Encouraged by signs of growing consumer demand, especially in emerging markets, manufacturers showed renewed willingness to invest in IT in 2011. Exploiting business intelligence (BI) and social media to sense customer demand were some of the core manufacturing technology trends, as was using mobile ERP and cloud computing to bridge the widening distances of supply chain globalization.
SearchManufacturingERP.com’s editors reflected on the year’s developments and identified six manufacturing technology trends that changed the landscape of manufacturing IT.
Manufacturing cloud computing became more popular -- and more complicated. Manufacturers began to get over their initial fears about cloud computing and deployment options such as Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). A study by IDC Manufacturing Insights showed that 23% of manufacturers are using some form of cloud computing, with 44% more undergoing cloud implementations or planning cloud projects.
Software vendors responded to this growing interest in cloud technology by introducing new SaaS options. Microsoft used its 2011 Convergence conference to introduce its cloud ERP product roadmap, which included multi-tenant, subscription-based SaaS ERP.
While lower server and software maintenance costs are the main draws of cloud computing, manufacturers found that they could also improve global IT governance by switching to SaaS-based ERP, according to analyst firm Gartner Inc.
One of biggest questions surrounding cloud computing in manufacturing in 2011 was which model -- private clouds or public clouds -- was a better choice for data security and running core business software like ERP or SCM. The cloud picture got even more complicated for companies planning to use multiple SaaS-based systems, as they weighed the benefits of running multiple cloud environments.
The growth of mobile ERP brought new security concerns. As smartphones and tablet computers became part of everyday life, manufacturers wrestled with the costs and security risks associated with mobile computing and mobile ERP. Manufacturing IT had to decide whether to allow employees to access company data through their personal mobile devices or issue company-owned and controlled devices. In either scenario, the data security challenges were significant and included hackers, malicious applications, and lost or stolen devices.
Despite the challenges, manufacturers saw many benefits to adopting mobile computing. When paired with Wi-Fi networks, mobile devices provided new freedom and flexibility to manage operations on the go and access email, company data and business applications wherever a hotspot was available.
IDC Manufacturing Insights advised manufacturers at its 2011 Directions conference to build strategies for managing devices and applications now. Its analysts named mobile -- along with cloud computing and analytics -- as key components of the new technology platform that will shape manufacturing IT for years to come.
Manufacturing BI and analytics became a top priority. Manufacturers came to recognize the cost and revenue advantages of applying supply chain analytics to demand planning and inventory optimization, experts said. Companies sought to extend this manufacturing BI to mobile devices, putting mobile analytics in the hands of salespeople and executives for improved supply chain alignment.
Meanwhile, industry experts and a few innovative manufacturers touted the benefits of applying manufacturing BI to the operational side of the business. The goal: business intelligence for manufacturing that lets employees in every department receive key performance indicators from the shop floor and warehouse -- in real time. But a study from Ventana Research Inc. showed that most manufacturers fail to exploit the significant operational, marketing and financial decision-making benefits of manufacturing analytics. Nearly two-thirds use time-consuming, unreliable spreadsheets for their business analytics, and many say the information is stale or unreliable.
Supply chain globalization drove new investments in cloud computing and analytics. Manufacturers were reminded again of the sometimes stark realities of supply chain risk, while scrambling to meet new demand in emerging overseas markets by standardizing global manufacturing.
The devastating Japan earthquake and tsunami, which disrupted the automotive and consumer electronics supply chains, shocked manufacturers into taking another look at supply chain risk management software and strategies.
Companies turned increasingly to manufacturing cloud computing to set up fast connections to their worldwide suppliers and customers. In a report, Gartner advised companies to establish cloud-based “supply chain control towers” to gain broad visibility, control and performance analysis of their global partners. It’s all part of a growing trend toward supply chain outsourcing, Gartner said.
The operational side of supply chain globalization moved to the forefront, as analysts prescribed an IT toolbox for global manufacturing that can both standardize production across facilities while making them more responsive to local needs. Engineering-intensive companies, such as Ford Motor Co., reported some progress in implementing a “global plant floor” by integrating ERP with product lifecycle management and manufacturing execution system software over the cloud.
Manufacturing social media initiatives improved connectivity and collaboration. Manufacturing organizations looked to harness the power and popularity of social media outlets such as Facebook, Twitter and LinkedIn. Some revamped their company intranets to mimic these sites, providing employees with more familiar and user-friendly interfaces to encourage greater interoffice collaboration.
When it came to forging social media connections with customers, however, few manufacturers moved beyond the planning stages. A survey by Affinity Research Group and ERP vendor IFS North America revealed that while 24% of manufacturers considered software that has collaborative and communicative functions to be “very important” or “extremely important,” only 12% were exploring tools labeled as “social media.”
“The idea [of manufacturing social media] is of interest, but right now there isn’t a tool for feeding all that data in” from an ERP system or other enterprise applications, said Matthew Davis, principal research analyst at Gartner. “Anything around predictive analytics is difficult, because there’s too much volume.”
Supply chain sustainability became a job for operations. Spurred in part by new guidelines meant to foster the sustainable supply chain, manufacturers began to make more substantial investments in sustainability software, but found the market to be fragmented, according to Verdantix, a market research firm.
Manufacturers were expected to take a greater interest in using IT not just for “greenwashing” publicity campaigns and easy routes to reducing carbon footprints, but to cut energy and resource use in their manufacturing processes and facilities. IDC Manufacturing Insights analyst Kimberly Knickle predicted sustainability would converge with other business improvement initiatives, such as lean manufacturing and employee safety, and green decision making would spread deeper into organizations.
There was some evidence that more manufacturers were indeed serious about exploiting IT to master the demands of a sustainable supply chain, but they still faced technical and regulatory hurdles. Panasonic Europe, for example, said it uses SAP manufacturing sustainability software to manage the complex regulatory requirements of “e-cycling” but has yet to fully integrate product data across its global network of plants and suppliers.