February, 2024- Face Time
Q: What is digital transformation, and why is it important to manufacturers?
A: Within complex manufacturing markets, timely and detailed data analysis is essential for maintaining a strong competitive position. However, creating or modifying traditional digital reports often involves the time-consuming task of downloading the report to an Excel spreadsheet and manually organizing the data.
Digital transformation simplifies the data analysis process by converting conventional ERP reports into graphic formats that are highly visual and easy to understand, allowing a manufacturer to easily see trends and make forecasts. With a dashboard builder tool integrated into an ERP, the process is fast, accurate and automatic.
Imagine having graphic performance measures and trends of sales, inventory, production orders, capacity planning, forward- looking production planning, AR and AP, daily KPIs, and more, all in one visual report. Furthermore, the data is updated in real time so there always is a current account of the metrics being tracked.
Another form of digital transformation that simplifies production is displaying up-to-date job information on TVs or large screens throughout the shop floor so machinists and other personnel can see all the data for their current and upcoming jobs. Production and efficiency rates climb because machinists don’t stand around wondering what to do next while managers can see at a glance whether shop floor employees are clocked in on the correct work order.
Q: What ERP trends will continue to accelerate in 2024?
A: I see many on the horizon this year, such as integrating nesting software with metal cutting machines and increased use of robotics. Based on conversations I’ve had with hundreds of manufacturers, finding ways to improve and simplify processes is the most common issue. Many are looking at solving this issue by integrating the rapidly evolving capabilities of artificial intelligence (AI) into their software and shops. While AI can improve processes in many different ways, its most compelling feature is the ability to automate repetitive jobs. It can add intelligence to machines, equipment and computer capabilities, and use progressive learning algorithms to teach the data to perform the programming. AI not only lowers labor costs and improves efficiency but also eliminates boring work that nobody wants to do. For example, it used to take one of our customers 10 hours a week to process customer invoices. Now, an AI application automatically matches the purchase order, receipt and accounts payable invoice and automatically inputs the invoice into the system. The process is completed in seconds without the need for human intervention.
Q: How are manufacturers adapting to the ongoing shortage of financial and manufacturing specialists?
A: When a veteran CFO retires or goes to work for a different company, the search for a qualified replacement can take weeks or months. Instead of allowing financial processes to lag during a lengthy or frustrating search for a new CFO, some manufacturers are taking a unique approach— using outsourced accounting to get their financials done on time until a replacement can be found. Some use this as a virtual service while others hire an outsourced CFO or financial manager on a temporary basis. Either way, the month-end closing gets done on time and correctly. Hiring a temporary CFO ensures the books will be in order and allows time to train financial employees on various processes. This strategy helps improve the business while closing an employee gap that could negatively impact the business. Another outsourcing area gaining attention involves bringing in ERP experts to help make improvements. The most common problems we see are scheduling, inventory control and purchasing. The company hires an ERP consultant to conduct an audit of various processes. The consultant then creates a flow chart that lists each process as good, needing improvement, or needing reimplementing or retraining, and provides coaching, training and strategy development to upgrade ERP skills throughout the company. Given the rapid advances in ERP capabilities, some manufacturers have the audit performed every three to four years. We’ve seen this approach be highly effective with small to midsize companies that lack sufficient manpower and expertise to analyze and improve their processes. Given the time, effort and money invested, the long-term goal is to help ERP users get the most out of the software.
