Futureproofing your manufacturing business to mitigate risk
By Kevin Dherman, Chief Innovation Officer at SYSPRO
In 2020, Industry 4.0 technologies played a decisive role in many manufacturers’ pandemic responses and it helped these companies to keep their operations running during the crisis. Many were able to keep operating in the face of shortages of workers or raw materials, whilst others struggled to keep up with the sudden spike in demand.
How did Industry 4.0 technologies help those companies in their efforts to reduce the negative impacts of the crisis and reduce the risks for their business?
The SYSPRO 2020 Manufacturing CFO 4.0 Survey, which was conducted in October 2020, shows how manufacturers and distributors handled the operational shifts brought on by Covid-19.
It revealed that 60% of manufacturers and distributors were impacted by supply chain disruptions. 47% of businesses were unable to function due to operational staff reliance on-site; while 29% of businesses felt that their business systems did not provide them with the availability and accessibility to manage the changes that the pandemic introduced.
As these businesses attempt to stabilise, many are considering adopting emerging technologies and Industry 4.0 to mitigate the risk of major disruptions in the future.
The challenge for many of these businesses is understanding which technologies to adopt, when to pursue this transformation and how to budget for it.
There are several Industry 4.0 technologies that have real potential to help futureproof Australian manufacturing and distribution businesses in the next five years.
The automated warehouse
It is important to note that transitioning to an automated warehouse is a long and expensive journey. In most cases, it will take three to five years for manufacturing and distribution businesses to be fully automated. At which point there will still at least 65% of workers still in the warehouse.
This is because the automation augments the human capital, it does not replace it, particularly in smaller manufacturing plants.
There has been a shift due to the pandemic and we are seeing more of a push for robots to overtake that augmentation to fill a more autonomous role to decrease the possible transmission of disease for example, but what we are seeing at this point is baby steps.
We are a long way from a fully robotic scenario with remote monitoring.
What we have seen globally through this pandemic, is that manufacturers started their shift first with online shopping, and then contactless delivery in some instances using robots to enable social distancing.
There has been increased implementation of digital and contactless payments.
One of the first areas manufacturers can start to make changes is to reduce paper-based systems, and to work on making their distribution more contactless, particularly at the point of delivery.
There have been a lot of different approaches in different countries, from robot baristas, drone coffee deliveries to delivering groceries from trucks to front doors using robots.
Many manufacturers are still using paper-based systems, so from the time they capture the order, to when it gets printed in the warehouse, picked, packed and delivered, it has been through multiple points of contact.
For companies that are running an ERP system, this process can be easily automated and when it comes to devices, most people today have smartphones or tablets that can be used to facilitate it.
Particularly for smaller manufacturers, the advent of Bring Your Own Device (BYOD) means that there will not be a huge outlay for specialist devices, so it is an affordable way to start their digital transition.
Another way that Australian manufacturing and distribution businesses transitioned during the pandemic was to take their businesses to the cloud, to facilitate work-from-home environments.
This allowed for more agile online shop fronts where orders could be automatically captured and processed. There has been a huge increase in online shopping during the pandemic and many organisations have had to upgrade their online presence to enable eCommerce.
Those manufacturers who had the foresight to move their technology forward a year or two ago and upgraded their ERP systems were able to pivot quickly to plug in payment gateways, which made a big difference for their businesses.
The ability to also plug into a connected supply chain and make use of an established third-party system for the retail and distribution of their products also proved a winning combination. Looking forward it is important to be agile enough to withstand sudden potentially hugely impactful events, such as war or future pandemics.
The secret when planning a digital transformation is to look at an organisation’s immediate needs and choose technologies that can help them to unlock the most value, for the least amount of stress and a more realistic cost. Interconnected technologies are the best option, because if everything is connected, there will be a big reduction in the need for paper-based systems.
Most organisations have existing technology that they can use, so you do not need to incur costs of buying it all new.
A few baby steps like that will take you further into futureproofing and risk-proofing your business.