Industry 4.0 is in full swing and Australian manufacturers can benefit significantly from intelligent technology, if integrated into their business in the right way. By Greg O’Loan.

Industry 4.0 refers to advanced manufacturing technologies including the Internet of Things (IoT) and artificial intelligence (AI). It also facilitates new ways to apply old concepts such as automation and robotics, both of which have long been used in manufacturing (with outstanding results).

Embracing emerging, intelligent technology is essential for Australian manufacturers to compete effectively in a tough globalised environment. While the manufacturing industry in Australia has recently returned to growth, strong competition from overseas manufacturers remains a concern for local firms. Manufacturers in this country tend to have higher costs in terms of energy, labour, materials and logistics, compared with overseas competitors.

One of the ways to potentially overcome this disadvantage is to embrace smarter technology, such as IoT or AI. For example, one manufacturer has used cloud-based analytics and IoT to reduce equipment inspection times by 100%. This helped the company avoid a potential cost of $361 per second for downtime caused by manual inspections. This illustrates the enormity of savings that could be delivered by this type of technology.

Lower fault rates can mean manufacturers spend less time on corrections and more time on producing saleable products. The data provided by IoT sensors can help manufacturers identify bottlenecks or inefficiencies and remove these for a more streamlined process. It is even possible to identify new revenue opportunities and offer customised, unique products that further set the manufacturer apart from its competitors.

Many manufacturers are already aware of the potential presented by intelligent technology. Epicor research indicates that manufacturers believe the industry is either on the verge of large-scale IoT adoption or at least experimenting with the idea. According to the survey, 79% of manufacturers already have IoT sensors on their machines and 42% are using IoT technology to control and work with robots. Asia Pacific manufacturers are savvier than those in other parts of the world, with 73% saying they’re well informed about IoT, compared with 43% in Europe, the Middle East and Africa (EMEA).

One barrier to implementing this type of technology, however, is that measuring the benefits isn’t always straightforward. Almost three-quarters of the manufacturers surveyed by Epicor said they hadn’t yet measured a real return on IoT investments. Numbers like these can make manufacturers nervous about investing in intelligent technology, since a strong business case and demonstrable return on investment are key factors.

To maximise the benefits offered by intelligent technology like IoT and AI, manufacturers must pair them with enterprise resource planning (ERP) systems developed specifically for the manufacturing industry. This pairing can help manufacturers extract deeper, more meaningful insights from the data provided by IoT sensors, for example.

Real-time business intelligence systems, built into modern ERP solutions, can help manufacturers gain a microscopic view of their operations. This can help them extract every single last opportunity for improvement and deliver an outstanding customer experience that sets them apart from competitors. Getting that same level of insight using older reporting tools simply isn’t feasible.

Furthermore, modern ERP systems are far more capable of integration with emerging intelligent technologies than their older predecessors. This reduces the risk of adopting new technologies and increases the speed with which manufacturers can start to see results. Consequently, running pilot programs can get quick wins on the board, which can then scale to the broader business.

When IoT is effectively integrated with ERP systems, manufacturers can realise significant benefits beyond speed, accuracy, and customer experience. For example, they can effectively measure the daily performance of their operations down to each individual machine. This can let manufacturers understand how well their equipment is being utilised and it can provide opportunities for predictive maintenance, which reduces the amount of downtime in a production facility.

The vast quantities of valuable data that can be collected by IoT sensors can only be useful when it’s analysed and the insights are used to determine actions that will deliver results. While most manufacturers already rely on an ERP system of some kind, it takes a modern, preferably cloud-based ERP system to fully leverage the benefits of intelligent technology.

A modern ERP solution with business intelligence built in can more effectively manage the onslaught of data triggered by IoT sensors, turning data into insights, and insights into actions. Importantly, modern systems can provide these insights in near real-time instead of as part of a batched report at the end of the month or the end of the quarter—when it’s too late to see any benefit from changes.

Cloud-based solutions are also valuable because they eliminate the cost and burden of managing on-premise solutions that can be challenging to upgrade. This means manufacturers can access the latest functionality without the cost and risk of a monolithic solution upgrade.

By combining IoT and ERP, manufacturers can unlock significant benefits to help them compete more effectively in an evolving landscape and continue to grow their business. Importantly, the addition of ERP overcomes return-on-investment challenges associated with emerging technologies, resulting in measurable improvements for the business.

Greg O’Loan is the Regional Vice-President, ANZ for Epicor Software Corporation.