Insight: Digital Transformation in Manufacturing Sector

Digital transformation has been changing the manufacturing sector. The implementation of the Industrial Internet of Things (IIoT) and Industry 4.0 revolution have been converting the manufacturing facilities into smart factories. There is a big scope for technology adoption in Southeast Asia SEA’s manufacturing sector. The digitization has been making manufacturing units more efficient and productive.

According to a report by McKinsey, 96 percent of manufacturing companies in the SEA region believe that the digital transformation will create a new business model. In the region, only 13 percent of the manufacturing companies have started their digital transformation journey.

In SEA region, experts believe that in 2021, the manufacturing sector in Indonesia is likely to grow by 6-7 percent annually, up from 5 percent in 2016, due to the improving political situation, stabilizing currency and changes to economic policies. 

IT companies have been helping SEA manufacturing companies in their digital journey in a cost-effective and scalable manner by offering various tailor-made solutions. By adopting the technologies, companies can collect data and analyze the industrial data for smarter business decisions.

Global Manufacturing Sector: An Insight

The global perspective in the manufacturing sector is also booming and on a path of digital transformation. The global consumption is forecast to reach $ 62 trillion by 2025 from $31 trillion in 2013. The growth will be from the emerging world. The digital adoption by the manufacturing system will enable them to have faster and agile production systems. And, by 2025, half of the world population will live in the cities and in the next two decades, the demand and consumption will have a significant rise in more than 400 midsize cities.

The countries with the highest industrial output across the world are China, the European Union, the United States, Japan, Germany, India, South Korea, United Kingdom, France, and Italy. Industry 4.0 and digital transformation is certainly going to drive new opportunities and challenges in these countries. In India, Surat is the mega-hub for textile production, Foshan in China is known for furniture and light products, Porto Alegre in Brazil is a major exporter of agriculture products. It is expected that digital disruption is going to have a big impact on these cities in the next two decades.

Manufacturing Sector: Challenges

According to the 2019 National Manufacturing Survey Report, 52 percent of manufacturers’ have cited labor and talent as big challenges. While 34 percent and 25 percent considered competition and making a profit as the major challenges in the manufacturing sector. The report also suggested that “an increase in spending on Big Data and business intelligence are delivering innovative technology for minimizing productivity concerns,” Let’s have a look at major challenges in the manufacturing sector.

1. Consumer needs in Emerging Markets: The major challenge for global manufacturing companies is to meet the needs of consumers in emerging markets. Most of the companies are efficient in addressing the needs of their customer and face challenges while moving the emerging markets. For this, they need good strategies and business plans to reach and do businesses.
2. Personnel Shortage & Skills: It is hard for the manufacturing companies to get the right personnel and skills for the production and process. The automation process has been able to address some of the challenges; however, lots of companies have been still relying on the skills and right personnel. The labor market is the biggest aspect of the manufacturing sector. The global talent shortage will touch 85.2 million people by 2030; it would cost companies trillions of dollars in lost economic opportunity.
3. Lack of Information (Analytics): Some of the companies see the lack of information as the biggest challenge. This could be related to processing, materials, and resources. It is expected that 59 percent of the companies don’t have real-time visibility of stock levels within the organization, while 65 percent do not have a real-time view of suppliers’ manufacturing schedule.
4.  Manufacturing Technologies: The subject of manufacturing technology is very vast. The adoption of technology is slow. The companies could use the technology to control various types of tools: hand-held tools, lathe machines, milling machines, NCC machines. These units need designed or tailor technologies to run and operate various tools to finish certain jobs. Most of the companies are in dilemma that which technology they could use for their production.
5. Internet of Things (IoT): Manufacturing companies need to utilize the latest technology to stay relevant, innovative and competitive. The biggest challenge is the implementation of IoT in their jobs to achieve operational excellence, reducing costs and improve efficiency. The safety of the works is also a major concern for the companies while implementing the technologies replacing the traditional process of production. Simply implementation of the IoT will not be useful; manufacturers need a strategy for the same and product innovation.
6. Maintaining the Right Inventory Levels: It is very common that manufacturers face with the inventory management and forecasting the production. The biggest challenge is to remain organized with these things. They need real-time tracking in their production process so that they can make the right decision regarding inventory or the forecasting the production for future operations. Software (ERP for manufacturing) will be useful to keep a track on the inventory, which can give a precise update on available raw material, work-in-progress and finished products.

ERP Solutions for Manufacturing

Considering the above challenges being faced by the manufacturing companies, it could be suggested that software solutions will be beneficial. ERP Software would be useful for companies to check the entire process on a real-time basis. There are many solutions available in the market, as per experts view – Odoo ERP software could be useful and beneficial for the manufacturing units irrespective of their size and nature of the business.

Odoo manufacturing is the best app among business apps. The application has been useful for the manufacturing units to look after the overall process including PLM, maintenance and quality. It is an all-in-one application; companies can do accurate planning based on real manufacturing time measures. It is integrated with MPR, maintenance, quality, and PLM. Manufacturers can check the worksheets, quality alerts and guide workers on real-time communication. And, they can automate the entire shop floor using APIs. It is useful in engineering, manufacturing engineering, managing supply chain, maintain quality and extending maintenance.

Digital Disruption in the Manufacturing Sector

Of late, the digital data in the manufacturing sector has been increased significantly. The companies are gathering data using smart products, customers, enterprises, suppliers and IT system connected with production units. Due to the adoption of the technologies, the scenario has been changing rapidly across the world. To stay competitive, manufacturing companies need to improve productivity, check the errors and control the input costs.

The digital transformation is easing the complex process of the manufacturing companies and simultaneously opening the door to new competitors to enter into the sector. Companies need to adopt the right technology to keep up with the current trends in the industry and could go for the best application for faster and better performance.

The IoT and Big Data are not only improving the manufacturing companies in terms of productivity, effectiveness, and efficiency but also improving the outcomes. The lasts technologies have been useful in production optimization, operational excellence, lower the input costs and help in the automation of the manufacturing unit.