The arrival of Industry 4.0, the fourth industrial revolution, triggered radical change within manufacturing, bringing IoT, AI and machine learning to the table. For manufacturers, there are several ways how ERP and IoT can work together.

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MANUFACTURING ERP AND
INDUSTRY 4.0

2. Prior to the advent of modern ERP systems, small to medium manufacturing
operations were conglomerations of disparate machines, software platforms and
processes. While computer technology existed, it was often sourced by different
management segments for their own use within their sphere of influence. As a
result, data was not integrated, and elements of the systems could not “talk” to
one another. Any exchange of data between manufacturing and finance or
purchasing and warehousing had to be interpreted, parsed and defined into the
receiving department’s process language. While technology had improved
efficiency compared to previous decades, it still left a lot to be desired.

3. The most effective way to drive continuous improvements using data and
technology came through the arrival of ERP systems. ERP, or Enterprise Resource
Planning, was developed to coordinate the flow of data and integrate it
seamlessly between departments in all functional areas. It helped to un-silo data
and developed a common database for use between all subsystems which
benefitted decision making in all areas.
As ERP systems have matured, they are now an integral part of manufacturing
that has seen additional leaps in efficiency of production as well as the
operation of the entire business. They serve as master data and analytical
systems for the entire enterprise. But just as ERP was once a new technology, so
too has the arrival of Industry 4.0 triggered radical change within manufacturing.

4. Industry 4.0
Industry 4.0 is also called the fourth industrial revolution. In this movement, IoT
devices, often sold and serviced alongside analytical software that uses AI and
machine learning, are retrofitted into manufacturing equipment or are built into
new equipment. And as companies move to capture and analyze more and
more data, this move for toward a smart, or connected, factory is having an
impact throughout manufacturing.

5. Industry 4.0
Production – The use of IoT technology is allowing all equipment within a
factory to be tied together under one dynamic base of data. Decision making
for many operations can be automated and analysis can be performed at a rate
faster than human intervention could duplicate. This includes machine
operation, scheduling, staffing and work in process.

6. Industry 4.0
Maintenance – IoT and Industry 4.0 allow for the creation of predictive
maintenance programs. Predictive maintenance goes beyond the realm of
preventive maintenance by not only detecting problems but scheduling
corrections and repairs, managing inbound spare parts and recommending
maintenance before failure can cause even longer production loss. Some
corrections can even be made autonomously without having to rely on an
operator or technician. Companies that have deployed IoT and use predictive
maintenance have seen as high as 20% drop in maintenance cost and
reductions in maintenance related downtime.

7. Industry 4.0
Supply Chain – Whether managing raw materials shipments, ordering parts for
maintenance autonomously, or managing inventory more accurately, IoT brings
analytics to supply chain management. Companies that deploy can utilize a type
of “digital JIT” by utilizing the same data being gathered from production
equipment to more accurately trace, track and consume materials at a more
efficient and cost-effective rate.
The implications of Industry 4.0 for manufacturing are enormous. And it is
estimated that by 2020 there will be over 30 billion connected devices in the
world with almost 70% of those being utilized within business applications.

8. ERP and IoT – Friend or Foe?
On the surface, it would be easy to assume that Industry 4.0 will somehow
supplant ERP systems as tradition has always favored displacement of old
technology with new. But a closer look reveals there are synergies pointing to
the potential for a powerful partnership between the two. And in fact, Industry
4.0 may be more likely to increase proliferation of devices throughout
manufacturing companies because of the inherent capabilities of most ERP
systems and because many ERP systems are already beginning to build IoT
connectivity within their framework.
There are several reasons that the two are more likely to work complimentary to
one another than against:

9. ERP and IoT – Friend or Foe?
Data Utilization – One of the issues facing IoT adoption today is that data is
often siloed in traditional manufacturing between functional areas. The use of
disconnected platforms and different metrics between departments reduces the
amount of data collected and its effectiveness. However, companies using an
ERP system have already “un-siloed” their data and have integrated that data
into a single database programmed across the enterprise for managing all
aspects of the operation. This is a natural match for the capabilities of IoT and
having the groundwork already laid through use of ERP reduces implementation
time, learning and training curves and process adjustments.

10. ERP and IoT – Friend or Foe?
Data Interpretation – Because most ERP systems are modular and flexible, they
can serve as the infrastructure upon which data from IoT devices can be used
and the installed devices themselves can be programmed to fit that modularity.
This is particularly true for cloud based a’ la carte ERP systems where
functionality is customizable by the user for their particular manufacturing
reality. In this way, an ERP leverages the power of Industry 4.0 capabilities. And
most modern ERP systems can help facilitate the interpretation of this vast
amount of data through their inherent ability to be customized. One key benefit
is that his linking of the two systems allows for decentralized decision making.
Just as humans can’t analyze data as quickly as AI and deep analytics, they
cannot make the fast, “on-the-fly” decisions that will optimize the system and
increase efficiency.

11. ERP and IoT – Friend or Foe?
Security – One major concern impacting adoption speed of Industry 4.0 and IoT
technology is the security issues surrounding IoT itself. Many IoT service
providers do not have native security systems and companies adopting them
must also source the security component to ensure its connected devices are
safe. But most manufacturing companies using ERP systems already have a
security system in place to manage the flow of data within the respective areas
within the ERP system itself. Having integrated finance operations, product
design, HR and CRM function where confidentiality and security are critical, they
have already secured much of their data in key functional areas.

12. ERP and IoT – Friend or Foe?
It may require upgrading or enhancement. But because enterprise has already
adopted a singular database use and have mapped the workflows for how the
connections between the departments will work, there will already be a
familiarity in what is needed for added security and where the system would
need to be improved. And as new ERP systems come online and old one’s
upgrade, security can be built into the ERP system to facilitate IoT connectivity
for those that don’t already or offered as a marketing tool for ERP providers that
do.

13. Must Haves
In the last few years there has been an increase in the number of ERP systems
available to manufacturers. Many of these new solutions providers offer a range
of services and applications such as cloud-based availability and data
management, customizability, continuous updates and more. They are more
agile in their deployment and are ideal for small to medium sized manufacturers
who may not have the resources to pursue the more expensive larger providers.
For manufacturing cohttps://www.mrpeasy.com/manufacturing-
software/mpanies looking to take advantage of the natural match between ERP
and Industry 4.0 there are a few “Must Haves” for the ERP system chosen:

14. Must Haves
• It must be able to integrate fully with connected devices and be completely
interoperable between all connected equipment and the people operating
them.
• It must be flexible and modular, offering multiple iterations for deployment.
• It must be data smart, allowing central data management in real time.
• It must be mobile to allow access to the data across tablets, phones and
other devices.

15. Must Haves
• The increase in availability of more nimble ERP system s offers Industry 4.0 an
opportunity to advance at a more rapid pace. And ERP systems provide
higher productivity by consolidating business processes under one database.
They also improve reporting and increase enterprise agility across all
functional areas. And they allow sharper decision making with better insights
into the data they provide while making their IT efforts simpler and easier to
manager.

16. Must Haves
• Industry 4.0 is a natural fit with ERP because it either takes advantage of
these elements within a company’s infrastructure to reduce deployment time,
training, and data and metric reconciliation between departments to reduce
upfront programming needed. Or, it enhances the cross functional
capabilities already in place with an ERP to allow higher degrees of
automation, autonomous decision making, intuitive and focused machine
learning to ramp up the core ERPs capabilities to allow them to function more
efficiently. If Industry 4.0 is to be the next data “superhighway”, then ERP
systems are the trailblazers that have cut the path through the forest and
organized the infrastructure components upon which that highway will be
built.