The Lessons of 2020 for Manufacturing and the Future of ERP

When I work with manufacturing companies to help them implement or optimize their ERP systems and business processes, I always try to keep an eye to the future.

Of course, no one has a crystal ball (and I certainly would not have predicted the upheaval of the past year) but the COVID-19 pandemic truly laid bare some critical vulnerabilities in many manufacturing businesses. And it got me thinking about some of the ways these companies might mitigate the effects of shocks like these in the future.

As I’ve said elsewhere, I believe that the Digital Operations Platform (DOP) is where ERP is headed. But in this article, I want to talk more broadly about the operational trends I see coming in the manufacturing sector, and how current ERPs might need to evolve to meet them.

More Real-Time Data for Greater Agility
If nothing else, the events of 2020 have shown us that the business landscape can change pretty quickly. The pandemic triggered massive disruptions in global supply chain operations, and in wider consumer demand.

That created huge challenges across the manufacturing sector. With so many moving parts, both inside and outside of the business, manufacturing companies were suddenly scrambling to adapt to an increasingly volatile business environment. Without proper visibility into all parts of the value chain, manufacturing companies that weren’t digitally advanced had little room to maneuver.

One way to preempt that kind of operational free-fall is to invest in more integration between disparate business systems. ERP systems that pull in data from different sources and departments provide greater visibility into the business as a whole. Critical business data is no longer buried in departmental silos, and personnel can spot and address problems before they turn into crises.

Further, ERPs that support data from a wide array of systems enable a robust and agile operational model. Real-time data supports more informed decision-making, from planning and forecasting to mitigation strategies for supply chain disruptions. Digital technologies are the key to making this happen.

This trend has broader implications for the manufacturing workforce, too, and I think it’s a good thing. With systems in place that provide a more holistic view of business operations, manufacturing employees also get exposure to that end-to-end view. Instead of working away in isolated silos, they gain insight into how different parts of the business operate and fit together on a daily basis. In a healthy workplace culture, this facilitates internal mobility and upskilling — resulting in less employee churn.

More Automation for Increased Efficiency
The quest for more efficiency is nothing new in the manufacturing sector, but when it comes to manual business processes and workflows, businesses can only get so far. Automation is the next level of operational efficiency, and more and more companies are investing in technologies that make it possible. A digital ecosystem that connects multiple business systems under one umbrella can take advantage of automation in a substantial way.

Automation is good for manufacturing companies even in the best of times: It lowers operating costs by removing human labor from repetitive tasks, and improves overall quality by eliminating human error in business-critical workflows. Bottlenecks are also a thing of the past when automation is introduced, and traceability is enhanced because there’s a digital footprint at every stage of an automated business process.

But strategic automation has turned out to be even more critical in times of widespread social upheaval. According to a recent report from McKinsey, 25% of manufacturing companies surveyed are accelerating implementation of their automation programs to address staff shortages resulting from the pandemic.

To be fair, when it comes to the manufacturing workforce, there’s often a lot of unease around automation, and what it means for the future of employment. But the reality is, automation actually frees up employees for higher impact tasks.
By definition, automation uses technology to relieve people from having to carry out repetitive, manual processes. That means they can focus on more strategic, knowledge-based activities that allow for long-term career advancement. When employees have opportunities for professional development and growth as part of their day-to-day work, they’re more likely to stick around for the long haul.

Cloud-Based Technology for Business Continuity
One thing the pandemic highlighted for many businesses is the importance of business continuity planning. Whether it’s a pandemic or a natural disaster, there will always be events beyond anyone’s control that force sudden changes in the businesses operate.

Across every industry, cloud-based technologies have replaced more conventional backup systems, and have become an integral part of disaster recovery strategies. While this approach makes good sense in the context of technical failures or breaches, it also mitigates the disruption when a worksite is compromised.
Many manufacturing companies experienced this first-hand during the pandemic: according to a report from Syspro that surveyed the global manufacturing industry, 47% of manufacturing businesses were unable to function during the pandemic because they relied on on-site staff for day-to-day operations. Of course, many of the roles in a manufacturing environment must be on-site — they are making something on the shop floor. However, what many companies discovered is that with the right technology in place, some of the on-site roles could have gone remote, even temporarily.

Cloud-based technologies offer many advantages for optimizing business systems and operations. Since cloud-based applications are accessible from anywhere, they enable mobile ERP. Employees from the back office to the warehouse floor, or even out in the field, can access important business data whenever they need it, from wherever they are. In any manufacturing environment, there are natural limits to what can be accomplished off-site — but the cloud still provides extraordinary flexibility.

Perhaps most importantly, cloud-based technologies enable a remote workforce. This is obviously critical in times of disruption, as we’ve seen, but the trend toward remote work (in some degree) is only accelerating. Adopting a policy that supports a flexible work arrangement as a matter of course — or even just when and if the need arises — will set the companies that offer it apart as employers of choice.

The Evolution of ERP Is A Tide That Lifts All Boats
Moving to a DOP-centered operational environment is quickly becoming a business imperative — for staying competitive and for retaining talent. It doesn’t have to happen overnight, but the time to start thinking about it is now.

I’d love to help get you started. Feel free to schedule a one-hour complimentary consulting session and we’ll talk about ERP and DOP in the future of your organization. You can schedule a time right here.