Cloud ERP for manufacturing: Now more than ever
Why is cloud ERP for manufacturing at the top of so many companies’ to-do lists right now? For starters, the enormous change and upheaval that manufacturing and supply chain operations have undergone in the past few years has left even some of the best-run companies feeling overwhelmed. Also, the need to shift to ever-widening partner networks for supplies and materials is leaving businesses exposed and blinkered. Growing customer demands for speed and customization see outdated systems straining at the seams. Global disruptions – while nothing new in this sector – have nonetheless been at epic proportions lately.
Many businesses are pushing their legacy ERP systems to the brink, trying to manage their day-to-day operations including their supply chain, logistics and finance operations. To not only cope – but thrive – under these mercurial conditions, today’s manufacturers are looking for solutions that unify, connect, and coordinate – giving them visibility they need to manage their operations and share data across the business on a single, shared platform.
Definition: Cloud manufacturing
Cloud manufacturing makes operational resources available on demand across the business using Industry 4.0 technologies including AI, cloud connectivity, Industrial IoT, and predictive analytics. Through the use of a centralized smart system such as cloud ERP software, cloud manufacturing operations can be optimized and managed across the entire lifecycle of a product, from concept and R&D to maintenance and even to end-of-life and recycling.
What can AI-powered manufacturing ERP software bring to the table?
In the modern manufacturing sector, business leaders are faced with myriad challenges but once they’ve identified their problems, what separates a good business from a great business is how quickly they get on with finding the right solutions – and finding ways to get out in front of their competitors.
To conquer both cultural and process-based challenges, the best companies are focusing on a few core priorities, and modern manufacturing ERP software with AI can help in these 4 ways:
It’s no secret that silos and opacity are bad for business. Everyone agrees yet it remains a pervasive problem – especially in distributed operations like global supply chains and manufacturing. The world (and your clientele) runs at a faster pace than ever before, demanding more and moving on quickly when they can’t get it. To achieve true agility and resilience, manufacturers need to collaborate with external suppliers, partners, and business networks – as well as the specialist teams and relevant departments within their own organization. ERP for manufacturing gives teams and partners the unified access and visibility they need to share strategic plans, ideas, data – and to collaborate in real time on any aspect of manufacturing operations.
Product lifecycles are getting shorter by the day. There is increasing pressure to customize items and service, and to improve sustainability across the supply chain. Every link in your manufacturing value chain – from raw materials to final packaging – has an impact upon other operational areas. A cloud ERP for manufacturing lets you coordinate partners and departments, with centralized data and intelligence they need to meet changing pressures and demands. For example: When HR knows a big project is coming up, they can be prepared with trained and vetted staff. When sales and marketing hear that a product innovation is in the works, they can get ready early with coordinated campaign and marketing plans.
According to a recent study from LexisNexis, corporate compliance-related increased almost 20% from 2019 to 2020. And more than 89% of that global total (of over $213 billion), was borne by North American and European companies. From cybersecurity to trade regulations, to HR, modern businesses face a growing and daunting range of global regulations. Cloud ERP systems not only manage and refresh global compliance regulations in real time – they can also help you configure automated process and procedural updates in response to changing regulations.
- Customer integration
Traditionally, business have gathered and analyzed customer feedback in a backward-looking and retrospective fashion. After a few months of observing trends, there would be a decision to update a product or service or to improve the customer experience in some way. But today, customer loyalty is more fickle than ever. Bloomreach research shows that all it takes is one bad experience for almost 80% of customers to move on to another brand. For businesses to thrive, they need to be as responsive as possible to customer needs. Cloud ERP solutions are helping to drive this by supporting faster real-time data analytics and more agile production processes. This enables product customization to individual customers’ specifications, drives new business models, and helps to nurture customer relationships beyond the initial transaction – providing tailored service and support as part of a continuously learning circular economy.
What do the best cloud manufacturing ERP systems actually do?
Once business leaders have identified the challenges they face and the outcomes they want to achieve, they’ll need to look at some of the specific functionalities of cloud ERP to determine how those features can help them meet their goals.
- Business intelligence: An in-memory database with a device-friendly dashboard lets ERP users easily customize reports and aggregate disparate data sets to deliver fast, accurate intel. This lets C-suite stakeholders compile all the information they need make fast, confident decisions without having to hunt through a lot of data, scattered across departments, or wait ages for reports.
- Financial management: Whether in the boardroom or on the factory floor, business leaders need to have a close eye on the bottom line. Access to accurate, real-time financial data and reports is essential. Manufacturers using cloud ERP benefit from faster financial close, more accurate job costing, and the ability to amalgamate finances and expenses all in one place, in a globally consistent format.
- Material requirements planning (MRP) and production: An old adage says that inventory is just money sitting around in another form. For centuries, manufacturers have struggled to have enough (but not too much) raw material and inventory on hand. For as long as this has been a problem, its solution has involved curating information from a lot of different yet relevant sources. With cloud ERP functionality, managers can inform their operations with live data from internal departments – as well as external data from supplier networks, customers and even news and weather reports. Live MRP scheduling features help businesses ensure both supply and rapid sourcing during volatile times – allowing for significantly faster reaction to shifts and trends, and the ability to remain connected to business and supplier networks in real time.
- Simplified and leaner production and assembly: The drive for leaner manufacturing is leading companies to simplify production and assembly processes. Cloud ERP systems help to unify assembly plans – incorporating MRP, production and capacity planning, bills of material and routing. Predictive analytics also contribute to this process by informing robotics and robotic process automation (RPA), and mapping machine models and factory floor layout. When production and material flow is automated from end to end, the most efficient manufacturing methods can be put into play such as lean control, continuous improvement, and just-in-time replenishment.
- Streamlined design and engineering: Manufacturing doesn’t start on the assembly line, or even with the raw materials – it starts with ideas and inspiration. Designers and engineers bring new products to life, and market researchers and data analysts help to make sure those products are as tightly aligned as possible to their customers’ hopes and wishes. In the past, it took a long time for this information to get shared and acted upon, and much of it got eroded and lost like a whispered word in a game of telephone. But today, cloud ERP lets customers, designers, R&D, and production teams collaborate in real time. It also speeds up the process by helping to centralize and manage smooth handovers of engineering documents, bills of material, design changes, and other relevant global documentation and specs.
- Tight quality management: The best quality management (QM) processes are data-driven and objective. The ability to run closed-loop QM processes – from planning to operations – in an ERP helps business minimize risk and more confidently roll out new products and services. What’s more, AI-driven technologies can help managers run customized what-if simulations or build digital twins with which to test any eventual situation. This means that virtual machines and processes can be pushed to their absolute limits, without any cost or risk to valuable physical equipment. This QA and testing feedback can then be broken down by specialist area and shared with the relevant teams across the business to support continuous improvement and risk mitigation.
- Accurate project planning: Exploring new projects and expansion opportunities shouldn’t have to involve any more risk or speculation than absolutely necessary. Integrating various data sets from across the operation onto a single shared ERP platform helps planners optimize and automate production projects. And when machine learning capabilities are put into the mix, it means that the ERP system will learn over time from similar project plans, getting smarter and more accurate as it goes. With this kind of increased central visibility and end-to-end data capture, planners can automate ‘true actual’ costings for highly engineered products and projects. This not only adds value and cuts cost across the final outcome, but it also gives your business negotiators more confidence to narrow margins and quote more competitively with less fear and risk.
- Product configuration: It’s one thing to be responsive to customer feedback and reviews but what if you could allow your customers to personalize products at a click? Today, customer-facing, web-based product configurators supported by cloud ERP are allowing customers to bring their ideas to life. Moreover, these tools are rules-based and structured. This means that only realistic, feasible, and relevant customizations can get made. It also means that those customizations are digitally communicated to designers and manufacturers in ways that are globally consistent and built to work with existing operational processes.
- Future-proofing and scalability: Newspapers, phone booths, wristwatches. Every day, something old becomes obsolete and new objects and technologies begin to trend. Where once the cycle of obsolescence may have taken decades, it now seems to take just months, weeks, even days. For manufacturers, this not only means they have to keep their ears to the ground, but that they have to be able to re-jig and pivot their existing operations rapidly and frequently. The reconfigurations can have enormous impact across every department of a business. But with cloud ERP solutions with AI and machine learning capabilities, operational changes can be identified and automated across the organization. Plus, the best in-memory databases are virtually infinitely scalable, to support not only rapid change but also rapid growth and expansion.
The best ERP for manufacturing: Is it worth it?
These days, C-suite executives and other budget-holders face enormous pressure to quickly establish value and benefit for their enterprise software investments. Furthermore, they are being asked to squeeze increased output from decreased budgets and to make purchasing decisions that bring maximum ROI to the organization. The temptation is to take a band-aid approach and keep bolting lower cost APIs and third-party manufacturing solutions on to a legacy ERP. Is this solution cheaper? Yes. Does it work? Sure… until it doesn’t.
Traditional ERPs with disk drive databases were not built to handle the kind of real-time AI-powered analytics and end-to-end coordination your supply chain needs to compete in today’s world. Business is not going to get less competitive. Customers aren’t going to become more patient and easygoing. Inflation and rising materials costs won’t reduce the pressure on your bottom line. The saying “penny wise, pound foolish” has never been more apt. Once your business and your customers have outgrown the capacity of your legacy ERP and outdated processes, you can only play catch-up at that point.
Cloud ERP for manufacturing and beyond
The future of manufacturing lies in the cloud – it relies on speed, accuracy, leanness, and global, real-time transparency. A cloud ERP with a powerful database is a versatile and invaluable tool for connecting and aligning your entire business – and for delivering the competitive edge that you need to stay ahead of the pack in the manufacturing sector.
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