What does the Internet Of Things mean for ERP and CRM?

Posted on 5 Mar 2015 by The Manufacturer

Unless you’ve been as out of touch as the recently-found Beagle 2 Mars space probe, it’s hard to escape the buzz surrounding the Internet of Things. Stephen Wilson from Ebecs explains.

Big Data IoT
The Internet of Things extends Internet connectivity to devices, and not just desktop computers and smartphones.

Not so long ago, the Internet of Things meant nothing to most people – and now, the sense is dawning that it’s a genuine game-changer. Simply put, the Internet of Things extends Internet connectivity to devices, and not just desktop computers and smartphones.

And that has important implications both for ERP, and CRM.

Serving customers better

In manufacturing, the concept of Vendor Managed Inventories underpins many lean initiatives. So to do kanbans – more recently, in the form of ‘electronic’ kanbans. And both concepts are commonly built into ERP systems.

The problem is getting the data in order to trigger a replenishment.

Take Vendor Managed Inventories: these days, few staffing budgets permit the sort of ‘hands on’, people-intensive approach to Vendor Managed Inventories that was common in the 1980s and 1990s. Likewise, the best sort of electronic kanban is one that goes direct from the factory floor to the supplier -bypassing corporate procurement systems altogether.

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Enter the Internet of Things. By coupling sensors and similar devices to the Internet, it’s very easy for re-order points and kanbans to be instantly transmitted to suppliers’ ERP and CRM systems. Efficiently, securely, and without human intervention.

Enabling new sales models

Just as the Internet of Things has burst onto the scene, so too has the notion of servitization. Simply put, servitization is about providing customers with services, as well as products – and sometimes, instead of products.

During the last recession, many manufacturers of large pieces of equipment and expensive machine tools saw their order books dry up. Customers still wanted the manufacturing capabilities that those machine tools and pieces of equipment represented. But they were unwilling – or unable – to commit to the upfront capital investment needed to purchase them.

Various rental and leasing models emerged. But that often meant financial intermediaries taking a slice of the pie. A better option would have been a ‘pay for use’ business model, just as Rolls-Royce does with its aero engines.

The problem: getting reliable, accurate, and timely usage data, in order to bill the customer. Yet it’s a problem for which the Internet of Things provides a handy solution.

Simply put, the machinery and equipment in question simply ‘calls home’, via the Internet of Things, to report usage figures directly into the respective manufacturers’ ERP and CRM systems.

Better insights into customer behaviour

How do customers actually use your products? How extensively do customers use them? When do they use them? And why do they use them? In an attempt to find the answers, it’s easy to spend a small fortune on marketing surveys and customer focus groups.

Enter – once again – the Internet of Things, which can provide just those insights.

Nor need concerns over privacy be a barrier. Intelligently packaged, such connectivity can be seen as a boon for both parties – supplier and customer.

Equipment at customer premises, for instance, can report back to ERP and CRM systems if consumables are running low, or if maintenance might be required. More extensive data can be linked to proactive maintenance or fault-finding programmes.

Radical? No more so than supermarkets sharing real-time Point Of Sale data with consumer goods manufacturers. Once regarded as heresy, it’s now routine.

The Internet of Things: a brave new world

Of course, none of this will happen overnight. As with any disruptive new technology, adoption will be gradual at first, while businesses explore the art of the possible.

But forewarned is forearmed, and if the Internet of Things isn’t currently in your technology road map, then here at eBECS we’d certainly argue that it ought to be.

Case Study – Ice breakers

In 2010, Hoshizaki Europe realised it had outgrown its existing patchwork of ERP legacy systems. Lacking full integration, individual functions within the business were forced to use these separate systems to complete tasks, consuming additional staff time and resource in the manual re-keying of data, and making it difficult to obtain ‘one version of the truth’.

Hoshizaki is the world’s largest manufacturer of commercial ice-making machines, and the second-largest manufacturer of commercial refrigeration equipment. Its European operation, Hoshizaki Europe, comprises a European sales and service headquarters in Amsterdam, and a manufacturing and distribution facility in Telford, UK.

At the same time as the business realised it had outgrown its current ERP system, it became aware of Microsoft Dynamics AX, having acquired a Danish company that had successfully implemented the solution. The challenge was finding the right implementation partner to handle the UK-based manufacturing and distribution operation.

“We’re a large company, and we were looking for a firm capable of partnering with a business of our size,” explains Jason Stokes, IT Coordinator, Hoshizaki Europe. “But just as importantly, we needed to find a partner with the right skill set—and with eBECS, we found the depth of manufacturing and inventory management skills that we required.”

Results & Benefits

The first implementation phase included embracing the functionality covered by the previous legacy systems. This was followed by implementing wholly new functionality, such as purchasing and manufacturing. Specific benefits of the move to Microsoft Dynamics AX 2012 include:

  • End-to-end integration

Instead of a clutch of standalone systems lacking integration, Hoshizaki Europe now has complete end-to-end, order-to-cash business process, covering new machines for sale, as well as spare parts and service. Manual re-keying has ended, bringing substantial savings in employee time and effort. “As a combined, integrated system, Microsoft Dynamics AX is delivering significant efficiencies,” states Stokes.

  • A single version of the truth

With manual re-keying of data into different systems, and those different systems’ different internal processes, Hoshizaki Europe had lacked a single, consistent view of its business. Worse, as well as overlaps between different systems, there were also gaps, calling for manual workarounds and paper-based systems—again bringing inconsistent views of the business. Stokes explains, “From a reporting and control point of view, the move to a single system has delivered greatly enhanced visibility. Instead of debating which set of figures is correct, we can take better decisions and take them sooner.”

  • Improved business processes

Previously, parts were purchased by two separate departments—one sourcing items from the parent company in Japan, the other sourcing from elsewhere. Using Dynamics AX 2012 to provide an integrated end-to-end order-to-cash system, the business has been able to significantly streamline its business processes, orienting them around best practice and delivering efficiency improvements. Stokes explains, “We needed to rationalise and create a single, merged Bill of Materials. The result has been a significant streamlining in our operations and improved internal efficiencies.”

  • Better inventory control

Through a combination of identification technologies such as barcoding, and by creating a seamless integrated end-to-end process covering parts ordering to machine construction and aftersales service, Hoshizaki Europe is enjoying significant improvements in inventory turns. “We’re far better able to keep track of inventory and match safety stock levels to actual demand, reducing the inventory we need to carry,” says Stokes.

  • Better customer service

A single, integrated single ERP system, containing details of every customer order, has delivered substantial improvements in customer service, thanks to the end-to-end visibility it provides.

Stokes states, “Sales staff can refer to the system while talking to the customer, and see information they couldn’t see before—such as a product’s build date. It gives them a much more complete view of all customer ‘touch points’ and customer service has significantly benefitted as a result.”