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Manufacturers Should Integrate ERP and IoT

Posted on June 18, 2019 at 6:32 pm

In recent years, there has been an explosion of the amount of data being generated by all organizations across the globe. As such, manually handling all of the operational processes and workflow isn’t just a herculean task, it’s an impossibility. Manufacturers and businesses no longer have an option — they have to go digital.

That’s why it’s necessary to have a central streamlined platform that can unify all of the operational and organizational processes into a cohesive structure. Such a platform can help all employees control all of the resources of the organizations smoothly without redundancies. Furthermore, the solution should be sophisticated enough to report operational modifications so employees can manage them accordingly and without delay.

That’s where a tool called Enterprise Resource Planning (ERP) comes in. As the name suggests, an ERP is an enterprise application that allows manufacturers and businesses to handle all of the business functions and also automate various tasks related to services and human resources. An ERP is essentially a one-stop-shop for all operational functions — product planning, development, manufacturing, sales, and marketing.

According to studies, 81% of all organizations have already adopted ERP functionality in order to increase their productivity and drastically improve their ROI. However, while ERP adoption alone is impressive, reports suggest that only 16% of all industrial companies use ERP in collaboration with IoT (Internet of Things). The same study found that industrial manufacturers have a disconnect between data garnered from connected devices and strategic implementations and operations. As such, the potential of IoT devices to bring about a digital transformation isn’t being fully realized.

If manufacturers start integrating both ERP and IoT functionality into their processes, they can avail massive operational, productive, and cost benefits. Over the next couple of years, it’s estimated that IoT in the manufacturing sector will significantly drive growth. In fact, experts forecast that IoT functionality in manufacturing will exceed $150 billion by 2024.

The twin forces of IoT and ERP have the capacity to offer impressive levels of visibility in industrial operations by providing an insight into every step along the production and supply chain process.

In addition to the unwillingness to adopt IoT into their processes, another hurdle that manufacturers have to overcome to succeed in their digital transformation efforts is to update their enterprise resource software. Most manufacturers continue using outdated enterprise software that isn’t compatible with IoT data consumption. Over one-third of the industrial manufacturers surveyed stated that their enterprise software was an impediment to their digital transformation goals. That issue primarily occurs because of the use of outdated and incumbent software that can’t administer IoT data to achieve the necessary goals.

The integration of IoT and ERP capabilities can have massive operational benefits and increase profits considerably. However, manufacturers should be more open to their integration and actively work to overcome certain challenges — they need to develop a clear road map for the digital transformation and overcome inherent biases.

It’s possible that you’re still uncertain about exactly how IoT can integrate with ERP and the specific benefits that pairing offers. The following is a brief overview of the various benefits of combining ERP and IoT functionality.

Data Collection

Pretty much all organizations across the globe are working to usher a digital transformation. However, the success of a digital transformation effort can be most effectively tracked based on the quality and quantity of data collected by the organization. Relevant real-time data can help you take action and strategize effectively.

The integration of IoT and ERP capacities allows you to drastically improve access to data, which can, in turn, lead to operational enhancements. IoT sensors can collect real-time data and send them over to the ERP software — if there are any operational changes, the ERP finds out immediately.

This is particularly useful for manufacturers because of its sheer breadth of application. For example, sensors installed in machines in a construction site or factory will send real-time reports to the ERP regarding their working condition. If there’s any glitch in the system or any issue in the machine, the ERP will receive the information immediately and you’ll be able to take immediate action. The necessary information will automatically be transmitted to all the relevant workers on site as well so they can act accordingly.

Interactivity

A lot of different groups of people are involved in the lifecycle of a product — all the way from its manufacturing to sale. As a manufacturer, you have to maintain a record of every single product being sold to the customers. If — for any reason — you have to contact the customer directly, it’s important to have access to their sales information.

This is a relatively smooth process. However, when third-party dealers and vendors come into the picture, i.e., when the product isn’t being sold directly by your organization, the whole process can get muddied and it can become nearly impossible to track every product and user satisfaction.

However, with IoT, all of the information regarding the product’s location and sale can automatically be updated in the ERP system. This streamlines the entire sale process and ensures that every party involved — the manufacturer and all the vendors — have access to the same information. This can also help enhance interactivity between all the stakeholders of the product.

Business Insight

IoT can also enhance the ERP’s ability to gain and provide key business insights and intelligence. Due to the continuous influx of data, manufacturers can engage in real-time analysis of the business functions to implement quick and decisive strategies through actionable insights. In fact, thanks to IoT, manufacturers can also combine ERP systems with AI and machine learning to get smart recommendations on business solutions.

The primary function of an ERP is to facilitate operational processes and cut downtime and redundancies. Once all of the business processes are integrated into a single well-oiled streamlined platform, manufacturers can reach unprecedented levels of optimization and automation. Combined with new technologies like IoT, AI, and Machine Learning, modern ERPs can actively help you strategize business growth, measure yourself against your competitors, and offer insight on the best means of achieving your primary end goals.

Equipment Efficiency

Most manufacturers believe that Overall Equipment Efficiency (OEE) is the most important measurement for the profitability of their daily production cycles. OEE basically measures a machine’s quality, performance, and capabilities. Without equipment efficiency, the entire production can come to a halt.

s mentioned earlier, IoT uses sensors to keep track of all equipment and their quality. If there’s any problem with the equipment or product line, it directly sends the information to the ERP. This allows you to get ahead of potentially unfortunate situations and remedy them with minimal delays.

Conclusion

All manufacturers should integrate ERP (Enterprise Resource Planning) and IoT (Internet of Things) functionality into their organization — that’s the only way to drive an effective digital transformation. As of now, most manufacturers either don’t leverage IoT capabilities or don’t use updated ERP tools that can collaborate with IoT. Once these hijinks and hurdles are cleared, IoT and ERP integration can transform the product cycle and increase ROI drastically.