Leveraging tech to reduce costs in manufacturing

Australian manufacturers need to find alternative ways of doing business
or risk being overrun by competitors with lower costs, according to Epicor Software.

Greg O’Loan, regional vice president, Epicor, said, “As the world has
gotten smaller, Australian organisations face increased competition from
international businesses. For manufacturers, rising energy costs and strong
competition from overseas companies mean Australian companies need to continue
to find efficiencies throughout the business. This must happen against the
backdrop of Industry 4.0, which is a new way of manufacturing that leverages
automation and data exchange through the Internet of Things (IoT) and cloud
technology.”

Industry 4.0 is characterised by a new reliance on interoperability
through IoT, information transparency through augmented and virtual reality,
improved insights through analytics and business intelligence, and automation
that leads to decentralised decision-making, which delivers new levels of
agility and flexibility that haven’t been possible in the past.

With traditional competitors mobilising into new areas, consolidation in
the market, and external competitors entering the market, Australian
manufacturers face significant challenges. Those that haven’t already upgraded
to a so-called ‘smart factory’ as part of Industry 4.0 may find themselves
disadvantaged compared to competitors that can leverage new technologies to
dramatically increase efficiency, reduce costs, and bring new products to
market faster and more successfully.

Greg O’Loan continues, “Businesses need to bring competitive products to
market. They can then consider leveraging non-traditional ways to market to protect
their existing customer base and expand into new markets. Manufacturers that
cling to traditional business models will find it hard to drive growth.”

No longer reliant on distributors and retailers to sell their products,
manufacturers can now go straight to market themselves by adding ecommerce
functionality on their website and realising higher margins on sales.

Manufacturers’ margins are under pressure because manufacturing is
inherently energy-hungry. In the face of rising energy costs, these businesses
need to make a choice. They can offshore their operations to a region with
lower energy and labour costs. Or, they can invest in automation, such as using
robots or device-to-device communication, which eliminates manual practices and
reduces labour costs, relieving some of the pressure on margins.

Some manufacturers have found a third option, which is to offshore some
of the more tedious and repetitive processes but retain the more complex,
valuable intellectual property-based processes in Australia.

Greg O’Loan explains, “Some companies have no choice but to stay in
Australia because of the high amounts of intellectual property involved. This
is often the case in high technology or unique manufacturing environments. It
can also be counterproductive to offshore manufacturing of very large products
because the cost of transporting them back to Australia can be high.

“So it’s essential for manufacturers to be smart about how they approach
their business in the next few years. They must consider the various options
available, including new technologies, which can help streamline their
operations.”

For some manufacturers, this could mean an increased focus on
manufacturing execution systems (MES), which can operate as standalone software
or integrated with an ERP system. MES functionality provides an overarching
view of information needed to schedule and manage production in the most
effective and efficient way. It includes everything from document management to
reasons for waste and supports quality assurance processes. MES systems will
increasingly rely on machine-to-machine information to deliver insights to help
manufacturers streamline and improve operations.

“Australian manufacturers need to combine smart manufacturing,
appropriate labour costing, and efficiencies in the organisation to reduce
costs and get control over spend. They can do this by implementing an
enterprise resource planning (ERP) platform that’s designed for the
manufacturing industry, integrates MES functionality, and is built to overcome
these challenges.

“2018 will be a year of preparing for change for many businesses. This
includes letting go of legacy systems that are costly to maintain and don’t
deliver a strong return on investment. It can be daunting for an organisation to
move away from heavily customised systems but, to take advantage of innovative
features and capabilities that can drive the business forward, they must
modernise. For example, Epicor offers industry-specific ERP solutions for
manufacturers that deliver out-of-the-box functionality that closely maps to
the organisation’s needs. This reduces the need for heavy customisations and
lets organisations innovate more freely, positioning them for growth.”

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