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September 24, 2014

ERP Continues To Transform Manufacturing

Posted by Sanjay Jalona (View Profile | View All Posts) at 10:18 AM

8 Manufacturing Trends for 2014 by Infosys [Source: http://www.youtube.com/watch?v=luquKreTqpw]

"Made in China." During the second half of the 20th century, these three words represented a seismic economic shift that would last for decades, involve hundreds of millions of laborers, and account for untold trillions of dollars.

Indeed, after World War II, Western companies discovered that the world was a big place, and the first thing they did was to take advantage of cheap labor way beyond their shores. It became far more efficient for, say, an American company to manufacturer its goods in China and then ship them all the way back to its home market, where it would put them up for sale.

The reason that cheap labor turned the manufacturing world on its head during the 20th century was that the research & development process - and everything else, for that matter - took enough time to justify opening plants in the Chinese countryside. The entire manufacturing process was a pretty long one, so having an assembly plant halfway around the globe where the labor came cheap was one of many realities of that era.

But today, microseconds matter. Thanks to enterprise resource planning (ERP) software, the manufacturing world is being turned back on its feet. ERP solutions have made every part of the manufacturing process so integrated, quick, and utterly efficient that companies are deciding to make their products close to where their sell them. Everything old is new again...

Probably nothing in the last decade has completely transformed the way companies operate than ERP solutions. Think about a major aspect of a vitally important. Whether you say inventory, shipping, payments, manufacturing, R&D, or even marketing, nothing has had such a profound effect on all of these functions than ERP.

Manufacturing used to be the realm of two basic types of functions: the foreman and the production line workers. What ERP did, in a most elemental way, was to make everyone involved with a company's product - from the ideation process all the way to the checkout counter - the foreman of their own, virtual assembly line. What I mean by this is that responsibility for every part of the process was streamlined and connected in a way so that the marketing guys weren't in their own silos wondering what the payments people were doing. Because of ERP, every function connected to every other in an impressive efficient, sum-of-the-parts operation.

And with that, things became a lot faster. What were once fairly far-reaching groups within an organization are now closely connected networks. I recall a colleague of mine speaking of how ERP is facilitating manufacturing so that "just-in-time" inventory processes are becoming "before-their-time." Information Technology is what binds all of these tasks together.

Because of ERP, many Western manufacturing firms don't have the time to wait for those three words (Made in China). ERP software brings down costs sufficiently so that operations are closer to their customers. No longer does an American company want to build a new plant some 10,000 miles away. It's also why, for example, BMW manufacturers its sports utility vehicles not in Germany but where it sells most of them: North America. Why put thousands of vehicles on a boat in Hamburg when you can roll them off an assembly line in South Carolina? Wherever they're situated, manufacturing plants are embracing high-tech materials and bringing the fruits of nanotechnology, chemistry, and physics to bear on their assembly plant operations.

That's just one example of how ERP has been connecting all parts of the manufacturing process so that the organization continually wants to push its operations faster and better and more efficiently. They want to improve each part of the manufacturing process and they're doing so, whether it's automation, Big Data, the Cloud, software, sensors, networking, and even predictive analytics.

Organizational manufacturing is coming together because of seamless ERP software packages that make an assembly process a thing of advanced beauty. The possibilities inherent in the solutions put forth by ERP are endless.

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