Manufacturers Move to Protect Margins During Times of Economic Uncertainty
Facing inflation, high interest rates, continued raw material shortages, and slow economic growth, manufacturers are struggling with uncertainty. Now, nearly halfway into 2023, continued market volatility is likely to be the biggest challenge for the foreseeable future.
With so many variables outside of their control, many manufacturers are looking to optimize their processes and business strategies to protect their margins. But a high level of digital maturity is required to tap into the power of automation for cost-saving efficiencies, to deal with today’s labor shortages, and to improve production capacity.
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In an effort to help manufacturers address some of these business challenges, we recently entered into a strategic alliance with Deloitte Digital. This partnership will allow us to combine our in-depth understanding of the benefits of cloud-based enterprise resource planning (ERP) software with Deloitte’s digital transformation expertise. Together, this combined knowledge can help manufacturers understand the trade-off between keeping longstanding, legacy ERP systems, which saves money in the short-term, against the alternative of having the full control and visibility that a modern cloud ERP solution provides.
Here are three ways manufacturers can leverage ERP to protect their bottom lines in 2023.
1) Supporting Defensive Business Strategies
According to a survey Deloitte conducted in partnership with the Chartered Institute of Procurement and Supply, 38% of survey respondents have entered into new supply markets to reduce their risk of supply continuity.
This statistic is in sync with the defensive approach many manufacturers are taking by rethinking just-in-time (JIT) to just-in-case (JIC) supply chain strategies that bolster inventory. The way supplier collaboration has been handled in the past—using spreadsheets and email—has had to transition to the digital realm.
For example, manufacturers using cloud ERP now have an automated process to source new and alternative suppliers. Interactions are orchestrated via a cloud community portal, and manufacturers can select bids based on costs, availability, lead times, and reliability.
By combining our powerful ERP capabilities with Deloitte’s consulting services, manufacturers have the help they need to not only identify where inadequacies exist, but also the expertise to fully utilize modern ERP capabilities to minimize supplier risks.
2) Creating Data Visibility Throughout the Organization
Manufacturers can’t optimize unless they have a clear picture of their entire operations. The only way to get this clarity is if they have access to data from every area of the company—including customers, sales, operations, supply chain, inventory, and more.
Toward that end, a cloud platform eliminates silos and brings data together. An ERP built on a secure cloud platform such as Salesforce can provide manufacturers with a 360-degree view of customer data and the entire value chain. And digital consultants can help manufacturers leverage this visibility to uncover the insights they need to further adapt to today’s challenging market conditions.
3) Supplementing Human Resources with Automation and Intelligence
Labor shortages have long been a challenge for manufacturers, due to older employees retiring and younger generations not having the interest or skills to fill their shoes. A 2022 study conducted by Deloitte and The Manufacturing Institute found that 83% of manufacturers surveyed believed attracting and retaining a quality workforce is their top priority. The study also showed that nearly 45% of manufacturing executives who participated in the survey had turned down business opportunities due to a lack of workers.
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Digitizing human knowledge and supplementing with machine learning can help bridge the talent gap. Using smart factory initiatives, such as those recommended by Deloitte, manufacturers can also convert physical aspects of manufacturing into data streams using technologies like sensors, wearables, and robotics.
This data can feed into a modern cloud ERP to help manage production capacity. In addition, since a cloud ERP is typically part of a larger solution ecosystem such as Salesforce, there are opportunities to further streamline operations across a company’s enterprise. For example, native connectivity with other cloud platform solutions can bring automation to specific areas, such as shipping, compliance, and reducing other time-consuming, multi-step processes, so they can now be carried out in seconds.
Digital Maturity: The Key to Future-Proofing Manufacturing Operations
With the constraints facing manufacturers today, it’s more important than ever that organizations optimize what’s within their control. Achieving digital maturity will allow manufacturers to transform data into invaluable insights and guidance. And by combining an ERP with the advisory services, manufacturers can better protect their margins and overcome challenges for a profitable 2023.
[To share your insights with us, please write to sghosh@martechseries.com]
