Manufacturing is no longer about producing goods as cheaply as possible to meet the demands and price points of retailers. Today’s manufacturers are becoming far more reliant on a new raw material – data.
As manufacturers become increasingly dependent on data and telematics to control and manage machinery, there is a need to gather and interpret data. Much of that data comes from sensors, something that manufacturers are all too familiar with. They already use sensors to gather key data from machinery, to manage manufacturing environments and to manage its costs. Over the last few years there has been a surge in the number of new sensors being deployed. These are coming together to form what is being termed the Industrial Internet of Things (IIoT).
IIoT delivers a tsunami of new data and better control
Early generations of sensors delivered limited data back to the manufacturing systems. Many were also simply about monitoring rather than control. The new generation of technology delivers a vast array of data and also the ability to control machinery. This is good news for manufacturers, provided they can take advantage of the data and integrate it into their systems.
For instance, some manufacturers are using this sensor data to cut costs and increase productivity. The more effectively they can use the equipment the more they can produce. If that can be combined with better use of raw materials or better planning to reduce waste, then unit costs are also lowered.
For many manufacturers their existing manufacturing software systems(opens in new tab) will struggle to cope with the influx of new data. The quantity of data delivers no inherent benefit. It is being able to ingest the right data and then effectively analyse it that makes the difference. That difference is enhanced when the analytics are done in as close to real-time as possible. Timely analytics requires the correct balance of computing resources. This is why manufacturers are beginning to move to cloud-based systems.
Scalability a key to coping with demand fluctuation
Being able to scale IT systems to deal with fluctuations in workload has historically been expensive. Organizations have often had to invest in infrastructure that was unused for large portions of the year just so that they could cope with peaks. Cloud-based solutions change this. As demand changes the resources being consumed also changes. Costs for cloud-based computing are based on resource usage. As a result the cost of IT tracks the highs and lows of workload demand.
Another benefit of this approach is being able to develop new processes and business models. The costs of adding resources to test a business case can be easily offset as it is taken forward. This is also true when looking at the development of new products. There are also other savings in terms of staff training for the IT department.
Analytics key to identifying costs and wastage
IIoT can deliver a vast amount of data not all of it useful. Manufacturers need to establish what data to keep and what data can be analysed to aid their business. For manufacturers faced with uncertainty in the cost of their raw materials, effective analytics offers significant rewards. If those analytics can be tied back to machine availability, stock control, order management and order fulfilment systems(opens in new tab) the rewards can be highly profitable.
For example, running jobs when power costs are at their lowest or moving to a just-in-time manufacturing process that is integrated with supplier systems to ensure raw materials arrive on time can significantly reduce costs. Reducing stock of both raw materials and finished products based on detailed modelling of sales cycles and promotions can as well.
Systems integration with suppliers and customers
One of the biggest benefits of cloud-based systems to manufacturers is a more tightly integrated supply chain. This is not just about the production but also the sales and distribution channels. The ability to see what material stocks are being held by suppliers means being able to reduce stocks held on site. It also delivers the opportunity to identify overstocks at the supplier to negotiate lower pricing.
In the sales and distribution channels, integration is about cost reduction, stock level management and reducing fraud. Understanding customer stock levels provides an opportunity to offer deals on product runs to get the most efficiency out of equipment. The use of new technologies that allow digital signatures to show when goods were delivered also speeds up payments. This is because it makes it easier and quicker to detect fraud and theft in the distribution channel.
For many manufacturers their challenge is finding a cloud-based ERP system(opens in new tab) that provides the manufacturing controls and analytics capability. Oracle NetSuite Manufacturing is a complete cloud-based solution that encompasses everything from sales and marketing through to integrated inventory and warehouse management. It can also be integrated with NetSuite’s ecommerce and analytics products.
To get the most out of the IIoT, manufacturers need to decide what data they want and ignore all the rest. Once the data has been captured, it needs analyzing along with other business information. Data does not sit in a vacuum and analysis only works if it meets business goals. Those goals might be anything from reduce unit costs to cutting waste or improving the productivity of their manufacturing equipment. Using cloud-based systems allows manufacturers to remove costs by not having capital expenditure on IT infrastructure. Instead that money can be used for investment in growing the business.
For more on Oracle NetSuite and trends in manufacturing, download the white paper “Not Your Grandfather’s Shop Floor: Modern Manufacturing Trends in the NetSuite Customer Base(opens in new tab).”