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The Fourth Industrial Revolution and Software Systems - ERP Is Doing What Spreadsheets Did To The Black Board

Thomas Epton - Business Development Manager

What is the Fourth Industrial Revolution / Industry 4.0?

Simply, the first industrial revolution brought us the steam engine, progressing to the second with the arrival of mass production assembly lines, thanks to Tom Ford. The third was thanks to the 1970’s and the innovation of the computer, transforming the work space. The fourth is now ushering us into a new fully-connected digital age, as a result of the leaps in computer power and efficiency. For more information on the revolutionary stages, visit the blog written by Gordon Benzie.

But what does it actually mean? 

It’s no secret that technology has been advancing at a tremendous rate. This means that it is not only more powerful, intuitive and automated, but also more accessible, with companies offering software solutions that are now affordable for micro-sized businesses - sometimes they’re even free! 

More importantly however, there are softwares that have been created for small to medium businesses in terms of functionality, offering simplicity and usability. If you can create a spreadsheet and put yourself through all the manual entry and formulation creation, you can certainly use a fully automated production control system. 

Driving this revolution are three core aspects, outlined below: 

  1. The Industrial Internet of Things (Internet of Things = everything embedded with sensors that collect and share data with each other).
  2. Big Data and real time data analysis.
  3. Secure digital infrastructure to support and trust autonomy.

How will it affect manufacturers?

Tremendously, is the answer. I know this from selling and implementing production control systems on a daily basis. Every business I work with is, however, at different stages of transformation, ranging from all the information being stored in the owner's head, making it impossible for the business to function at an efficient rate (unless it’s a one man band), to having a system which isn’t suitable, either down to lack of research or the business having been sold a lie by a ‘yes man’ sales representative. 

The middle ground - utilised by the largest portion of businesses I work with - is the spread sheet system. Granted, it's better than some scribbles on a piece of paper; however, the truth is that they are now obsolete and simply unnecessary, especially going forward into the fourth industrial revolution. This is because they require large amounts of document creation, manual entry and maintenance.

Production control systems are developed to simplify daily tasks, for example, creating a quote that everyone can refer to and storing it in the cloud so it can never be lost. Manual document creation is a task of the past with this software, as it only requires that you simply drag the information you entered at the quoting stage. This creates your schedule to forecast lead times - capacity planners will tell you in one click the amount of hours already scheduled, allowing you to further drill down into specific machines, or even employees. Furthermore, this is only the tip of the iceberg as far as benefits are concerned.

Benefits of the Fourth Industrial Revolution

Smarter Supply Chains
With connected supply chains, efficiency within business-to-business interactions is vastly improved. 
With the capture of data, it will be far easier to see which supplier can give you the most competitive price and has delivered on the promised dates.

Smart Production
With increased information for shop floor availability, businesses are able to make the most of their day, increasing productivity through machinery and personnel efficiency. Softwares such as nesting solutions will reduce waste, ensuring you get the most out of the resources you already have. 

Smarter Products
It's not just software solutions making advancements, plant machinery is also following suit. With greater precision and efficiency, manufacturers will be able to make higher quality products, demand-driven by customer needs. This will soon become essential as we move into the fourth industrial revolution. 

Real Time Reporting
Real time reporting ties together two of the three core drivers of this industrial change - the ‘industrial internet of things’ and ‘big data’. Creating a vast number of benefits for manufacturers, real time reporting will allow businesses to monitor every step of production, enabling the ability to spot potential bottlenecks. But for more immediate reporting, management can see all work in progress (WIP) and whether jobs are going to finished on time when current production rates are taken into account. Most importantly, costs are captured on a real time basis, ensuring profit is made on each job.

Reports 
As a result of all the data being collected, businesses will be able to achieve greater control and understanding of what's happening in their factory. By monitoring work rate, efficiency, conversion rates and product demand amongst literally thousands of other available reports, a business can increase productivity and keep pace with the industry's technological shifts.

UK and Industry 4.0

Britain was the flagship of the of the first industrial revolution and still remains in the top ten largest manufacturing countries (source: EEF). 
The changes that are taking place as a result of Industry 4.0 are expected to be a reality within the next decade, which does not give a whole industry a lot of time to transform its procedures - especially considering  that the UK manufacturing industry is generally behind competitor countries, in regards to manufacturing efficiency and adopting technology. Although it displays a window of opportunity to those more willing to embrace innovation by changing internal processes, it does result in many companies being left behind, dragging the industry performance down. 
The EEF conducted a ‘Digital Connectivity Survey’ in 2015. It found that only 11% of manufacturers in the UK believe the industry is ready for the changes that the fourth industrial revolution will bring (57% had no opinion and 33% say outright that the industry is not ready).
My personal opinion is that the UK will make a quick and sudden change, revolutionising in a matter of years. This is because technology implementation to manage production is very dependent on the company's decision makers; many small to medium manufacturing companies that are the lifeblood of the industry, have no interest in implementing technology. Due to the fact that technological systems simply weren't available when they learnt the trade, they have no desire to change - regardless of the benefits involved. Once these businesses are sold or handed down through families, the younger, more tech-savvy generation will inevitably embrace the change.

Barriers

Internet connectivity - will it load?!
A recent EEF report found that 50 percent of UK manufacturers did not believe that current internet connectivity is good enough to complete a 5 year digital transformation. However, 35 percent disagreed, which begs the question; is this variation due to location or personal belief? In reality, most softwares and systems use a very small amount of bandwidth - more likely, it's a result of a lack of faith in constant 24/7 connectivity and in-cloud applications.
Despite the country becoming more connected and the internet becoming a service that everyone should have access to, 44% of UK manufacturers have reported cost increases. Figures released by the EEF show that 23% of small manufacturers are paying over £5000 per year for internet connections. Meanwhile, 50% of mid-sized businesses report being charged over £5000, whilst this figure increases to 89% for large manufacturing companies.
Like it or not, manufacturing businesses are now reliant on internet connections to function on a daily basis. For example, 95% of firms require internet for online services, such as banking. 53% are using online data repositories, 55% utilise resource planning services and 38% require the internet to connect to plant machinery.
When it comes to internet connectivity, the UK’s core network is unfortunately copper. In reality, this is just about sufficient to support the fourth industrial revolution; however, more powerful networks are required for the ongoing development of the industry and more importantly, to increase trust within the manufacturing industry surrounding internet connectivity. Unfortunately, Britain is currently at the bottom of the league table for fibre rollout, with only 2 percent of the network infrastructure dedicated fibre-to-premises.

Staff skills and knowledge - how complicated?!
The industry change won't just affect the management - it requires a complete shift in processes, meaning that the way employees embrace the change is crucial. Once again, there is a common belief that digital systems require software knowledge due to their complexity. Whilst this may be true in regards to the large well-known systems wearing brand names such as SAP and Oracle, this is not a uniform fact. There are now systems that are developed for small manufacturing companies, that are focused on simplicity and usability. The reality is, if your employees can run a business using a variety of highly complex spreadsheets, they can run a ERP/MRP system which displays all of the information in one place. In addition, all software companies offer training - whether this is through one-on-one tuition or a library of tutorials, employees can grasp systems with the right amount of dedication. 

Cost - How Much!?
It’s true - not much in life is free and if it is, it’s probably not worth having anyway. Historically, digital systems came with a hefty price tag of between £10k-100k, not to mention the support and training fees involved going forward. However, that's what it costs to manage a large company and in relation to income, it's still affordable and essential. But what about the small to medium businesses? Recent years have shown a new emerging market of MRP/ERP-style production control systems, outlined in my ‘Small ERP - The Emerging Market’ blog post. Low-fee or even monthly subscriptions packages are now available to spread the cost of a system.

It’s not the right time for us!
Time is arguably the most precious commodity to any business owner, especially in the fast-paced manufacturing industry. As highlighted in our ‘Sheet Metal - Case Study’, most businesses never have the time to make a change, especially a digital changeover. Subsequently, it may not be the ‘right’ time - you’re either busy trying the get jobs out the door, or busy trying to get more work! Whilst there is never a convenient time to change to a technological system, using technology to control production will give you more time in the long run. It really is short-term pain for long-term gain when it comes to the fourth industrial revolution. 

Program Connectivity and Integration - Why can't I find my magic wand?
In truth, there are few systems out there that are able to monitor every aspect of a manufacturing business, providing all the functions you desire. This does result in businesses having to run more than one system; for example, one system for production and document creation, one for accounts and another for machine efficiency and planning. This does require a certain amount of manual entry to keep all systems running in sync - far less, however, than using the completely manual methods of the past. Getting software programmes to integrate with each other is more difficult than it sounds - that being said, as time progresses, it will be more and more essential for system developers to consider.  The fourth industrial revolution will drive this increased integration as the demand for these system features continues to grow. 

ERP Is Doing What Spreadsheets Did To The Black Board:

The Fourth Industrial Revolution is a term creeping into a variety of literature aimed at the manufacturing industry. Furthermore, it is inevitable, being driven by a variety of factors which cannot be stopped. To the benefit of the manufacturing industry worldwide, despite the obvious pains of change, Rome was not built in a day.

Here at Statii, having worked in the manufacturing industry for many years, we are well aware of the barriers that small to medium firms face when changing to an automated system. We also know how much love there is for the spreadsheet system and how daunting it can be to switch to an automated software.

That is why we have created a free-for-life beginners system called Statii Liite. Designed to demonstrate the power of a dedicated manufacturing software and show how easy they are to use, Statii Liite will give manufacturers the Customer and Supplier function to keep an up-to-date CRM and an enquiry/quoting feature.

We have teamed up with Qimtek, the well known manufacturing directory, to spread the word and help manufacturing SMEs to make the original transition into the fourth industrial revolution.

For more information regarding the free Liite system, please click here.

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