With rising competition from developing low-cost manufacturers in the Mekong region due to low labour and operating costs, established manufacturers in Southeast Asia (SEA) are facing strong competition. By Frank McLoughlin, VP – Business Solutions Group, Epicor International at Epicor Software
The demand for quality, as well as the need to provide a stronger value proposition, is driving a greater focus on technology in the manufacturing sector, as companies face pressure to become more efficient and productive.
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Technology is continuing to take an ever-more integral role in the SEA manufacturing landscape. Beyond enabling greater efficiency and innovation, automation and robotics will greatly reduce labour costs, and enable employees to upskill and focus on more value-added tasks–all of which are critical in ensuring the long-term sustainability of the industry, as well as solving the persistent problem of attracting and retaining talent, particularly millennials.
This is also something we see happening to our western counterparts who have needed to implement technology just to survive. The same trend is now prevalent in SEA.
Whether it’s upgrading to a newer version of an existing ERP (enterprise resource planning) solution or investing in new systems, technology can help ensure manufacturers are in the best position to respond to challenges with agile manufacturing processes and continue company growth.
Smart Factories
Simply put, smart factories are the computerisation of manufacturing—machines that are technologically advanced enough to communicate with each other, monitor physical processes and make decisions. There are many benefits to creating a ‘smart’ manufacturing environment including, greater productivity, having more detailed product specifications, and the increased potential to reach a wider customer base.
With a vision to develop Singapore as the leading hub in advanced manufacturing and technology, British engine giant Rolls-Royce and Singapore’s Agency for Science, Technology and Research (A*Star) are teaming up to develop digital and data analytics capabilities for various industries, focusing on smart manufacturing and the Internet of Things (IoT).
The proposed centres will include a laboratory aimed at developing IoT sensors by using advances in nanotechnology and microelectronics, and a computational science development laboratory that can help create solutions to make use of the sensors, such as analytics software, applications design and cyber security.
The centres will also develop future-of-manufacturing capabilities, including advanced technologies and processes for manufacturing, assembly and maintenance, repair and overhaul applications.
However, to take full advantage of these ‘smart environments’ it is essential that manufacturers use technologically advanced ERP systems that can support this kind of machine interaction and extract relevant necessary data. Entire smart factories may still be some time off, but the manufacturing industry is starting to realise that creating smart production processes is the key to cutting costs and increasing efficiency.
Cloud
Increasingly, manufacturers are considering running their ERP systems in the cloud, a way of working which brings many advantages. It can be a more cost efficient means of hosting your ERP solution and offer scalability that can be responsive to what your business requirements are at a specific point in time. Also, IT responsibilities can be alleviated by outsourcing many of the associated tasks to the ERP cloud provider and, in many cases, upgrades to the technology are more easily installed with less disruption to staff. At the same time, migration from on-premises systems to the cloud is simple. As the same application is used in both deployment options, cost and risk are significantly reduced, and the migration is complete in a much shorter timeframe.
Currently, not many manufacturers in Singapore or SEA are taking advantage of the cloud. This is set to change, however, as manufacturing processes become more sophisticated, the technology demands company-wide usage for the best results, and a greater level of data storage becomes a requirement.
Internet Of Things
With the increasing proliferation of connected devices, IoT has continued its growth and industry penetration. The IoT revolution is expected to create tremendous business opportunities by 2022, especially in the industrial automation market. This translates to a value of US$3.88 trillion linked to manufacturing, according to Industrial-IP.org. With this growth comes challenges around effective data management, as collected data is only as useful as the techniques used to analyse the data and extract meaning from it.
Circular Economy
A circular economy is an alternative to the traditional linear (make, use, dispose) economy most consumers are familiar with. Many manufacturers have realised that there is a general societal shift to considering how the way we live affects our environment. People are becoming more responsible consumers, giving far more thought to repairing and recycling the things we need, rather than immediately disposing of unneeded or broken items.
Perhaps the most challenging circular business models are those that transform the supply chain, extend the life of products, or reuse waste and materials in new ways. In an effort to create circular supplies, Singapore-based tyre manufacturer Omni United has joined forces with US footwear company Timberland to create a special line of tyres that can be easily recycled be used for making shoe outsoles. This innovative partnership means Timberland overcomes the issue of not being able to get a steady supply of recycled rubber in a consistent quality.
The ability to harness data to manage resources through value chains is at the heart of some of the most successful circular business models.
Manufacturing Workforce
It’s only natural that, with all the change ahead, a more technologically adept workforce that is more comfortable with embracing this form of manufacturing will become essential. The future workforce will need a change in its skillset–not necessarily a reduction in numbers, but more a shift in what they are trained to do. An agile workforce with a broader skill set does means, however, that we will need a more technologically-based education system which will enable people to thrive in this new world.
There’s no doubt that the manufacturing sector is evolving and changing and the landscape we work in today is far different than that of our predecessors, but it is only set to change more in the imminent future. The manufacturers who will be best placed to thrive in this environment, be most responsive to political and economic factors, and gain a significant competitive advantage, will be those with the most robust, responsive and agile technology. It’s going to be an interesting next few years.