Is Your ERP System Industry 4.0 Compatible?

This article asks five questions, which every manufacturer should be asking about their ERP system in order to get ready for Industry 4.0. By Sabby Gill, executive VP, International, Epicor Software

Figure1 webWe are on the cusp of Industry 4.0, in other words, the fourth Industrial Revolution. Over the next decade, Industry 4.0 will emerge to meet demand for tailor made products at affordable prices – from mobile phones to cars and from household goods to sheet metal fabrication. At the same time it will give manufacturers access to highly flexible mass production processes that can be rapidly adapted to market changes.

Whilst Industry 4.0 no doubt offers manufacturers an opportunity to innovate, regional competition and domestic restricting have put the sector under considerable pressure in Singapore. Despite accounting for one fifth of Singapore's GDP and more than 400,000 jobs , the local manufacturing sector faces high labour costs, stagnant productivity and an ageing workforce in a slowing global economy. Manufacturing activity shrank for the twelfth straight month in June, following a decline in new orders and production output. This gloomy outlook is set to continue, according to the latest business expectations survey by the Economic Development Board (EDB). The survey found that 77 percent of manufacturing firms are not expecting change in lacklustre business conditions for the second half of 2016.

However, Singapore’s strong manufacturing base has enabled firms to incorporate more high-value manufacturing-related services into their business models. This includes knowledge-intensive activities such as research and development, technological innovation and product design. Additionally, given the need to be competitive in global markets, the government has made a greater push to upgrade Singapore’s manufacturing capabilities to enhance the vibrancy of the ecosystem. In line with the trend towards related high-value services, manufacturers need to begin assessing whether their current systems are compatible with the future of the industry.

Here is where we look forward to Industry 4.0 and the opportunities for innovation it provides manufacturers in the region with. There is no doubt that Industry 4.0 will have an impact on the manufacturing industry – 59 percent of manufacturers even agree that this fourth Industrial Revolution will have a significant impact on the sector. Yet, according to a recent study, 48 percent of Asian manufacturers find the lack of digital culture and training a crucial challenge when embracing Industry 4.0.

New Connections Between Machines, Production Processes And Systems

Industry 4.0 calls for a future of agile and affordable manufacturing fueled by technology enablers such as the Internet of Things (IoT), 3D printing, cloud computing, mobile devices and big data. This will marry the world of production and networking in a connected environment. Therein Enterprise Resource Planning (ERP) will become increasingly central to production. The ERP system will become the backbone of the network; connecting smart machines, logistics systems, production facilities, sensors and devices as products and machines communicate with each other and exchange commands as products move the production line.

To prepare for Industry 4.0, ERP vendors are moving away from pre-built interfaces and formulas to develop highly connected systems that conduct operations at the production line level, whilst giving business decision makers the real-time data they require. One aspect of this is how the Industry 4.0 compatible ERP system will fully integrate with Manufacturing Execution Systems (MES). As a result, it will be possible to track and document the transformation of raw materials through to finished goods.

Taking a car manufacturer as an example, each car will have an RFID chip for the manufacturing process. This will contain all of the information about the product – from the colour of the body, to the type of materials on the seats, and any bespoke features or details. When the chassis reaches the first workstation in the production line, the RFID chip will send a message to the MES, which will direct the machines to paint the body in the bespoke shade requested by the customer. Once complete, the action will be registered on the RFID chip and the car will move onto the next work station. This process makes it possible to meet individual customer requirements, whilst maintaining the efficiencies expected of the manufacturing process. Because it is so dynamic, Industry 4.0 allows for last minute changes to production, so manufacturers can respond flexibly to disruptions, order changes, or supplier failures as necessary.

Crucially, manufacturers need to address whether their existing ERP environment can support this level of system integration as they embark on their journey towards Industry 4.0. Below are five questions, which every manufacturer should be asking about their ERP system in order to get ready for Industry 4.0.

Question 1: Is Your ERP System Flexible?

Industry 4.0 is a journey, not a one-off project. Manufacturers will therefore benefit most from ERP software that has flexible deployment options. This will allow them to adapt to new business and service opportunities, new processes, workflows, data networks and decentralised locations, all in real-time as their business grows in an interconnected world. Whether your ERP solution is hosted in your own data centre, in the cloud, as a managed service, on-premises, or a combination thereof, it should be possible to easily switch processes and adapt to new ways of working, to maintain business agility.

Question 2: Is Your MES Compatible With Your ERP System, And Able To Cope With Multiple Locations?

The best next generation ERP solutions are able to integrate with an MES solution effectively. This is important because it allows for real-time data exchange. For growing manufacturers, their MES should be able to cope with individual facilities, but also with the centralised management of multiple production sites. This will give them the freedom they need to integrate their production lines with higher-level business processes, step-by-step, according to their strategic plans, without compromising on the end result.

Question 3: Is Your ERP Software Capable Of Central Data Management?

Figure2 webTo prepare for Industry 4.0 ERP software should meet three key criteria. Firstly, it should offer businesses a modular platform, based on a service-oriented architecture. This way business processes can be easily customised without changing the software code, securing the way for future technological developments or release updates. Secondly, ERP software should allow for central master data management. Last but not least, it should offer real-time data processing, enabling all stakeholders in the business to have access to the latest and most accurate data in real-time.

These three requirements form a powerful combination when it comes to accurate business decision-making. It enables all parties to view the same information about projects, customers, raw materials or locations, helping manufacturers to improve their customer experience and speed to market.

Question 4: Does Your ERP System Facilitate Mobility And Social Collaboration?

Whilst data sharing is becoming synonymous with Industry 4.0, this will also enable fluid cooperation across departments, from the shop floor to the top floor. As part of this flexible communication, user-friendly access to ERP information via tablets and smartphones will become essential for manufacturers. ERP solutions that feature intuitive dashboards and comfortably suit all screen sizes, will be key to businesses embracing the Industry 4.0 ethos of updating and sharing information in the mobile-working world. These solutions should also have the necessary mobile infrastructure in place to ensure real-time data synchronisation.

Collaboration is increasingly important and next generation ERP solutions are integrating social capabilities to help external partners, suppliers and customers become part of the business process. Embedded in the ERP system, information from these informal discussions is stored centrally in context with ERP data, instead of being buried in third-party systems.

Question 5: Are You Ready To Benefit From The Powerful Analytics And Business Intelligence Associated With Industry 4.0?

Powerful planning and management functions in next generation ERP systems can ensure that the benefits of intelligent manufacturing have an impact on all relevant areas of the company. Within the Industry 4.0 world, sophisticated analysis tools will, for example, help to verify the planning, execution and evaluation of new business models; testing what will work, allowing business leaders to make informed decisions, and helping them to adapt to market or customer demands.

It is clear that for manufacturers, growth in an Industry 4.0 environment will be intrinsically linked to a business’s ERP system. Those with next generation ERP solutions in place will be in a better position to meet the fast-paced and connected requirements of Industry 4.0. Certainly, the boundaries between production and management should diminish. Additionally, ERP and MES systems must form an integrated unit if businesses are to realise the growth opportunities presented by this new age of intelligent manufacturing. Taking a critical look at the existing IT environment in your business is the first step towards understanding how prepared – or unprepared – you are for Industry 4.0.

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  • Last modified on Friday, 25 November 2016 04:42
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