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Adapting your ERP system for the future of manufacturing

ERP with Industry 4.0 is the future of manufacturing

Stay agile and competitive in the age of Industry 4.0

Industry 4.0 is a vision into the future of manufacturing—one where agile factories use intelligent machines to produce superior products. The underlying technologies have been in the news for years—including cloud computing, mobile devices, big data, and the Internet of Things (IoT). Meanwhile, advances in robotics, machine learning and 3D printing are all opening the gates to digital disruption.  

for disparate systems to operate efficiently, you need agile, adaptable infrastructure


This emerging model of the future offers unprecedented opportunity, but to succeed, organizations need a modern enterprise resource planning (ERP) system that can readily adapt and meet the demands of the journey. Decentralized management will be at the core of the operating model of the future. But for disparate systems to operate efficiently, you need agile, adaptable infrastructure. That requires ERP systems that can readily adapt with flexible integration capabilities and the ability to seamlessly bring together separate functional applications and processes.  

The possibilities are exciting, but the path to digital transformation presents a number of challenges. Integrating applications and services requires robust back-end business processes and competent technical capabilities; a strong focus on the customer; and the ability to work across functional and geographic silos. When fully leveraged, these capabilities can provide compelling competitive advantages.

Advances in 3D printing for Industry 4.0

Disrupting Factors in Manufacturing  

Several major disrupting factors are poised to have the greatest impact on the manufacturing model of the future and are already driving much of the change.:

1. Infusion of the Internet of Things (IoT)

At the center of digital disruption is the IoT, which provides manufacturers with an effective way to link products, devices, and machines to enable new levels of information monitoring, collection and analysis. On the plant floor, this is achieved with sensors monitoring and recording a range of parameters, such as the quantity of raw materials entering the factory, as well as the volume of in-process products progressing through the plant.

IoT-enabled equipment improves production efficiency and allows for a smarter way of doing business. Digitizing the movement of raw material and products gives plant managers an exact accounting of material usage and production rates, as well as insight into ways to cut costs and forecast future needs. 

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IoT technology of the future is expected to extend beyond real-time measuring and reporting to integrated information systems that optimize data and analytics to help deliver more reliable, higher-quality products. With the IoT transforming manufacturing through the use of intelligent, connected devices, organizations have even more opportunities to refine their operations with better data and process integration.

2. Mass customization

The accelerating trend of mass customization is requiring greater manufacturing agility to meet shifting customer demands. Mobilization and connectedness—leveraged through the IoT—is helping to addresses these challenges by enabling more effective after-sales service and support. Data collected from connected devices, for example, can be translated into insights that help improve product quality, optimize performance and extend lifecycles.  

Complete integration helps ensure that customers are promised realistic lead times and can be given reliable, real-time progress updates


Driven by growing customer demand and enabled by modern technology, mass customization fulfills two core needs: It appeals to the growing demands for personalization from today’s exacting consumers, and it helps manufacturers gain an important element of differentiation in an increasingly competitive marketplace. But it also means manufacturers must be agile enough to make changes in near real-time without the entire project coming off the rails. 

This highly fluid environment makes it difficult for manufacturers to execute core tasks such as ordering the right materials in the right quantities; determining accurate costs for each phase of the production process; and accommodating changes that invariably arise at the most inopportune time.

Advanced supply chain management tools, which fully integrate with the enterprise business system, can help manage the complex resource planning and fulfillment of custom orders. This complete integration—from the front end to procurement and production and supply chain systems—helps ensure that customers are promised realistic lead times and can be given reliable, real-time progress updates.

ERP is at the center of the factory of the future in Industry 4.0

In the factory of the future:

  • All external and internal and external processes are linked through the same information platform
  • Customers, designers, and operators will share information on everything
  • The distribution of intelligence throughout the shop floor will require an ERP system that can support a decentralized production model. 

3. Decentralized management

The distribution of intelligence throughout the plant floor means that the Industry 4.0 world operates in an inherently decentralized management mode. To accommodate this, the ERP also needs to act decentralized—not physically but logically with autonomous agents, products and tools that flexibly coordinate production demands and efficiently manage information processes.  

vertical integration is essential through ERP to link manufacturing and engineering processes with the shop-floor


While products or materials can communicate with shop-floor machines, compliance with wider processes such as quality, logistics and engineering still need to be applied. This vertical integration is essential through the ERP to link manufacturing and engineering processes with the shop-floor.

Of course, not all the information needed for a completely efficient manufacturing plant lies within the facility. Horizontal integration of the ERP can provide transparency throughout the whole supply chain. This will enable the decentralized production model to be extended to other factories. Instead of data residing in separate functional silos, a modern ERP system provides visibility of key performance metrics across the entire enterprise. This insight improves decision-making and helps ensure optimum resource utilization.

KPI playbook with KPI formulas

Measuring the right KPIs is the first step toward manufacturing success. 
Get the KPI formulas, descriptions and "when to use" info from our download, The KPI Playbook for Modern Manufacturers

4. Optimized workflows

The age of Industry 4.0 will see a growing demand for automated technology to keep pace with production speed and efficiency demands. To meet these challenges, the consistent use of cutting-edge tools, capabilities and best practices is a must. Advanced robotics is a good example. Today’s advanced robots are capable of replicating more human movements and actions such as nimbleness and memory recall, making them particularly valuable in fluid, made-to-order production environments.

Highly trainable and collaborative, robots are integral to helping manufacturers optimize workflows, inventory, work-in-progress and supply-chain decisions. A number of industries, including automotive, electronics and industrial machinery manufacturers, have invested heavily in programmable robotics with exchangeable fixtures and tooling that can nimbly switch between machines and execute process changes with little impact on efficiency. 

In these environments, sensors replace human hands, resulting in less wasted time and materials, as well as optimal accuracy and workflow. Quality is also no longer at the expense of efficiency, as machine learning algorithms dictate which elements impact service and production quality.

Modern ERP in Industry 4.0 includes workflows and barcode scanning

Reaping the benefits of a modern ERP  

What does all of this portend for manufacturers? Although every organization will decide based on their individual needs and goals, Industry 4.0 provides a vision for how manufacturers can bolster their competitive position in a fast-changing world. 

To capitalize on the opportunities presented in the digital economy, manufacturers need an ERP architecture that is up to the task. Monolithic mega suites will be replaced by agile, adaptable application infrastructures. Businesses that are subject to government regulations should be especially concerned about design flexibility. If the system’s architecture makes it difficult to add functionality to support new regulatory requirements, you may find yourself scrambling to find an alternative solution, which may be a cumbersome, error prone manual system or an expensive replacement. 

Because of the complexity and mission-critical nature of manufacturing processes, modernizing IT operations must be a central component of the company’s digital strategy. Muddling along with outdated software, manual systems and inferior tools is a direct route to obsolescence.   

A smart first step toward the factory of the future is upgrading to a modern ERP system—one that can bridge the gap between high performance and minimum operating costs. A scalable and robust ERP platform provides a solid foundation for future growth. Not only are existing business processes amply supported, but new capabilities can be added as needed with new software updates. As operational processes grow, businesses have confidence in their ability to easily scale to meet them.

Building the framework for smart manufacturing

While the opportunities for success are abundant, the path forward also brings many challenges. Becoming digitally proficient requires solid business processes, a sharp focus on the customer, and the ability to execute and perform across functional and geographic silos. 

Industry 4.0 will not immediately transform manufacturing; rather, the impact will be felt incrementally over a period of time. Organizations will still need skilled employees and centralized platforms, along with the emerging IoT data for the next decade and beyond. This means that advanced, high-performance ERP systems will be vital and in-demand more than ever.

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