At Statii, we have been operating in the manufacturing industry for decades. Long before the invention of ERP software and production control systems. Despite still dipping our toe into the manufacturing industry, software is now our core industry, instead or working for it… serving it. So, I thought I would write this article, after reflecting on the past year and hoping that 2017 brings a more positive outlook.
Due to the nature of the manufacturing industry and its direct correlation with the performance of the economy, not only the domestic but global economy. It’s even harder to predict 2017’s outcomes moving forward into so much uncertainty.
Manufacturing Industry
I’m sure you are all aware of the decisions that have created this economic uncertainty, with the UK’s decision to leave the EU in its Brexit vote; of course, not forgetting the US election and the new era of Trump. 2017 doesn’t show much help with the economic unrest, with Germany, France and Hong Kong all anticipating national elections.
A recent study conducted by the EEF had to be revised after the Brexit vote was passed, the result was a negative one, with forecasts falling even further. However, no one is truly sure on how the Brexit decision will affect the UK and the EU as the trade deals have not yet been finalized. The UK can expect a rise in exports with the weakening Sterling making the UK more attractive. However, the UK’s export demand could fall from the EU, offsetting this minor glimmer of hope. To read the EEF’s articles further – Please click here.
As for the US? The MAPI foundation have predicted growth for the manufacturing industry, with production growing throughout 2017 because of increased consumer demand driven by job growth. MAPI are predicting a 2.7% rise in GDP for the US, a slight increase from the 2.4% seen in 2015. More figures can be found, Here.
Manufacturing processes and systems
Recent years have seen leaps in technological advances and the adoption of IT solutions in the manufacturing industry, with the phrase ‘industry 4.0’ being coined. Creating a more efficient and productive manufacturing industry, offering increased speed, value and quality for customers. Other terms such as ‘smart manufacturing’ and ‘connected factory’, moving manufacturers from manual to automatic processes, all used to increase productivity and simplify production processes. For more reading on smart factories, read the interview with Matthew Treeby here.
Despite all the benefits of using IT solutions, the manufacturing industry has been slower to adopt the changes in comparison to other industries. This is down to a large number of factors such as culture, but in short many manufactures are not yet willing to invest their time and capital and the risks tied to IT implementation.
Like it or not, IT solutions are becoming more and more important to the future competitiveness and survival of manufacturing businesses. With the skills gap widening, driven by the retirement of the baby boomer generation, it is crucial that the skills and knowledge they possess are transferred to future generations, this cannot be done however without a platform to do so. The reality is the longer this task is avoided the worse the situation will become and will require highly skilled IT specialist to work with a complex manufacturing industry. For more on the skills gap issue and how the overcome it, please click here.
However, it’s not just customers driving the need for increased productivity and quality… “government regulations, production of high-quality product is growing in importance for manufacturers. This is especially true for such sectors as Medical, Military and Aerospace where a single event of non-compliance can threaten the reputation of the manufacturer and the safety of the product’s end user.” (aiscorp manufacturing trends) Quality is becoming more important than ever and is becoming easier to manage than ever, with software automatically collecting big data.
Software such as ERP and MRP are designed to help guide a production process, allowing managers to gather ‘real time reporting’ supplying far faster reaction times. The 2017 manufacturing predictions see even further adoption of ‘smart manufacturing’ to support day-to-day functionality. “Manufacturers that are slow to implement advanced analytics systems risk the inability to meet customer needs and eventually being outpaced by their innovative competitors.” (aiscorp manufacturing trends)
ERP (Enterprise Resource Planning)
Global manufacturing consultants Panorama gave this message in their ‘top 10 predictions for ERP’ blog. “This is the year to say goodbye to that old legacy, the green screen, or the Excel spreadsheets.” They went on to explain the barriers that are preventing manufacturers from implementing IT solutions, these have not changed in the last decade, so I won’t bore you with yet another in depth analysis. These barriers being the classic lack of time, lack of capital, perception of risk and of course affliction to change.
But the reality is technology is now so advanced that any changes can be made to suit individual needs and the functionality is tried, tested and proven. As discussed in Panorama’s 2015 report, 9 out of 10 ERP implementations require bespoke work to fit the organization’s needs. Also, software solutions come in all shapes and sizes, this is also true for the price tag, with solutions being created to be accessible for almost every size business in every industry.
“Gone are the days where a company needs millions of dollars to deploy new enterprise technologies, which will make ERP systems, CRM software and other business technologies accessible to most.” (top 10 predictions for ERP)
As for the deployment of IT solution’s, we can’t imagine there will be a dramatic change in consumer need’s as reports show that on-site is still a largely desired method. However, cloud is certain to consistently grow as the technology become more effective and the perceived risks involved diminish. The sector most likely to adopt the cloud solutions are the small to medium businesses who a few years ago, could not access an ERP solution due to price, complexity and infrastructure.
“Without the elasticity of the cloud, the storage and sorting of data points collected from sensors embedded in products, vehicles, and machines—the cornerstone of digitalization—would be impossible. Manufacturers would have to build massive warehouses just to hold the servers to keep their data on premise.” – See more
The final point of this article is the changes in pricing structures and business models with the rise of the SME software industry. Monthly subscriptions have been adopted for years by services and the software industry is no different, big players such as Microsoft paved the way and now many SaaS firms are following suit. This has made the software cost more manageable, especially for those who previously could not afford the capital investment up front and is regular seen by software targeting the SME sector; this is not predicted to change any time soon.
CIO recently released a software predictions article, with an interview with Engin Kirda, cofounder and chief architect, Lastline. Who stated “Competitive pressures and new efficiencies will cause enterprise software pricing to continue to shift further toward subscription models.”
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For more information on Statii and how we help small and medium manufacturing businesses transform their production processes – Please Click Here
