk management advantages too. If you choose the SaaS model for greater business assurance, make sure the provider offers you a satisfactory level of control over how and when updates and upgrades happen.

At the same time, even if you don’t want to take advantage of ERP delivered through a SaaS model, look for a solution that offers a flexible cloud-based architecture in an onsite hosted option. That way you get most of the benefits of a cloud model—but in your preferred hosting environment. Ideally, you also want the flexibility to move to a SaaS version in the future that will be better for your business.

Irrespective of whether you call it Industry 4.0 or digital transformation, it doesn’t change the fundamental nature and scale of the revolution taking place, nor the challenges facing regional manufacturers as they try to identify and take the right steps to survive. But by investing in the right ERP platform, manufacturers can face these challenges head on and not just survive, but go on to thrive, and grow.