Note: Before jumping into my post, I wanted to share a video that was recorded as part of Epicor Insights Live. They asked me to share my thoughts on Industry 4.0 and you can see what I said here – Nick
I recently attended Epicor’s user conference, Insights, in Nashville, TN. The announcements made during the conference, such as those related to Epicor’s cloud-first strategy in support of business flexibility and innovation, illustrated how the company remains committed to providing customers with a platform for competitiveness in the new business environment.
This new business environment, especially the emergence of Industry 4.0, was a major theme at the event. For the uninitiated, Industry 4.0 refers to the way cloud technology, analytics, and the Internet of Things are transforming manufacturing. Indeed, through a combination of intelligent automation and analytics, forward-thinking manufacturers are creating a more productive and efficient manufacturing environment.
I think this is an important theme, and I am glad that Epicor chose to focus on it. ERP solutions such as Epicor’s provide the foundation for any Industry 4.0 strategy. In my recent report, ERP’s Role in the Modern Manufacturer: Supporting the Needs of Industry 4.0, manufacturers were asked to indicate their top two goals for the coming year (Figure 1). Of course, profitability came in at the top; that will never change. What is changing, however, is the way organizations go about achieving profitability.
Figure 1: Top Manufacturing Goals
To succeed in today’s environment, manufacturers must explore new ways to deliver innovative products and services. For many, this has necessitated a change in processes and even a change in business models.
For example, as customer-centricity increases across the industry, products need to become more customizable. This calls for changes to both production and delivery methods, changes that are difficult to pull off with traditional tools and workflows. It is therefore not surprising to find that the second highest priority for manufacturers right now is modernizing business systems.
As it turns out, when we asked Leaders to name their top two strategies for the coming year, modernizing technology came out near the top (Figure 2).
Figure 2: Strategies of Leading Manufacturers
Through technology modernization, Leaders introduce improvements across their operations, helping them compete in an Industry 4.0 world. Such improvements include streamlining processes to increase productivity, supporting and encouraging collaboration across the organization and the supply chain, and focusing on delivering products and services that will grow the customer base. Together, these strategies are the path to success in the modern manufacturing environment.
ERP is the foundation for such success. The vast majority (83%) of surveyed manufacturers have an ERP solution in place. But not all ERP is created equal. In Industry 4.0, ERP must reflect the goals of the modern manufacturer, supporting the technologies that enable faster access to useful data and making efficient, agile, and automated processes possible (Figure 3).
Figure 3: In Support of Industry 4.0
As you can see, leading manufacturers are over three times as likely to have deployed their ERP solution in the cloud. Indeed, as Figure 3 also shows, Leaders are less likely to have deployed their solution using a traditional on premise model.
Because cloud solutions can be accessed (via the Internet) from anywhere, they provide companies with a central source for real-time data and communication regardless of geographic boundaries. Additionally, cloud solutions are continuously updated by software vendors. This ensures their continual evolution to support new best practices, accommodate new regulations, and connect with emerging technologies.
In other words, the cloud deployment model helps make manufacturers flexible, fast, and effective.
It’s also worth highlighting that Leaders are 16% more likely to have integrated business analytics into their ERP system. This allows them to do more with their data, from analyzing the effectiveness of processes and determining profit trends, to monitoring customer data. All of this analysis leads to decisions that impact the bottom line.
Furthermore, an organization connected to the Internet of Things can revolutionize the way it delivers products and services. Why? Because it can thus analyze equipment, machinery, and product data, not to mention leverage a range of devices that support process change.
The Internet of Things is a core component of Industry 4.0. While today’s Leaders are currently more likely to integrate ERP capabilities with the Internet of Things, overall adoption, as you can see, is still relatively low.
Nevertheless, another Aberdeen survey found that 38% of manufacturers plan to implement Internet of Things technology in the next 12 months. Seventy-two percent (72%) plan to do so within the next three years. Organizations that fail to see how this technology can impact their organization will be left behind.
It is a time of tremendous change in manufacturing. ERP vendors are looking for ways to aid their customers in growth, but that requires a commitment to support emerging technology. Industry 4.0 is forcing manufacturers, and their software vendors, to think differently about technology’s role.
Within this context, Epicor is poised to be a partner for innovation in Industry 4.0.