The manufacturing industry is constantly evolving and modernizing, presenting new challenges for small and midsize manufacturers. Supply chains have become more global, more complex, and now with the pandemic, more restrictive. Customer demands are pushing for greater convenience, better quality, and lower costs. Employees expect modern systems, mobility, flexibility, and a connected work environment.
The current state of the industry has shown how quickly things change with materials in short supply and long wait times for deliveries. To meet these modern-day challenges and to help them grow, manufacturers are digitally transforming utilizing technologies such as the Internet of Things (IoT), Big Data, Cloud Computing, Robotic Process Automation (RPA), Machine Learning, Additive Manufacturing, and Augmented Reality.
What is digital transformation?
Simply speaking, digital transformation is using modern, digital technology across an organization to improve operations, processes, and the value delivered to customers.
Why is digital transformation needed?
The world is becoming increasingly digital, so companies need to also become digital. Having a digital backbone and core digital business systems allows companies to continually evolve, adapt to their changing business needs and processes, and meet the needs of customers and employees. Employees want systems that allow them to work easily and efficiently. Customers want to have a seamless experience and interact with companies in real-time – place online orders, check their order status, etc. So organizations must invest in innovative tools that will meet both employees’ and consumers’ expectations. If they don’t, they’ll simply go to another company that does. It is about survival and competition.
Innovation leads to more innovation. As new technology helps to improve the internal workings of a business, such improvements lead to innovation across the company’s products and services, and perhaps even to continuous improvement mindset and culture. Then, as consumers get used to the latest improvements, they anticipate the next innovative change. Businesses need to be able to continually evolve and they need the technology that will help them drive change.
How does an ERP system help with digital transformation for manufacturers?
An ERP system is the backbone and central business system of a business. When companies implement a modern ERP system that becomes their digital backbone. Having a digital backbone that supports adaptability, agility, and innovation allows companies to grow, evolve to be more competitive in the marketplace, and better meet customers’ current and future needs – more easily and effectively.
For manufacturers, since they have unique operational processes, not only require a modern ERP system that supports their digital transformation, but also an ERP system that is suited to their particular manufacturing processes. They are best off with a solution that can automate their manufacturing processes and provide the latest technology that can utilize all of the innovation that comes along with Industry 4.0 such as IoT, machine learning, robotics, blockchain, and more. An industry-specific system has all of the modules to support manufacturing activities and it can help manufacturers increase productivity and run lean.
Benefits of digital transformation using Manufacturing ERP
When you incorporate a modern industry-specific ERP system into your manufacturing business you’ll be able to take advantage of the latest technologies and increase your ability to compete. Below is a breakdown of the benefits that can be achieved by transforming your manufacturing business digitally.
- Improved customer relations– Providing customers with access to their order information, improving product quality, providing faster deliveries, forecasting demand better, and understanding more about customer needs, all help to improve the customer experience.
- More efficient production– The ability to innovate your plant floor, connect to machinery, evaluate employee performance, optimize your warehouse space, and improve workflow, helps you to achieve better productivity.
- Reduced costs– Increased efficiencies, better visibility, and greater use of resources all help to lower costs and increase profits.
- Enhanced processes– ERP uses technology to streamline processes with connectivity, automation, and insight so staff can work better and enjoy their jobs more. It also allows collaboration across the company for work to get done more efficiently.
- Greater control– Being able to see in real-time what is happening across the organization and to monitor production and resources, allows you to stay on top of operations and make changes as needed.
- More strategic– A digital transformation with a modern manufacturing ERP system lets you quickly leverage your data so you can truly understand what is going on in the business, see trends, understand costs, notice opportunities, and forecast demand. All of that information helps you make better strategic decisions to keep your company on track for growth.
Challenges of introducing digital transformation
With all of the advantages of digital transformation, you might think it would be easy to get a business to implement a modern ERP system. Of course, it isn’t that simple. It’s a matter of overcoming some significant hurdles first. Let’s examine some of the challenges.
- Management approval – Making a change to a modern ERP solution is not inexpensive. Management has to understand the return on investment and that can be difficult as it can only be estimated and not truly determined until after the implementation is complete.
- Staff support – Even though there are many benefits for employees with the implementation of digital technology with ERP, it is difficult for them to fully understand how things will improve, and by nature, people are resistant to change. They may feel like new technology might put them out of a job, or into a new job. They may not want to invest the time in training or the work involved to change processes and whatever else might be needed.
- Funding – To implement a new solution, especially an ERP system, is costly. Although it will bring about lots of positive change, the budget doesn’t always allow for it.
- Plant floor – Operations on the plant floor are designed to get products produced and out the door. Anything that could present delays, even if in the end it will mean greater efficiencies, might not be welcome. Processes need to be well thought out and the vendor of choice should be well versed in helping to ensure workflow is interrupted as little as possible.
- Future predictions – As you get ready to transform digitally there are a lot of things to consider about what conditions you’ll be facing in the future which makes the planning process challenging. Things such as competition, the market, customer needs, and political changes come into play and it can be difficult to figure out how to encompass all of these in your digital transformation strategy.
Planning for digital transformation in manufacturing
Transforming your manufacturing business digitally is not easy, but things worth doing are not usually easy. The need for modern digital technology is only going to increase and so are customer demands. Here are some steps to help you get your manufacturing business ready for a digital transformation with an ERP implementation.
1. Create a digital strategy– Take a hard look at your business processes and what you need to change to create a stronger and more effective operation. You’ll need to get your executive team on board and have them understand how shifting workflow to utilize the technology will drive change. This step is the most important as it is what all the other steps will build from so take a hard look at how your business operates, what changes are needed, how the technology can make those changes, and get everyone on the same page.
2. Carefully plan out deployment– Implementing software is not simply flicking a switch. There is a lot involved, so you need to determine what is the best way to incorporate it without disrupting the entire company. A phased approach can help by only incorporating one module at a time so you can get that portion fully working and understood before moving on to the next module.
If there are multiple locations, it may make sense to implement at one location at a time. That way you can get the first site up and running which will help you learn what to avoid or what works best before you move on to the next location.
3. Update processes– This is your chance to rework processes to have them streamlined and fully utilize all of the technology that is available to you. It doesn’t make sense to just keep doing things the same way when the whole point of upgrading to new technology is to innovate.
You should standardize procedures and automate as many functions as possible. Figure out how to best use the tools at your disposal to get the biggest and most effective transformation for your organization.
4. Organize your data– Garbage in is garbage out. When implementing your ERP you want to ensure that you have data that is accurate. It’s important to have a plan in place to clean, manage, store, and archive different types of information.
Your ERP system will keep all of the data in a central location so you have a single version of the truth. However, if you have information fed into the system that isn’t correct you won’t receive accurate analytics. Take the time needed to get your data clean, organized, and consistent so you can achieve true insights.
5. Get customer-centric– Providing a positive customer experience every time should be at the core of your business strategy. With a modern ERP system, you can do so many things to improve the customer experience. Integrating departments and uniting customer data, will make it easier to better serve customers.
Take a look at all of the processes that affect customers and determine how you can utilize the technology to improve those transactions. Ensure that all of your operations are designed with the customer in mind to provide the greatest service possible.
6. Transform your staff– To fully utilize the ERP system with all of its new technology, you need to have your staff fully trained on how to use it. It’s no secret that people are resistant to change so you need to help your employees understand how this digital transformation will help them, the organization, and your customers.
Ensure they are fully acclimated with the software so they can dig in with full confidence and utilize all of its functionality. Everybody learns differently so you may need to use various formats for training. The importance of this step should not be overlooked.
Manufacturing firms are constantly getting pushed to produce faster, better, and to provide more and better services to customers. They need to stay on top of data to foresee trends, risks, and opportunities. They also need to do everything they can to keep good employees and attract new ones.
Having the right technology is essential to satisfy all of the above-mentioned requirements. A modern manufacturing ERP system allows you to utilize the advancements of Industry 4.0, improve processes, gain insight, lower costs, improve the customer experience, and achieve greater success.