The manufacturing industry is always in a state of flux, and for the last few years the pace of change has been intense. If predictions hold true, the pace of change for the upcoming years will be almost mind-boggling, due to the influence of these five global industry trends.
1. Supply chain disruptions
With global supply chains, manufacturers need to keep an eye on political and economic situations all over the world. Even local weather conditions can disrupt a global supply chain – think of the tsunamis in Japan and the Philippines, Hurricane Sandy in the U.S. and the wind storms in China. Each of these events caused far-reaching problems for global supply chains.
Supply chain management software can help by enabling manufacturing companies to model the effect on production of alternative sources of supply in the event of a disaster, or to assess the cost impact of using different suppliers during the crisis.
2. Inherently global - but refocusing on local
Almost every manufacturer in the world is a global company in today’s connected economy. Even the smallest of companies sell their products or source materials in multiple regions. However, rather than blindly following the belief that it is inherently less expensive to manufacture overseas, companies are considering reshoring manufacturing operations. The result has been a resurgence in the health of the manufacturing industry, particularly in North America.
3. Technology has changed pretty much everything
Perhaps more than most industries, technology advances from 3-D printing to the Internet of Things have affected the manufacturing industry. Even small and mid-sized manufacturers are connecting sensors to equipment to provide information to their ERP software. Additive manufacturing – the technical name for 3-D printing – will change everything from the way we design products to the way we deliver them.
These changes have spawned thousands of new manufacturing ideas for small business, from dental implants printed in dental offices to sensor-equipped HVAC installations that alert homeowners and service people about potential failures before they occur.
4. Pressure of regulations
It’s astonishing how many regulations manufacturing companies must comply with today, even if they aren’t in regulated industries. OSHA safety regulations, Obamacare Insurance requirements, SEC regulations on conflict minerals, Dodd-Frank reporting on segregation of duties – the list goes on and on, even without adding in FDA regulations for medical devices manufacturers and food and beverage companies.
Fortunately, modern ERP applications include compliance management software along with the traditional ERP capabilities to support manufacturing, customer management and financials.
5. Demand-driven manufacturing
Manufacturing companies had historically pushed work orders to the shop floor regardless of the amount of work in queue, but as lean manufacturing techniques took hold, they shifted to pull systems where work centers requested work as needed. This seemingly basic change made a huge difference in inventory levels and productivity.
Manufacturers have started applying the same concept to their high level planning. Working closely with customers and the sales force, they have sharpened their focus on predicting actual demand. The result, once again, is a reduction in inventory, more production throughput, shorter lead times and happier customers. Coupled with S&OP (sales and operations planning), demand driven manufacturing has reduced costs, improved margins and often increased sales as customers respond to faster deliveries.
Today, even small business manufacturing software includes capabilities to support demand-driven manufacturing. Since the benefits are so great, it makes sense for companies to adopt this capability if it’s available in their ERP systems.
Small and mid-sized manufacturers are affected by these trends as much or more than large companies. Fortunately, the right ERP system can help them to level the playing field and become more competitive.
