Integrated. Intelligent. Autonomous. Informed by a constant flow of data and driven by real-time demand. The factory of the future is coming into focus. Sometimes referred to as “smart manufacturing”, “Industry 4.0”, or the “Fourth Industrial Revolution”, the ongoing shift in industrial paradigms is being driven by disruptive advances in technology, and by the ever-increasing need for sustainability, optimization, and business agility. By modernizing their modes of production, Canadian manufacturers are increasing their competitiveness and positioning themselves to face future challenges. A 2017 Capgemini survey found that 76% of larger manufacturers already have a smart manufacturing initiative in place, and that 56% have invested $100 million or more in smart manufacturing over the last five years. The same report notes that: “...manufacturers across segments have already started realizing potential of smart factories, with industrial manufacturing seeing the biggest gains in productivity and quality of output.” Of course, no two manufacturers are exactly alike, and smart factories must be created to support and strengthen strategic objectives. The same mix of technologies that make an automaker profitable may be unsuitable for a company stamping widgets out of sheet metal. There is, however, one technology that all smart manufacturers require, and that’s an enterprise resource planning (ERP) solution. ERP is the glue that binds Industry 4.0 technologies together. There is, unfortunately, a bump on the road to the future factory that many manufacturers have yet to contend with.
The Capability GapThe last generation of ERP was designed for a different economy, with different market demands and different technologies. Repetitive, high-volume manufacturing processes used to be the norm, a fact reflected in the design of older ERP software. With the advent of Industry 4.0, demand-driven factories and much shorter product cycles have called for a new approach to business systems. In response, ERP has transformed itself into an agile, modularized, flexible business solution, designed to meet the requirements of the ongoing digital transformation. For manufacturers who still cling to legacy systems and older ERP, a significant gap has opened up between the capabilities of older business solutions and the demands of the future factory. The capability gap poses significant limitations. Big Data, for example, driven by the Internet of Things (IoT), becomes impossible to capture and make sense of without up-to-date business solutions. For properly equipped manufacturers, data from the IoT can lead to measurable efficiencies in speed, scale and resource requirements. IoT applications can predict the need for machine maintenance, gather market information, manage inventory, increase visibility along the value chain, improve trackability and traceability, and ensure on-time delivery. Driven by the accessibility of cheaper, increasingly informative sensors, the IoT will grow in importance as more manufacturers come to realize its competitive potential. According to a 2017 study by MPI-Group:
- 69% of manufacturers improved profitability over the last year by leveraging the IoT within their plants and offices
- 65% of manufacturers improved profitability over the last year by selling smart/intelligent products (i.e., IoT-enabled products)