Manufacturers in 2018: Transform or die

According to a report by Deloitte, the average life expectancy of an S&P 500 company went from 75 years in the thirties to 15 years today.

Businesses have always been bought out, merged and gone bust; but in recent years, the global nature, complexity and pace of disruption has increased. Today, the leading disruptive force is automation.

Average lifetime of S&P 500 companies has declined to 15 years

Source: The Shift Index: Deloitte's Center for the Edge.

Technologies that connect, automate and integrate production processes – such as robotics, AI, Industrial Internet of Things, machine learning and augmented reality – are giving businesses a competitive edge.

The rise of this new era of digital transformation (also called smart manufacturing or Industry 4.0) is reflected in two funds that invest in automation technologies: ROBO Global Robotics and Automation Index and Global X Robotics & Artificial Intelligence have grown, this year, 42% and 58% respectively. This compares to an 18% gain in the S&P 500 Index.

Why do businesses fail so often? Many businesses are run with the assumption that there will be no changes in their clients’ operations or that internal processes never need to change. In a fast-moving market, competitive advantage can disappear rapidly.

Digital transformation isn’t just about taking advantage of the latest technologies, but is also about weaving a digital thread through existing systems, making them work more efficiently, and making them work together.

In the manufacturing world, for many years, engineers have lived in the silo of product lifecycle management (PLM), the shop floor in manufacturing execution systems (MES), operations in enterprise resource planning (ERP), and the front office in customer relationship management (CRM).

Traditionally, the PLM system has managed the creation, approval and implementation of product configurations from an engineering angle, while the production plan has resided in the main ERP system. However, ERP and PLM functions that are not integrated often require the manual transfer of critical data, inevitably leading to input errors, data inconsistencies and problems in downstream processes.  

Likewise, the handoffs between product design in the PLM and the shop floor MES suffer from the errors and inefficiencies that result from manual processes.

As well as being inefficient, ill-fitting technology solutions provide little visibility into business processes and guarantee higher failure rates, lower quality and higher costs.

On the other hand, trying to force-fit your systems to your business model with a one-off integration between disparate solutions is no guarantee of success. Custom code for integrations can break with subsequent upgrades and may require constant support and rework.

Real efficiencies are realised when all key systems sit on the same platform. An integrated PLM-MES-ERP-CRM platform facilitates data sharing between engineering, the shop floor and the front office, and creates a closed loop that enables manufacturers to be more responsive and agile.

By connecting all phases of a product’s lifecycle, such as automatically populating the MES with bill of materials (BOM) information directly from the PLM, it not only avoids the errors often caused by manual processes, but can provide manufacturers insights to help optimise the product and key processes to achieve higher levels of productivity. With greater visibility and feedback on processes, product delivery cycles can be streamlined and significantly shortened.

The synchronisation of customer, order and inventory data with production facility data, and the integration of engineering with the manufacturing and purchasing processes, enables key professionals in all parts of an organisation to work more effectively.

With the ability to map and execute business processes from quotation through engineering and production in a single system, and rely on a single source of data for the whole business, a manufacturer is best placed to meet the changing market demands and industry disruption of the coming years.

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Written by
Simon Barrett

A native of London and a graduate in economics, Simon began his marketing and PR career in the music and film industries. Simon is fascinated by the compelling ideas that shape our future and communicates them with passion.