NTT DATA Business Solutions
Jan Ammann | February 28, 2019

Smart Manufacturing: Are You Facing These ERP Challenges?


Customer demands are greater than ever before. It is no longer enough to simply sell the products you want to – you need to sell the products the customer wants. This requires smart manufacturing capabilities to maintain a competitive edge. But for this, companies will need the support of an agile and connected ERP solution. In this series, we explore how cloud ERP could be the answer to many challenges in the age of continuous digital innovation.

From the shop floor to delivery and aftersales services, innovation and connectivity have drastically changed the sector. With innovative technologies such as big data, blockchain, the Industrial Internet of Things (IIoT), and cloud technology, the manufacturing industry has experienced huge advances that have given birth to the smart manufacturing concept.

Using these technologies, smart manufacturing presents exciting new opportunities for industrial production – but not without creating business challenges. And when facing these, companies without an advanced ERP system will struggle to keep up with demands.

7 ERP Challenges: Is It Time to Update Your ERP?

In the changing environment presented by smart manufacturing, your company may find itself struggling with the following challenges:

  • Too Many Systems, Not Enough Time

Many manufacturers still rely on ERP systems that were installed many years ago, even before some of the technologies crucial to smart manufacturing existed. In an attempt to catch up, you may have implemented additional systems and solutions for process such as materials resource planning (MRP) and customer relationship management (CRM). But you now find your IT environment overcrowded and difficult to manage. To provide seamless service to customers, you may need to consolidate all data and processes into one streamlined system. Automating or outsourcing some processes could also alleviate your IT managers from menial tasks.

  • Struggling to Provide Customization

There is a huge demand in the manufacturing industry for highly customized products at prices closer to that of mass production. This “mass personalization” approach puts great stress on nearly every department of a company and could require additional, data-heavy technical features such as a configurator. Those with outdated legacy ERP systems may find the required server infrastructure too expensive or data sharing between departments too slow to be able to keep up with demands. Taking your processes to the cloud could speed up processes, reduce costs, and enable better communication between departments.

  • A Predictive Approach to Maintenance

Machinery uptime is crucial to smart manufacturing – but how do you know how well your equipment is performing? Legacy systems are more about reporting what has happened rather than the forward-looking, condition monitoring capabilities that a modern ERP can provide. This often leaves companies “firefighting” breakdowns, with unexpected costs. What’s more, with little transparency on how well each individual machine is performing, it can be hard to locate the root cause of failures to optimize processes or prevent further disruptions down the line. A comprehensive, modern ERP solution could help you monitor performance, locate errors, and predict failures with much better accuracy.

  • Blurred Insights, Slow Actions

Supply chain management and MRP are hard enough to plan without the additional stress of supplier delays or last-minute order changes. Outdated or overcomplicated systems for ERP create a detachment between departments and hinder the flexibility and agility required to satisfy your customers. In addition, a legacy ERP may not have the AI capabilities or digital assistants that a modern one can offer, which optimizes planning and decision making. In the short term, this can lead to mistakes or slow reactions to last-minute requests. In the long run, you may find it more difficult to plan budgets, MRP, or other performance enhancing processes.

  • System Hopping Between Departments

With aging or outdated ERP systems, data gathered from separate departments can become siloed and blur communication between shop floor and top floor. This often leaves your staff “system hopping” from department to department, trying to find the most up-to-date information. If your managers don’t have a full overview of inventory, order requests, machine performance, or staff levels, the likelihood of dissatisfied customers increases.

  • Lacking Vital IIOT Capabilities

The Industrial Internet of Things (IIOT) is a vital component in smart manufacturing, enabling you to access much more data, much faster. Companies with all systems connected via the cloud benefit from scalability, increased efficiency, time savings, and reduced costs. An outdated ERP system may prevent you from pooling siloed data, maintaining an accurate overview of performance, and keeping up with the new industry standard.

  • Slow Access to Data; Slow to Innovate

Older ERP systems with additional individual solutions running alongside require too much management and leave very little room for innovation. And, finding out where innovation is actually needed can also be a struggle when your data is siloed and the performance of each of your machines is not being monitored. When your IT managers spend their time on managing a complicated IT environment, there is often not enough time, nor resources, to spend on innovation – and you could quickly lose your competitive edge in the market.

The Benefits of Cloud-Based ERP

Updating your legacy systems to a cloud-based ERP solution can help you overcome the abovementioned challenges. A subscription-based solution such as SAP S/4HANA Cloud offers scalable and affordable support for manufacturers. Consolidating siloed data into one central system using the cloud ensures complete access to accurate information. Optimizing processes with machine learning, predictive analytics, and automation gives you the agility required to best serve customers and stay competitive.