Benoit Wambergue, VP of cloud products strategy at manufacturing technology specialist Forterro, discusses how digital adoption could help the UK’s manufacturing sector to navigate economic headwinds and prepare for the next stage of growth.
With the Bank of England releasing news that the UK is set to enter an economic recession before the end of 2022, all industries are looking at how they can quickly and efficiently alter their ways of working to soften the inevitable impact.
As inflation and energy costs continue to rise at a rapid rate, small-scale manufacturers face major obstacles. Planning for growth while overcoming these challenges may seem like a daunting task, but rather than solely focusing on getting through the ‘here and now’, manufacturing businesses should look at how they can implement new technology solutions which will help in the long run.
A 2022 survey showed that out of 200 SME manufacturers, 35 per cent are most focussed on survival, whereas 80 per cent are happy to invest in new technologies if they can see the clear benefits for the future.
Although just under half of those manufacturers surveyed also said that a key barrier in adopting new systems was lack of funding, it’s clear that the appetite to invest in digital technology is strong. This is where tailored ERP systems can transform processes and minimise the risk of investment.
Facing the hurdles
In August 2022, the Chartered Institute of Procurement & Supply’s factory Purchasing Managers’ Index score fell to under 50, the minimum score considered to represent growth. The findings from the index suggested that manufacturers are facing three main issues: supply chain disruption, material shortages and labour availability.
Alongside the threat of a recession, as well as the continuing effect that Brexit, the pandemic, and the war in Ukraine are having, manufacturers are also having to face the consequences of ongoing disruption at UK and international ports.
As delays to overseas imports and exports continue to be exacerbated by industrial strikes, raw material shortages are slowing the manufacturing supply chain even further. Without access to the correct materials and sufficient labour availability, manufacturers are struggling to keep up with demand.
Future forecasting
It is inevitable that investing in new technology systems during challenging times can feel like a major decision. Many businesses may not want to interfere with their processes at this time, with one report finding that 65 per cent of manufacturers do not expect inflationary pressures to ease before the second half of 2023. However, if the last three years have taught us anything, it’s that there is no better time than the present to implement fresh ideas and processes.
With the adoption of new technologies such as 3D printing, artificial intelligence (AI), blockchain, and Internet of Things (IoT) now surging within industrial businesses, the competitive advantage of the most digitally mature companies widens.
Almost eight in 10 companies are struggling with poor quality data, or worse, absence of data. In fact, 60% of businesses don’t actually know how much bad data is costing them because they aren’t measuring the impact.
The need for manufacturers to have an efficient single point to manage data and processes is greater than ever before. In that context, the use of an ERP system remains among the top priorities to digitising manufacturing processes, cloud-based solutions today make the most cost-effective and beneficial way to support business. Even more so as they allow for continuous improvement, while removing the need to take care of it internally.
The ability to build a single-view of data and processes will also help manufacturers to be more innovative and respond better to external changes such as the pandemic, economic disruption, Brexit and rising costs.
For some companies this will be an opportunity to benefit from such market conditions, as these changes lead large companies to procure more parts locally. How much time does it take you to figure out whether you are able to fulfil a potential contract? If more than a few minutes, you should most certainly consider changing systems. Not to mention that inaccuracies in data costs between 15% and 25% of revenue for a company.
Cloud-based systems simplify the installation process and enable the systems to be used almost immediately, and manufacturers can save time ensuring all employees are trained correctly. Greater efficiencies across the business’ processes will save time and money, meaning focus can be put on responding to external forces.
Ultimately, adopting digital solutions might not eradicate every issue a business faces, but it will enable more flexible financial forecasts, and support decision making when managing materials and labour availability. When a company has all of this in one ERP solution, they can ensure the system works for them and their industry, not the other way around.
For more information about Forterro, visit www.forterro.com
