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The Supply Chain Management Blog covers the latest in SCM strategy, technology, and innovation.

How Manufacturers Are Using ERP to Conquer Disruption

Julia Vagdati
Product Marketing Director

If you’re a manufacturing executive who thinks digital disruption will change your business “someday,” consider this your wake-up call: Someday is today.

Customer expectations are rising while current competitors and nimble new players turn up the heat. Smart CEOs are carving out new revenue streams from product management and maintenance subscription programs that use IoT data. COOs are transforming their organizations with hyper connectivity, leveraging cloud technology to overtake larger competitors, and close the product feedback loop with rich customer usage data. And manufacturing leaders are using real-time data, predictive analytics, and automation to increase supply chain efficiencies, lower cost, reduce downtime, and increase productivity and quality.

Welcome to Industry 4.0. One of the most important features of Industry 4.0 is connectivity: Connecting people, processes, machines, and technology to generate the data necessary to make real-time decisions. This can bring significant business value to the organization. However, to be able to realize this value, manufacturers need a comprehensive solution for real-time visibility and collaboration across all functions and the complete value chain.

Yesterday’s technology cannot support tomorrow’s manufacturers

To thrive and grow in this environment, manufacturers must be nimble enough to respond to and even predict rapidly changing market needs. With real-time visibility across the business, manufacturers can become more agile, anticipating and responding to opportunities and challenges alike quickly and intelligently. In fact, nearly two-thirds of manufacturing CEOs responding to a recent KPMG survey say acting with agility is “the new currency of business; if we’re too slow, we will be bankrupt.”

But beware: If you’re relying on inflexible on-premises systems, your ERP solution may not be helping—and it could be holding you back. Legacy systems lock data into functional silos that inhibit information sharing. They require complex customizations that make upgrades (and even updates) a nightmare. And they run on infrastructure that requires ever-increasing resources to maintain and large capital investments to scale.

Worst of all, these outmoded systems leave most companies effectively running blind: Only 6 percent of respondents to the KPMG study say they’ve achieved full supply chain visibility—meaning manufacturers are missing out on cost reductions of up to 20%, according to BCG. If your manufacturing firm relies on such a system, the cost of standing still is huge. What’s the solution?

Cloud = value, visibility, and insight

An end-to-end, cloud-based ERP system—including SCM (supply chain management)—gives manufacturers visibility and insight across the value chain. It enables technologies such as IoT and AI, which can help manufacturers use information from multiple applications and processes—from the factory floor and across the entire supply and demand chain—to distill actionable insight and context for better decision-making.

Along with visibility, the software as a service (SaaS) model provides minimal capital expense and better ROI than on-premises applications. SaaS can scale on demand, lowering capital expenses while allowing for faster solution startup. Without the initial expense of hardware and licensing fees and ongoing maintenance costs, cloud deployments have an average 52 percent lower total cost of ownership (TCO) compared with on-premises deployments—and deliver 3.2 times the ROI.

Not all clouds are equal

Many manufacturers are holding off on transitioning to the cloud or are dipping their toes in with multiple, limited-functionality cloud apps or hosted solutions, in which a single instance of an application runs on a remote server. This type of ad-hoc cloud deployment increases infrastructure complexity and does little to reduce the time, disruption, and resources required for ongoing maintenance. Also, you can’t efficiently share data, which could potentially lock a manufacturer into business processes with diminishing returns. When manufacturers explore options to migrate to ERP cloud applications, they often find that their current provider’s “cloud” offering is little more than a refresh of older, legacy applications with the same limitations that are already putting them at a competitive disadvantage.

By contrast, Oracle ERP Cloud is built for cloud from the ground up. It provides a standard, enterprise-wide approach that delivers benefits at the infrastructure, platform, and application layers. This integrated approach to cloud is key to unlocking the potential of disruptive technologies. This is possible only with Oracle Cloud, because business intelligence is built in. Oracle Cloud applications excel at pulling together important data from a wide range of sources and helping executives improve decision making.

In the modern SaaS model, flexible reporting, industry-leading best practices, and emerging technologies are built in. As processes evolve, the software evolves with them. What’s more, best-in-class cloud-based ERP systems are highly configurable, so that they can adapt to your business without losing those adaptations to future upgrades and enhancements.

Oracle for manufacturing

Oracle ERP Cloud—the only leader in Gartner’s 2018 Magic Quadrant for Cloud ERP for Product-Centric Midsize Enterprises—provides a future-proof architecture that is continually updated, so manufacturers can adopt the most advanced capabilities without risking business continuity and spending resources on costly system upgrades. Oracle ERP Cloud offers manufacturers:

  • Industry-leading best practices built in. Oracle ERP Cloud can be configured for specific workflows while also standardizing business processes.
  • Integrated analytics, embedded AI and IoT, so you don’t need data scientists to take advantage of emerging technologies.
  • Integration with Oracle’s Smart Connected Factory solution to improve visibility, monitor performance and quality, and predict maintenance needs.
  • Vast reporting capabilities offering more than 1,000 real-time analytical reports right out of the box.

If manufacturers hope to thrive in today’s (and tomorrow’s) highly disruptive environment, they need the right foundation for building an innovative, 21st-century business. This includes an end-to-end cloud-based ERP solution. They should look for a manufacturing-specific system that integrates with IoT, AI, and ML to optimize real-time decisions, while controlling for costs and quality.

Oracle Manufacturing Cloud brings all the facets of manufacturing together to enable exponential growth and scalability for your business. To learn how Oracle Manufacturing Cloud can help your company seize new opportunities, visit https://www.oracle.com/applications/supply-chain-management/solutions/manufacturing-cloud.html

 

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