The Internet of Things holds great promise for manufacturers, from within the four walls of the factory all the way through the supply chain. But amid the excitement around the increased connectivity of industrial products, it’s important that manufacturers do not overlook the significant impact the Internet of Things will have on their enterprise resource planning systems and the business processes they support.
The core goal of an ERP system is to provide actionable data and information to company leaders. But collecting accurate data is an ongoing and vexing challenge. The Internet of Things has the potential to massively expand data availability and improve accuracy. This has significant implications for customer service, forecasting, inventory management and business intelligence.
To take full advantage of the business potential of the Internet of Things, manufacturers need to fully embrace it within their manufacturing operations by equipping their products with the sensors and tools necessary. They also need to capitalize on the full potential of modern ERP systems, which offer easy access to new applications and enhanced functionality via the cloud.
The proactive manufacturers that run full speed toward an Internet of Things-enabled world and seek to maximize the value of their ERP systems will enjoy competitive advantages.
Improved Customer and Field Service
A persistent challenge for manufacturers who produce complex, long-lasting industrial products is the ongoing service and maintenance required. Manufacturers generally lose sight of the product after shipping it to the customer and are forced to rely on field visits and customer service calls to assess its performance.
The Internet of Things is already changing this equation. If the product is connected to the internet, the manufacturer can access information about use, behavior, and wear and tear. In some cases, the product can even order its own service or replacement parts (or print these parts on a 3-D printer) based on detected wear and tear or operational hours. It is also possible that a potential problem could be solved remotely via the internet. If not, engineers could receive a real-time distress call and plan a visit.
Further, thanks to the Internet of Things, direct connection with end users now has become a key feature of an ERP system. Traditionally, the ERP system’s service module was updated with customer information for each serial number, either at the time of shipment or after. When a manufacturer sells directly to a customer, the end user is visible in the ERP system from the very beginning. But when products are sold through dealers, obtaining end-user data has been a challenge.
By enabling the product to communicate with the manufacturer from the moment it begins operation, the Internet of Things resolves this problem, giving manufacturers additional flexibility in their sales model and providing them with a treasure chest of information for service operations as well as engineering.
The End of Forecasting?
For manufacturers, forecasting is a necessary evil. Relying on sophisticated mathematical models, manufacturers seek to extrapolate historical sales data and detect trends and patterns and project these into the future. But even the most advanced forecasting processes remain imperfect.
The Internet of Things has the potential to almost completely — if not entirely — eliminate this complex and challenging forecasting process by allowing point-of-sale inventory levels to be transmitted directly to the factory. And for configured products, critical information about the popularity of certain configurations could be available. With this information on-hand, a manufacturer could switch to a more profitable “make-to-order” model instead of the forecast-driven “make-to-stock” model and only produce the products that are actually in demand. The same would apply to the replenishment of inventory stored by dealers and managed by vendors.
In the 1990s, ERP systems began offering portals to vendors and customers to improve and speed up communication. This was a great improvement that enabled vendors and customers to directly access the ERP system to confirm and update orders and enter any issues. In an Internet of Things-enabled world in which products communicate directly with the ERP system, this connection between ERP systems and customers and suppliers is becoming closer. This results in reduced waste and errors, a more profitable business partnership, and a leaner overall supply chain.
The ability to have products communicate directly with the ERP system and update on-hand values can also eliminate the tedious effort and time spent on inventory management. Real-time updates and accuracy can produce a sea change for the entire ERP system that renders geographic distance irrelevant, opening the door to allowing manufacturers to manage consigned inventory or inventory located in third-party logistics warehouses. Instead of being dependent on a clerk in that warehouse to report inventory levels, manufacturers would have consistently accurate insights.