Environmental, social, and competitive trends challenge industrial manufacturers today. While making things still is at the heart of industrial manufacturing, the complexity has increased. Industrial manufacturers need to evolve.

There are numerous headwinds that manufacturing faces today.

Customer-driven change.

Social trends mean that customers now expect products and solutions that fit their exact needs—and at competitive prices. Manufacturers need to embrace different pricing models such as “pay as you go” and usage-based pricing. To go there, industrial manufacturers need to capture and understand customer sentiment in near real-time, and effectively use those insights for mass customization and innovative pricing strategies.

An evolving business landscape. 

The old rules are gone. A more fluid business landscape means that customers are now partners, and partners are competitors. New business models, competitors, market opportunities, and customer segments further add to the dynamics of industrial manufacturing in the post-pandemic age. Industrial manufacturers require a more flexible, agile approach for ongoing operations.

Supply chain disruptions.

Nearshoring and geopolitical considerations plague industrial manufacturers. Supply chain challenges include shortages of raw materials and labor, transportation congestion, and the breakdown in just-in-time production scheduling. Industrial manufacturers must remain flexible and be able to shift production, resources, and funds as supply chain considerations dictate.

Environmental pressure.

The pressure for sustainability in manufacturing is increasing both from customers and governments. Sustainability ratings are impacting the cost of capital, regulations are increasing, and industrial manufacturers must now face the added complexity of voluntary sustainability reporting requirements such as inclusion, sourcing, and emissions. Industrial manufacturers need precise, real-time visibility and tracking of every input and output that is part of the manufacturing process today.

Meeting Industrial Manufacturing Challenges with Cloud ERP

These challenges can be met with a modern, cloud-based enterprise resource planning solution that enables the digital transformation required for industrial manufacturing in the face of these headwinds.

The good news is that unlike the legacy ERP solutions built for manufacturing in the past, cloud-based ERP solutions of today such as SAP S/4HANA Cloud Public Edition are more flexible for embracing the evolving manufacturing landscape—and they are both less expensive and can be rolled out in a matter of months instead of years.

There are several ways that cloud ERP supports industrial manufacturers in the face of these new challenges.

1 - Customer Centricity and Small Lot Sizes

Tailoring manufacturing to customer needs require the ability to act on real-time customer data and manufacture with lot sizes as small as one. But it also requires doing so in a cost-effective way.

Cloud ERP assists industrial manufacturers with this customer centricity through integration with real-time customer feedback mechanisms such as ecommerce platforms, supplier networks, and both marketing and sales systems that can gauge the needs of customers. Modern cloud ERP also enables automated transmission of custom lot specifications at the time of order that can sync up with inventory, production schedules and current pricing data.

2 - Digital Smart Products and Solutions 

Specificity and product differentiation come from digital capabilities and value-added services that can be bundled with the physical products that industrial manufacturers produce. Through digital capabilities such as self-awareness of product health and operational status, and product connectivity directly with a manufacturer’s business system, businesses can stand out and lead in the market.

Cloud ERP serves as the digital backend for these smart products, serving as the backend hub for IoT connectivity and facilitating innovation such as product health status notifications and pre-emptive service requests. The foundation of these Industry 4.0 capabilities--Industrial Internet of Things (IIoT), AI, intelligent automation, and edge computing, all stem from the digital backend that cloud ERP provides industrial manufacturers.

3 - Resilient Supply Networks and Smart Factories

The shop floor has long contained digital technology. But what is new is the intelligence that now is needed for industrial manufacturing production and logistics. To handle the supply chain disruptions and complexity today, manufacturers need agile systems that can automatically pivot to alternate suppliers and transportation routing when dynamics shift.

Cloud-based ERP supports this level of supply chain nimbleness through real-time connectivity with all links in the chain, as well as with end-to-end visibility all along a manufacturer’s operations. With a modern ERP solution, industrial manufacturers can automatically adjust production schedules and preferred suppliers as pricing and availability changes and the analytics built into cloud-based ERP solutions can suggest new ways for driving manufacturing efficiency in the face of supply chain disruptions.

4 - Servitization and Outcome-Based Business Models 

With traditional products getting commoditized, industrial manufacturers need to shift from selling products to providing complete solutions. In some cases, industrial manufacturers can even charge for outcomes or monetize asset data. All of these lead to increased revenue and differentiation in the market.

Cloud ERP helps industrial manufacturers shift to this servitization model through the linking of product manufacturing with digital services, and through automation that can track outcome-based offerings for correct pricing. Modern ERP also assists manufacturers with housing and making sense of the various data within the company, enabling data monetization and the creation of new complete product offerings.

5 - Sustainability and Circularity

As mentioned above, sustainability is a huge consideration now. Industrial manufacturers must track operations and inputs more precisely for better reporting, and uncover ways to reduce their environmental footprints in the face of increasing social pressure.

By encompassing the complete picture of an industrial manufacturer’s operations and supply chain, the analytics engine within a modern ERP solution can identify ways to increase sustainability in cost-effective ways.

ERP also can make short work of the voluntary sustainability reporting that industrial manufacturing now faces through automated report generation based on manufacturing operations and logistics. These new reporting requirements such as carbon footprint and sustainable sourcing need not be challenges for industrial manufacturers when they have the right ERP system in place.

Learn More About Cost-Effective Industrial Manufacturing Transformation

Discover how modern ERP can support your manufacturing operation’s digital transformation. For more on the topic, download the free booklet, The Intelligent Enterprise for Industrial Manufacturing Companies .

For specific questions, you also can contact one of our experienced ERP consultants at (801) 642-0123 or by writing us at info@nbs-us.com.