The use of innovative technology in manufacturing should no longer be seen as aspirational, but as a key differentiator and driver for growth within the industry today. Artificial Intelligence (AI), Virtual Reality (VR) and IoT—to name just a few—are starting to make headway in the manufacturing sector as indicators to modernise enterprise processes affirms Andy Coussins, Senior Vice President and Head of Sales, International, Epicor Software.
According to IDC by the end of 2021 a quarter (25 percent) of global manufacturers will apply machine learning to data across product development, supply chain, manufacturing, and service, to improve decision-making, quality, differentiation and innovative business models. Research also suggests that by 2020, 60 percent of G2000 manufacturers will rely on digital platforms that enhance their investments in ecosystems and experiences, supporting as much as 30 percent of their overall revenue.
With industry analysts predicting that innovative technology will have a hugely positive impact on future manufacturing growth, are companies set to reap the benefits? According to manufacturers themselves, digital transformation—or the use and reliance on innovative technology—is only a strategic priority for 16 percent of businesses. This marks a big difference in where the industry is now and where it needs to be, to sustain growth and success.
Take up so far
A lack of strategic emphasis on digital transformation could signal a disconnect between the hype and actual innovation in the manufacturing industry and mainstream adoption. But why is it not a strategic priority?
A key barrier to fully embracing Industry 4.0 could be due to legacy systems and the bespoke technology and processes that many manufacturers rely on for day-to-day operations. Also, despite many processes being underpinned by technology, some still have a manual aspect for operation—or when it comes to production control activities.
As such, the perceived cost and upheaval of digitally transforming all aspects of product lifecycle and the supply chain—from design, sales, inventory, scheduling, quality, engineering, and customer service—is often a sticking point. Despite the benefits of digital transformation being clear, actually taking the steps to overhaul or even ‘rip and replace’ existing systems can seem hugely disruptive, costly, and even a step too far. The issue of value and ROI is therefore a key factor in taking the plunge, with an ‘if it ain’t broke, don’t fix it’ attitude slowing down adoption, particularly during times of economic uncertainty.
This is reflected in recent research of manufacturers across the globe into what’s holding them back. One in five (21 percent) cite a lack of understanding into digital transformation as a barrier, with one in ten (13%) believing the concepts are ahead of reality in what can actually be delivered.
Next step towards transformation
Some of the main reasons being cited as barriers are actually reasons to take steps towards prioritizing Industry 4.0 adoption. Take spend and ROI as a case in point—the old adage ‘you have to speculate to accumulate’ has never been more suitable here.
Readying today’s factories for tomorrow’s technologies will enable businesses to reap additional financial and competitive benefits in the long term. Indeed, with businesses expecting AI, machine learning, IoT, and VR to have a positive impact on future industry growth, now is the time to future-proof systems and processes, and prepare to take advantage of those innovations.
Far from throwing out legacy technology, intelligent and cloud-based Enterprise Resource Planning (ERP) systems can provide the platform needed to revolutionise business operations and gain value from Industry 4.0 applications.
Connecting physical with digital systems will be key in helping to access data from technology applications, to empower manufacturers to better understand where efficiencies can be gained and value achieved, to boost productivity, improve processes, and drive growth.
(The research was conducted by Savanta on behalf of Epicor in H1-2019. It questioned 2,390 business people in 13 countries across the globe about their growth performance in the last 12 months and future business challenges.)
BOX OUT II
Manufacturing sector maintains growth trajectory despite adverse conditions
Epicor unveils results of 2019 Global Growth Index
Manufacturing business growth has continued to rise over the past year, but at a much slower rate than the previous 12 months. Despite challenging market conditions and the difficulty in recruiting and retaining skilled staff, there has been a marginal one percent rise in the number of businesses reporting growth.
These findings are survey results unveiled today from the annual Global Growth Index by Epicor Software Corporation—a global provider of industry-specific enterprise software to promote business growth.
For those companies who have experienced growth, maintaining it hasn’t been easy over the past year. Forty-two percent admit it has been challenging, whilst a fifth (22 percent) have found it stressful. Forty percent of businesses cite market conditions as having a negative impact on growth, and 23 percent feel that staff skills and experience have also played a detrimental part in maintaining growth.
Geo-political volatilities
Political volatility and uncertainty also continue to be a common cause for concern across the globe. Thirty-two percent of respondents cited the China-US trade dispute as likely to have a negative impact on future business growth. A quarter of businesses (24 percent) stated that the uncertainty surrounding Brexit is also still a big threat.
“The manufacturing industry plays an integral role in our global economy and people forget that it is responsible for delivering important products we use every day,” remarked Steve Murphy, CEO, Epicor.
“As such, the health of the manufacturing industry is something we should all be concerned about. While it’s good news to see that growth in this industry is still taking place, we need to keep a close eye on what factors are contributing to this growth and what factors are causing a lag,” he continued.
Rooting for ERP solutions
Now in its third year, the Epicor Global Growth Index is designed to measure the state of worldwide business growth within the manufacturing industry. Compared to last year’s results, the Growth Index rose by one percent. This is down from the 3.7 percent in the previous 12 month period.
“Investing in the right technology, such as Enterprise Resource Planning (ERP) solutions can help businesses better plan for change by improving visibility and insights into current operational workflows. This can enable and empower people to deal with challenges more effectively, by providing the flexibility, agility, and adaptability needed to respond to market conditions and customer demands. Technology can also have a positive influence on other factors including work ethic and staff recruitment and retention,” concluded Reid Paquin, Research Director, IDC.
