Technology as a Tool for Business Growth
Nancy Sarpolis - June 14, 2022
Much of the discussion around Industry 4.0 technologies centers around improving agility, streamlining processes and gaining efficiencies. But manufacturers are starting to recognize that adopting digital solutions is also putting them in a strong position to fuel business growth.
According to one report, manufacturers’ Industry 4.0 priorities “are shifting from mitigating COVID-19 disruptions to business model innovation and growth, with 50% of manufacturers anticipating their digital investments will lead to revenue increases in the next 12 months and nearly half (49%) planning to add new digital revenue streams.” Additionally, the report finds manufacturers that adopted Industry 4.0 strategies prior to the pandemic were better equipped to navigate its disruptive impacts and are now positioned to reenter growth mode ahead of their less digitally advanced peers.
The bottom line: Global CEOs agree that “acting with agility is the new currency of business.”
Sustainable Levers to Save Costs and Fuel Growth
For manufacturers, digital is no longer optional. Industry 4.0 leaders are already realizing the benefits of their investments and are building business value. Here are three approaches to optimizing operations for sustainable business growth:
Productivity Improvements. When it comes to fueling growth through productivity improvements, Advanced Planning and Scheduling (APS) solutions provide production planners with a clear view of the status of all production lines and components at any given time, for an unprecedented real-time overview of work content, machines, processing times, staff and parts requirements, and resource utilization. These insights allow for better decision-making and process flows can therefore be drastically improved – minimizing idle times and reducing costs. Some organizations using APS report an increase in machine utilization from 20-14% and a similar reduction in set-up times.
Inventory Reductions. While many supply chains have moved from “just in time” to “just in case” following pandemic scarcities, determining and maintaining an optimum inventory level still makes good business sense. The reduction of capital commitment through lower inventories is an attractive way to funnel more financial resources into business growth. Organizations that adopt APS solutions often experience inventory reductions of 20% or more. Consider the case of an automotive manufacturer that wanted to reduce the need for physical storage space and better utilize its resources. The manufacturer was experiencing an increase in demand for a number of product variants, but was unable to meet the current demands without maximizing overtime capabilities and increasing on hand inventory. By using an APS solution to schedule production, they achieved target inventory levels while also reaching 100% on-time customer delivery.
Reduction of internal IT operating costs. On-premise solutions may seem like a more cost-effective approach, with their attractive software licensing fees. But the reality is often much different: expensive customization, implementation hardware incompatibilities and legacy ERP or supply chain management packages that don’t quite fit the bill—not to mention costly downtime for implementation and software upgrades, performance tuning and network maintenance. Cloud solutions are particularly adaptable because they are maintained by the solution provider. As new features and applications are introduced, software can be automatically upgraded without disrupting current operations. Look for suites that support modular deployments and interwork easily with MES and ERP systems, Microsoft Azure, AWS or other popular services. It’s estimated that cloud systems offer at least a 15% reduction in IT costs compared to internal IT.
Efforts to invest in Industry 4.0 to increase growth can lead to numerous benefits for early adopters, including increased productivity and an overall more agile supply chain. But perhaps the greatest benefit is to the bottom line, through sustainable cost savings that fuel business growth.