The message from Lee Hopley, chief economist at the manufacturers’ organisation EEF, was that we are yet to see investment kick in despite optimism returning to the manufacturing sector.
Speaking at the Manufacturing Innovation Forum, hosted by the business software provider SAP, she said, “Businesses should be under no illusion that the Chancellor George Osborne will reverse his plans to reduce the trade deficit. Investment has to come from business.”
Pierfrancesco Manenti, head of EMEA for market research firm IDC Manufacturing Insights, predicted that the next decade will be about operating in a more intelligent economy where IT investment will be led by the cloud, big data, social business, and mobile. Manufacturers agree; 90% of them saying that this software will change the way they work.
Mr Manenti explained, “We need to bring intelligence and become customer-centric by embracing new technology. Firstly, we need to integrate people by providing them with the right information and advanced collaboration tools. Secondly, the factory must be integrated into the network of global operations and focus on customer fulfilment. The factory used to be seen as separate from everything else, but with the uptake of just in time (JIT) across manufacturing, the factory is now part of the supply chain.”
There is a need to streamline software because data is stored across too many platforms. Many firms are currently operating with single business applications for engineering, marketing and administration that don’t talk to each other, impacting upon the service received by the end customer.
In the globalised world that we inhabit, IT is an essential tool for communicating across land and time barriers. For companies that export across long distances, such as printer manufacturer Brother, which mostly manufactures in the Far East, there are challenging lead times of around six weeks to bring products to the end user.
This length of time made it difficult for the group to respond to demand changes so it standardised the IT system throughout the business so that the supply chain could be managed more efficiently.
Ian Metcalf, EMEA chief information officer at Brother, said, “This produced real time order updates and one number planning, because salespeople could not inflate sales and had to commit to a forecast, that allowed us to reduce the levels of inventory. We have increased order fulfilment through improved delivery accuracy which has enabled us to track goods through the supply chain.”
The SAP software rolled out across Brother allowed comparisons to be made between its different factories and operations. After it flagged up the cheaper cost of servicing goods in Germany over France, Mr Metcalf discovered “Germany was sending customers new products as it was cheaper to do that than send an engineer but France didn’t know. We then replicated what was happening in Germany across Europe, sending out new products for anything below a certain value to save a huge amount.”
More than 22% of manufacturers are planning to invest in ERP; it has long been thought of as putting order into process and has become a backbone of business. But by putting order into ERP and streamlining disparate sets of software across different divisions, business flaws are often exposed.
Keith Ross, company secretary at pilot-seat maker Ipeco, recently installed a new software system from SAP and admitted, “In the past, people have been able to duck and dive, taking shortcuts to get things even more wrong and waste even more time. Now things get done first time because the processes are there.”
For SMEs like Ipeco, the drive to invest is “a demand driven by the customer as one of the prerequisites to work with OEMs is that suppliers integrate with their systems,” explained John Antunes, director of SME and Channels at SAP.
He continued, “You speed up your decision-making to maximise opportunities by having data readily at hand with fully integrated software. This means you can make a decision within 10 minutes instead of four hours. Interlinking applications, analytics, mobility and the cloud is what brings data to life so that customer expectations and time scales are managed. The market is changing. It is becoming more and more about the service. Social media and mobility can play a key part.”