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The 5 Risks of Delaying Migration to the Cloud

The 5 Risks of Delaying Migration to the Cloud 150 150 David Sheriff

The 5 Risks of Delaying Migration to the Cloud

By: Dan Johnson

There has been so much written about the benefits of migration to the cloud that it’s puzzling why there are still any number of companies that delay doing it. The cloud provides the opportunity to virtually eliminate capital investment in IT infrastructure, and that’s just for starters. There’s also the human resources the cloud frees up from systems operation and maintenance, not to mention software purchases and upgrades are no longer needed. So why the delay?    Some cite security concerns. Others claim their business or manufacturing processes are so unique or proprietary that they can’t see how the cloud could possibly provide the same level of customized functionality they have with their internal legacy system. They unknowingly suffer from “terminal uniqueness” – a condition that paralyzes business owners or managers and prevents them from migrating to the cloud because they are convinced their IT situation is singularly unique and impossible to duplicate.  Cloud adoption, however, is making significant advances in some business areas such as human resources, customer relationship management (CRM), and marketing. Where cloud migration lags is in finance, order entry/execution, and production. Some of this can be attributed to security concerns. A larger issue is that ERP and supply chain management (SCM) software developers have not yet delivered comprehensive SaaS applications for complete ERP/SCM functionality. This is perhaps the greatest current obstacle to cloud manufacturing adoption. However, there is a footrace going on right now between the major software developers to bring SaaS solutions to market, so this situation will change quickly as SaaS ERP and SCM solutions become more readily available and manufacturers quickly adopt them to reap their significant benefits.The risks are substantial for those enterprises that hold back from migration to the cloud, from both an operational and competitive standpoint. Five major risks of delaying migration to the cloud include: 1. Opportunity limitationsCompanies tied to legacy on-premise systems are transformationally hamstrung. The cloud provides the agility to take advantage of sudden business opportunities. The cloud makes finding and retaining the best possible human capital easier as well. The most talented workers want to use the latest tools and not waste time and energy learning a legacy system limited by whatever technology runs it. The cloud enables enterprises to adapt and utilize the latest technologies to gain new efficiencies and encourage continuous improvement.2. Ongoing infrastructure costsAn on-premise IT infrastructure keeps the opportunity to grow the business in the hands of the IT department. And once an investment has been made in infrastructure, it’s hard to let it go. Networks and data centers are expensive, and IT is reluctant to give them up. But expenses continue with every passing day, including electricity, software and hardware upgrades, maintenance, and staffing, to name a few. The cloud alleviates all those issues and enables management to invest elsewhere, where the money can bring more value to the organization. 3. Delayed competitive responseThe Internet and social media have fundamentally altered the commercial landscape. Facts and opinions crisscross the Web instantly. Consumer trends come and go with lightning speed. Disruptive technologies can blindside an unsuspecting brand and turn it from being a market leader one day into a has-been the next. To maintain a competitive edge, no matter what your business, requires the agility, flexibility, and scalability that can only be found in the cloud.4. Business continuity issuesThe business world runs on data. Nothing is more dangerous than service disruptions that can cause an IT ecosystem to grind to a halt because an on-premise data system has been compromised in some way. The cloud provides a safe, efficient, and flexible way to disperse IT assets and redundancy across the country – even around the world — minimizing the possibility of service disruptions.5. Resource drainThe modern, successful manufacturing environment is all about efficient use of resources. Operating an in-house IT infrastructure, especially in a larger enterprise, can be a considerable drain on resources, including personnel, space, power, heating, cooling and the money required to maintain it all. Moving on-premise IT systems to the cloud is a quick and economical way to save resources.Migration to the cloud for most manufacturers should be a question of “when”, not “if,” and the sooner the better. Many of the benefits for manufacturers are the same as for non-manufacturing companies – streamlined ordering and procurement, faster process implementations, improved data collection and analytics.If your company’s not already planning its migration to the cloud, it’s time to get moving. 

Cloud Infrastructure – The Actual Cost of Cloud Manufacturing

Cloud Infrastructure – The Actual Cost of Cloud Manufacturing 150 150 David Sheriff

Cloud Infrastructure – The Actual Cost of Cloud Manufacturing

By: Dan Johnson

For any company considering a move to the cloud, it doesn’t take long for the conversation to turn to cost. After all, moving to the cloud is a smart, money-saving move for just about any organization, even complex manufacturing operations, but there are costs involved. In fact, moving to cloud is perhaps the one area where an admission of ignorance regarding cost is far smarter than making assumptions.Unlike the early days of cloud computing when costs were simpler – essentially swapping out servers and software – today things are a little more complicated. Companies need to look past simple capex and opex costs and a little more closely at things such as IT operational services and support, process automation, virtualization, and business processes. To understand the real costs of migrating a manufacturing business to the cloud – cloud manufacturing — you have to put it in context with on-premise system costs. There are primarily three basic elements that comprise an on-premise IT system:

  • Infrastructure: this is the hardware of an IT ecosystem, including such components as servers, routers, cabling, workstations, and firmware. To use a house-building analogy, it is the system foundation.
  • Platform: this is the database and middleware that forms the IT plumbing and wiring, helping to pump data through the infrastructure. 
  • Software: Applications are the furnishings and appliances that run the household and make it functional.

Each of these three components must be purchased, installed, and integrated to create a fully-functional IT environment. In addition, personnel must be hired and trained to operate and maintain it all. Moving to a cloud infrastructure (in this case, we’re referring to the entire, integrated IT system, not just the foundation of it) provides savings across all three elements. Utilizing SaaS ERP for cloud manufacturing can save as much as 75 percent of out-of-pocket infrastructure and platform expenses when you look at the cost of purchasing and upgrading the hardware necessary to install, operate, and support an on-premise IT system.Software costs, however, are approximately the same when compared over a five-year period. The overall cost of the initial license and support fees for on-premise ERP software and the subscription and support costs of SaaS ERP, over five years, are generally a wash.Where there is considerable additional savings, though, is in implementation. Manufacturing enterprises that utilize SaaS ERP often save as much as 50 percent in implementation costs over on-premise software. Further savings, especially for larger enterprises, can be realized in reduced headcount as datacenter functions move off premise and into the cloud.As a cloud infrastructure and cloud computing free manufacturers from the burden of implementing, upgrading, and operating an on-premise IT ecosystem, the newfound flexibility and agility provided by the cloud leaves them poised for innovation and new business opportunities.

The Cloud and Innovation in Manufacturing

The Cloud and Innovation in Manufacturing 150 150 David Sheriff

The Cloud and Innovation in Manufacturing

By: Dan Johnson

You can’t go to an industrial technology trade show, conference, or seminar today without someone talking about innovation. In many cases, it’s a fairly nebulous reference to some vague improvement in processes or operational efficiencies. It’s tough to wrap your arms around.However, the importance of innovation in manufacturing can’t be emphasized enough — today’s highly competitive markets demand innovation in manufacturing in order for manufacturers to succeed and grow. And we’re not talking about innovative new products or a trendy new approach to a tried-and-true process. No. What we’re really talking about is innovation at all levels of manufacturing operations – both production processes and management. Let’s be clear – innovation does not come without some risk. How do you minimize that risk? By lowering capex and opex. And one of the best ways to do that is to move appropriate processes and operations to the cloud. This, in turn, reduces infrastructure, and less infrastructure sets the stage for a faster, more agile organization.   Innovation is not possible without agility. Manufacturers looking to gain a competitive edge are turning to the cloud in increasing numbers as a principal means for gaining the agility to drive innovation and growth.The cloud enables turn-on-a-dime responses to changing market trends and conditions, accelerating the product development lifecycle and streamlining supply chain management. The cloud fosters innovation in manufacturing by reducing burdensome IT costs, freeing up resources, and removing organizational and geographic boundaries. Collaboration becomes easier, process improvement faster, and the manufacturing environment more flexible and dynamic in general, priming the pump for innovation.In this modern economy, data drives everything. For manufacturers embracing a Lean methodology or other efficiency-based business strategy, collecting, analyzing, and utilizing ERP data is critical. The cloud provides the virtually unlimited storage space and scalable computing power necessary to make the most efficient use of data and mine its potential for fueling innovative product development.On a more tactical level, the cloud takes operational control out of the hands of the IT department and places it directly with business and shop floor managers who can quickly change and enhance functionality. Cloud-based APIs and modules can be added and removed to accommodate changes and support on-the-fly innovation and improvement. In fact, the ability to integrate, manage, and monitor all the resources on the shop floor through the cloud can have a dramatic impact on virtually every aspect of manufacturing.Managers and workers can directly see improvements in information and process flows that can lead to improved operations and product quality. Real-time data and instructions are managed in the cloud to run processes, improve utilization, and reduce energy consumption. In short, the cloud becomes a core platform for integrating new technologies, driving process efficiency and innovation in manufacturing operations and the finished goods they produce.

How Cloud Computing Can Improve Your Manufacturing Business Agility

How Cloud Computing Can Improve Your Manufacturing Business Agility 150 150 David Sheriff

How Cloud Computing Can Improve Your Manufacturing Business Agility 

By: Dan Johnson

The concept of agile manufacturing first popped up over a decade ago as manufacturers were looking for the Next Big Thing beyond Lean manufacturing. Agile manufacturing was seen as a natural evolution, the next link that would take manufacturing from being simply streamlined (“lean”) to flexible and versatile as well (“agile”).Over the past ten years or so, agile has become popular because it’s the ideal business strategy for companies in highly competitive markets, enabling them to respond quickly and efficiently to market changes. Companies that have embraced agile manufacturing typically have strong supplier relationships and empowered employees focused on delivering quality products to meet customer demands.Cloud computing is the next logical step for manufacturers who have come to the agile concept recently or are just now considering it and still using an on-premise IT infrastructure and ERP system. Think of it this way – agile cloud manufacturing is simply taking all those streamlined, agile premise-based systems and processes, stripping away the resource-intensive, on-premise infrastructure and transforming it all into industrial-production-systems-as-a-service.The real power of the cloud is the way it enables manufacturers to spend less time and money managing their IT and more time growing their businesses. Users can now access all that operational functionality in the cloud – process design, production management, business processes, and virtualization, to name a few. An added benefit? The cloud supports closer, easier collaboration with suppliers and customers without proprietary IT walls between them.Cloud computing improves business agility by: Empowering employees The cloud enables workers to do their jobs better, faster, and with greater flexibility by removing the handcuffs of proprietary on-premise systems. Workers today are already used to living in the cloud, so to perform their jobs there as well is an intuitive extension requiring minimal training, unlike having to learn an arcane legacy system. Employees are better able and more inclined to fix problems on their own if they no longer have to constantly enlist IT’s help to program process changes.Fueling growth Cloud-based solutions enable companies to rapidly establish new business units or expand existing operations virtually anywhere without having to expand or integrate IT infrastructure, substantially minimizing both capital investment and risk. They also offer better business results by making it easier to share information with new or existing partners and suppliers regardless of where they are located — around the corner or around the world.Simplifying compliance Rapidly evolving markets and industries can often cause compliance headaches for manufacturers. Aligning processes and products with regulatory requirements can be a daunting task, but migrating to a cloud-based SaaS strategy offers a number of benefits over a legacy on-premise model, enabling enterprises to reign in the complexity, cost, and risk of compliance. Cloud computing supports automatic updates to simplify the process of keeping systems current. It also ensures that everyone in the company has access to the most current information and tools to do their jobs effectively and efficiently.It’s not hyperbole to say that cloud computing and agile cloud manufacturing can transform your business. Cloud computing translates into greater visibility and flexibility across every function and department, providing faster innovation as well as improved productivity and efficiencies.

Manufacturing ERP Systems and the Cloud

Manufacturing ERP Systems and the Cloud 150 150 David Sheriff

Manufacturing ERP Systems and the Cloud

By Dan JohnsonMost companies, like people, hate change. It’s much easier to not rock the boat, especially when change can be scary, like moving key manufacturing processes and systems such as ERP to the cloud. The fact is, with cloud-based ERP initial costs are typically much lower because you simply implement the software you need to meet your specific requirements – software-as-a-service (SaaS) — and then access it through your company’s internet connection. The cloud ERP provider hosts and maintains all of the IT infrastructure for you, ensuring that the system is always running, that the data is secure, and that product enhancements are rolled out painlessly without disrupting or eliminating your previously implemented customizations.Meanwhile, software developers continue to improve cloud-based SaaS ERP functionality. As they develop more comprehensive, end-to-end solutions to better meet the evolving needs of discrete manufacturers, the benefits of moving to the cloud are becoming clearer:Faster implementation and return-on-investment (ROI) The flexibility and scalability of the cloud means ERP implementations can be tailored to meet a variety of immediate and long-term needs, speeding up initial implementation and achieving ROI faster. Since cloud ERP requires no additional hardware, your business doesn’t have to waste time procuring and installing IT infrastructure. Cloud ERP can be easily implemented across multiple regions, subsidiaries, and divisions with minimal cost and significant time savings — cloud ERP deployments typically take only 3-6 months compared to the typical 12 months for an on-premise solution. Faster, more flexible configuration With on-premise legacy manufacturing ERP systems, every customized manufacturing or business process change has to go through IT or perhaps an external supplier or consultant, making change slower and more costly. The cloud gives the power of custom configuration to the actual user, bypassing IT and outside providers to achieve faster results while saving time and money. Hosted SaaS ERP solutions are continually upgraded by the provider so employees are assured of working with the latest ERP application version and having previous custom modifications carried forward with it. Better enterprise-wide access to data On-premise manufacturing ERP systems tend to silo transactional data, making it difficult to share between departments and business units. Cloud-based ERP eliminates silos and makes it easier to share data across platforms and the entire enterprise, providing real-time, accurate data that can be accessed via the Internet anywhere, any time on workstations, desktops, laptops, smartphones, and tablets. Enhanced security With cybersecurity a real and growing concern for manufacturers, cloud-based ERP provides better security in addition to improved accessibility.  Many cloud-based ERP solution providers prioritize securing their systems and provide strong, industry standard data security certifications such as PCI DSS and SAS 70 standards compliance. Yes, cloud computing for manufacturers, such as hosted SaaS ERP, is relatively new and for some companies it can be hard to overcome security concerns. But the fact of the matter is that much of your day-to-day computer functionality – personal and professional — is already cloud-based, whether you know it or not. The truth is, security is constantly improving and breaches are more rare than you might think. The benefits of moving manufacturing ERP to the cloud are too great to let a little fear and inertia get in the way.

Using Lean Manufacturing Solutions to Eliminate 7 Types of Waste

Using Lean Manufacturing Solutions to Eliminate 7 Types of Waste 150 150 David Sheriff

Using Lean Manufacturing Solutions to Eliminate 7 Types of Waste

By: Jaime Bzdok

Lean manufacturing solutions can help reduce raw material costs as well the time and cost of manufacturing while minimizing returns and quality issues. The goal is to deliver products faster, with increased quality, at lower costs, when and where customers want them. The challenge, of course, is how to accomplish all of this. In recent decades, many manufacturers have adopted lean manufacturing solutions to combat inefficiencies, optimize operations, improve business processes, lower operating costs, and increase profitability. The basic concept behind all of this is to essentially do more with less. That means processing fewer transactions with fewer resources such as people, machinery, materials, and energy. Fundamentally, lean is all about greater operational efficiency, continuous improvement and the elimination of waste throughout the organization. Waste is the primary enemy of lean manufacturing solutions. The process of eliminating waste requires addressing seven key kinds of waste: 

  • Inventory
  • Over-production
  • Unnecessary or inefficient worker or machine motion
  • Unnecessary material movement
  • Waiting
  • Inefficient or ineffective processes
  • Rework and scrap 

What makes eliminating waste particularly troublesome is the close inter-relationship between all seven forms of it. For example, if a company is over-producing due, say, to faulty forecasting or misplaced optimism, that causes excessive inventory which results in unnecessary material movement and worker/machine motion and, ultimately, products that don’t ship which impacts revenue and profits. In fact, over-production is perhaps the leading type – as well as cause – of waste. Over-producing triggers excess in virtually every other aspect of manufacturing: work-in-process (WIP), inventory, and movement, all of which cause excess lead times because everything ends up sitting and waiting for other processes to be completed. Many organizations have trouble with this because they mistakenly believe if they manufacture more products they can set the process up once and amortize it out over more parts to reduce cost. What they’re not realizing is that it could actually cost less if they set up multiple times because they’re not paying for overtime or to have excess stock sitting on shelves. The key to waste management: evaluating ALL the right metricsWhat this scenario reveals is that companies utilizing lean manufacturing solutions often focus on a single waste-reduction solution – such as increasing efficiency – when there might be a number of solutions of equal or greater importance. For example, instead of concentrating solely on efficiencies (fewer set-ups) they might streamline operations and reduce waste and cost better with more set-ups. In fact, companies that focus on efficiencies tend to create larger batches because it appears to cost less money. In reality, the opposite is often true. Instead, companies wrestling with waste caused by over-production should gain a better understanding of throughput accounting, focusing less on efficiencies and more on throughput. For anyone not familiar with throughput, it’s the amount of money left for labor costs after subtracting material and outside services costs from sales. So instead of over-producing to take advantage of efficiencies of scale, it’s more important to produce only what’s needed, ultimately increasing throughout and making room for more deliverable orders and more revenue. Throughput, total operating expenses, cycle times, delivery performance – these are all metrics that can be as equally important as efficiencies in achieving waste reduction when utilizing lean manufacturing solutions.

What You Need To Know About Industrial Analytics to Optimize Your ERP

What You Need To Know About Industrial Analytics to Optimize Your ERP 150 150 David Sheriff

What You Need To Know About Industrial Analytics to Optimize Your ERP

By: Scott Jessup

It seems like only yesterday that enormous software providers such as Oracle or SAP had the resources and sophisticated tools to integrate business intelligence with enterprise resource planning (ERP). Only big, expensive, enterprise-level ERP systems had the data collecting and processing firepower to conduct analysis on any meaningful level – it was just too expensive to run and maintain.But that’s all changed.Today, ERP systems are remarkably faster, more flexible, more agile, and more powerful – at a fraction of the cost of those legacy systems. Modern manufacturing now has the tools to gather, monitor, manage, and analyze data faster and more easily than ever, using industrial analytics to turn information into knowledge and knowledge into improved processes and performance.Today’s ERP systems now enable even small to medium size businesses (SMBs) to gather vast amounts of information from multiple processors across a complex environment. But the trick is how to easily and efficiently extract and analyze that information in a useful manner.Some people believe that ERP is all about entering information into the system. In reality, it’s more about getting information out of the system and utilizing analytics to create value by identifying weaknesses and bottlenecks that can be fixed so processes can be optimized. After all, inefficiencies are the result of specific behavior (certain tasks are performed a certain way) and the purpose of analytics is to drive behavior.The challenge, though, of using industrial analytics is the possibility of driving the wrong behavior. For example, if someone gets punished every time there’s a stock-out, the purchasing agent’s going to make sure he or she buys plenty, which can lead to overstocking.Industrial analytics vs. reporting
Let’s be very clear – reporting is NOT analytics. Reporting is simply the act of providing data and numbers by themselves don’t provide anything. There needs to be a goal or benchmark to which the numbers can be compared. It’s about using measurements for analysis to identify patterns and establish root causes to improve existing operations. Measurement should never be done just for measurement’s sake. The goal should be the collection and interpretation of real-time information.Reporting is simply a bunch of data. A list of every customer order entered or invoices sent out. Analytics helps you understand what this data means. It can be used to draw an informed conclusion so that behavior can be modified to improve processes, performance, and profitability. Analytics, when aligned with corporate strategy and business goals, can help a company better understand where it is compared to where it wants to be.So what operational areas are important to focus on for industrial analytics? Here are some basic metrics to consider: 1. Machine utilization
It’s pretty simple. If your machines aren’t running, you’re not making money. However, it’s not quite that simple. Beyond simply ensuring your machines are running, it’s important to determine if they’re running efficiently and effectively. For example, are you making the right products at the right time? Are you making them on time?2. Inventory turns
Analyzing inventory turns helps you determine if you’ve got the right product mix. If you’re turning inventory on a timely basis, then you’re producing the right product mix. 3. Purchasing
Analyzing purchasing is popular with many manufacturers. Are you purchasing too much, too little, or just enough? Analyzing inventory and purchasing together can be particularly valuable.4. Supplier performance
A reliable, efficient supply chain is clearly important, especially if you’re practicing a lean strategy. Supplier performance affects everything, from planning to production to costs and customer satisfaction.5. On-time receiving
Most companies just look at what was received and when, but that’s not quite enough. Instead, it’s important to also analyze when it was scheduled to be received. Measuring the performance against the plan yields much more valuable information for optimizing your supply chain.6. Rework/scrap
Rework and scrap are direct costs that just suck money out of companies. However, some organizations miss an important component of this metric, and that’s rework and scrap within work-in-process (WIP). It’s easy to measure rework/scrap against products already manufactured and in inventory, but what’s missing is the fuzzier but vital metric of additional raw material and time consumed doing rework before the product is finished.These six areas of industrial analysis are good places to start if you company is not already analyzing ERP data. However, none of it will matter if your workers are not actively engaged in the analysis. They are the ones most familiar with operational processes and can best drive process improvement. By using industrial analytics to gain valuable knowledge and insights from your ERP data, you and your employees are better positioned to drive positive behavioral changes that can improve overall organizational performance and ultimately profitability. 

5 Considerations When Choosing Manufacturing ERP Software

5 Considerations When Choosing Manufacturing ERP Software 150 150 David Sheriff

5 Considerations When Choosing Manufacturing ERP Software

By: Dan Johnson

Choosing manufacturing ERP software can be a daunting task for today’s modern discrete manufacturer. There is wide variety of systems available for enterprises of all sizes and in all industries. So what’s really important in selecting manufacturing ERP software?Here are five important considerations that might surprise you when it comes to evaluating and choosing a manufacturing ERP system:1. Can the system improve your entire business, not just the discrete manufacturing part? Many manufacturers make the mistake of considering only how manufacturing ERP software will handle the discrete manufacturing portion of their business, not how it can affect their entire organization. Simply fixing a specific bottleneck or process may not warrant the disruption that can result from instituting a fundamental change such as installing a new ERP system. Instead, companies should be considering issues that are so substantial they will require chaotic change in order to make significant improvements. It’s these kinds of challenges that should establish the criteria that drives the crucial decision of selecting the right ERP system. For example, let’s say you’re having a problem creating on-time shipments, which increases work-in-process (WIP) and cost of goods sold. This puts your ability to deliver product in jeopardy. This is a very expensive problem that needs to address not just work-in-process, but dynamic scheduling and processes affecting things in addition to WIP, such as supply chain management, inventory control, and delivery.2. Will the manufacturing ERP software pay for itself in 18 months? If you’re a complex discrete manufacturer, you need to look at an ERP investment in the same way you look at purchasing a piece of equipment for your shop, with a similar ROI. Some CFOs will look at the total cost of ownership (TCO) instead, which might go out, say, over five years and is used to drive tax benefits. But that’s not telling you if you’re getting a solid return on investment. And that’s what truly affects your bottom line. Is your manufacturing ERP software going to pay for itself in a reasonable amount of time, which for today’s manufacturers is typically within 18 months?3. What manufacturing ERP software do the competitors I respect use? The reason is simple. If someone’s out there kicking your butt, it’s wise to know what tools they’re using, including their ERP system. Even if you end up buying a different system, evaluating your competition’s ERP software will enable you to gain an understanding of its strengths and weaknesses, which will provide some competitive advantage.4. Is my ERP consultant focused on helping me solve my problems or just on selling me software? Purchasing and implementing manufacturing ERP software can be an expensive prospect for today’s complex discrete manufacturers. That’s why it’s so important to select the right ERP consultant. You want to partner with someone who will help you work through the problems facing your business organization and manufacturing operation to determine the most appropriate ERP solution. 5. Is the software intuitive enough for employees to learn and use quickly? Today’s new employees are often Millennials who are used to quickly and easily learning new apps and operating platforms on their own. Most are simply unwilling to sit in a classroom and be taught how to use a piece of software and learn the theory behind it. It’s important that they be able to embrace and exploit manufacturing ERP software for both the company’s and their own success.     Manufacturing ERP software, chosen carefully and implemented properly, can be a transformational business initiative that can not only improve your discrete manufacturing floor operations, but your entire company as well. These five considerations will go a long way in helping you make the right ERP software decision.

3 Manufacturing Trends and What They Mean For Your ERP

3 Manufacturing Trends and What They Mean For Your ERP 150 150 David Sheriff

3 Manufacturing Trends and What They Mean For Your ERP

By: Dan Johnson

Today’s modern discrete manufacturing is definitely not your father’s way of making things. Technological advances, business and operational process evolution, and tightening markets have all contributed to sweeping changes in the manufacturing industry and emerging manufacturing trends that can affect your organization and success. As a result, developments in ERP software for manufacturing, supply chain management, and business processes seem to occur every day to meet rapid and ever-changing industry demands.  Here are three of the biggest manufacturing trends and what they could hold in store for your business and ERP strategy:1. Zero-based inventoryInterestingly, this is not a new trend — it first came to light about ten or fifteen years ago. People have been talking about it for quite some time but have not been able to perfect it. Zero-based inventory means the manufacturer has zero inventory in both raw materials and finished goods. It requires meeting the service demands of customers while minimizing the manufacturer’s variable costs. This, in turn, requires a fairly trick balance of several production variables.To efficiently manufacture finished goods you need to have raw materials, people, machining processes, and perhaps assembly processes. In order to minimize the costs of all four of these elements, it’s important to manage constraints – the things that can limit or negatively impact process performance. This is what many manufacturers have trouble with, which is why zero-based inventory has remained so elusive. How do you manage constraints in the supply chain to reduce operational costs? This is perhaps the number one trend in manufacturing – optimizing processes to minimize constraints, maximize performance, and achieve zero-based inventory.2. Utilizing Software-as-a-Service (SaaS) to reduce operational costsMost manufacturers will readily admit they are not IT experts. They are experts in manufacturing finished goods for customers and prefer not to get bogged down in information technology and ERP-related issues. As a result, increasing numbers of manufacturers are turning to SaaS as a way to reduce operational costs, transfer IT concerns to third-party experts, and enable the manufacturer to focus on their core business.The reasons for offloading IT support with a SaaS strategy can be as varied as the types of manufacturers. A main reason why SaaS is one of the most popular manufacturing trends is that it enables manufacturers to make better use of internal resources. Another is to gain better control over software upgrades. This can mean taking advantage of automatic upgrades handled by third-party software experts, selectively upgrading to accommodate customized or legacy software, or not upgrading at all.3. Utilizing best-of-breed solutions that easily integrate with today’s open-architecture ERP systemsManufacturers are no longer satisfied with buying a single ERP solution, opting instead for an open-architecture system which enables them to take advantage of best-of-breed elements and bring them together in a common platform.This, too, is not a new trend, but one that is still growing in popularity after gaining traction through Oracle around 2005. Within the past three years, though, we’re seeing a rapidly increasing number of manufacturers taking a best-of-breed approach, integrating, for example, Infor Manufacturing, Salesforce CRM, Workday for human resources, and Oracle’s configuration management tool into a customized, open-architecture ERP solution. What’s really interesting is how all three of these major manufacturing trends are being affected by the Internet-of-Things (IoT) and information coming from multiple systems and devices. For better or for worse, this growing avalanche of Big Data is what’s driving business decision-making today.To determine what information is relevant and turning all that data into usable, useful knowledge, companies are increasingly adopting sophisticated business analytics as an integral part of their ERP. IoT is really driving the consumption of business analytics, the problem is, companies are having trouble finding the significance of the data being collected because it’s growing exponentially. As far as manufacturing trends are concerned, what this all points to is the need to ensure that robust business analytics are a major part of your ERP system. Regardless of whether you, as a manufacturer, are focused on achieving zero-based inventory, or moving to the cloud and a SaaS business model, or adopting a best-of-breed strategy, proactive analytics will be a key driver for successful business and operational decision-making.

How IoT in Manufacturing Will Change The Way We Make Things

How IoT in Manufacturing Will Change The Way We Make Things 150 150 David Sheriff

How IoT in Manufacturing Will Change The Way We Make Things

By: Dan Johnson

For many manufacturing companies, ERP has been a pinnacle of sorts for technological innovation. Sophisticated ERP applications enabled them to automate a host of functions and processes to help streamline both shop floor and business office operations.And then along comes the Internet of Things. A new wave of sensors and connected devices is unleashing a torrent of data on unsuspecting companies. Research firm IDC estimates that within five years, 40 percent of all data will be generated by machines – some 20 to 50 billion devices. Companies are awash in data, much of it unstructured and unutilized.With the growth of the IoT in manufacturing we’re going to see the parallel growth of a new job category for data scientists – what could be called an “actuary of data.” Someone with the unique skills that enable them to identify the usefulness of data within a supply chain and make it consumable for the manufacturer to improve operations and outcomes. As companies wrestle with how to effectively employ the IoT in manufacturing, lots of thought and discussion swirl around it, much of it struggling with the central question, “what information is critical to me for driving my business forward?” IoT is blurring the boundaries between physical and virtual systems. ERP, supply chain management (SCM), and other systems used by manufacturers will eventually be seamlessly interconnected across platforms, people, equipment, and processes.   Manufacturers lured by the siren song of IoT connectivity and the potential wealth of data associated with it should start by asking themselves several questions: 

  • What new data becomes available through the IoT?
  • Of that new data, what new information does it yield and what new knowledge does it provide that will be a game-changer for my business?
  • How will that information help me serve my customers differently – and better? 

The challenge for ERP systems will be to collect all this unstructured data from devices and connect it with the structured data in the business. Only then can it be effectively analyzed and utilized as a key component of a lean strategy and a catalyst for continuous improvement.According to IDC, only about a third of manufacturers currently utilize the IoT in manufacturing, but early adopters see value in it for cost and competitive advantages, such as: 

  • Using the data for value-added customer services
  • Connecting assets to improve efficiency and reduce downtime
  • Improving supply chain visibility and efficiency

There is no question that over time the Internet of Things will provide a phenomenal benefit to a wide range of industries and businesses. Transportation, process manufacturing, communications, aerospace – anywhere there’s a controlled process – will all be significant beneficiaries of IoT capabilities.However, manufacturers looking to turn themselves into connected enterprises via the IoT should carefully consider the risks. Every connected endpoint is providing intelligence to a larger information system and potentially vulnerable to hacking and attack.But along with risk comes the opportunity for reward. When assets are connected to the IoT in manufacturing, manufacturers can improve performance, optimize scheduling, reduce operational risks and minimize total cost of ownership (TCO).