The Rising Impact of IoT on ERP and the Manufacturing Industry

Running a manufacturing business today without an ERP or a business system is almost impossible. While it can be done, it makes running, and growing, any business extremely difficult. ERP systems have grown much more intelligent and useful over the years as technology innovations continue and more data becomes available. Now we are seeing the emergence of a concept known as ”The Internet of Things” (IoT) starting to make headlines and impact ERP capabilities, as well as industry and life in general.

There are a growing number of definitions around this new “thing”, but IoT is essentially a network of computing devices that can transfer data without human interaction. Any device embedded with an electronic component, software, sensor, actuator and any kind of network connectivity to share data is considered a piece of the IoT. Gartner predicts the IoT will consist of nearly 21 billion objects by the year 2020, with many experts predicting even more.

How ERP and IoT Work Together

ERP systems helps businesses run as a single unit and with a single source of data, making business more efficient and ideally more profitable. Essentially what IoT does is increase the amount of data available for an ERP to utilize and analyze. This, in turn, can help organizations make better decisions, and become even more efficient and profitable without exponentially increasing human effort. With IDC estimating that 40% of all data being machine generated by 2020, IoT is on track to become one of the most critical aspects of running a business. As devices talk to other devices and share two-way connectivity, more data can be gathered and utilized to help ERP better manage the products and services provided. With IoT, business can begin to offer new services that they may not have had the ability or knowledge to offer before.

According to Oracle solution architect Joost Maliepaard, “IoT enables the ERP system of the future to connect people, processes, data and things in an intelligent way to enable new business models and make better decisions. It will be more event-driven and intelligent. It will process more data. Our systems are scalable; we can process big amounts of data.”

How IoT Impacts the Manufacturing Industry

IoT holds considerable promise for the manufacturing industry, ranging from impact within a manufacturing facility through the supply chain and to the end consumer. An ERP system is designed to provide businesses with actionable data, but issues can occur in finding and defining accurate and actionable data. This is where IoT can help. It can expand the capacities and availability of data massively when used correctly. When this kind of data is available and ready to use, there is the potential to impact all areas of the business including business intelligence, product development, inventory management, customer service, and forecasting. Here are a few examples where IoT is currently being applied today:

• Tire manufacturers are adding in devices to their tires to monitor the use and status of the tires. Not only does this allow for the company that sells the tires to keep a closer eye on when their customers may need new tires or maintenance, but it is also allowing the sensors to provide in depth information about the use and durability of the tires. This, in turn, allows the manufacturer to use the data to create better tires.

• An international truck manufacturer has recently increased profitability with use of  predictive maintenance. Similar to the prior example, this company is putting sensors in their trucks so they can determine when maintenance is needed, even before the driver is aware. With a combination of predictive models and rout optimization, this technology is not only allowing the company to reduce costs by catching maintenance issues proactively, but also helps the drivers avoid mishaps on the road due to missed maintenance. The system will automatically schedule repairs when needed, will optimize the truck’s rout and delivery schedule, order the required parts needed for service and notify technicians at the identified service center so they are prepared. The company has placed sensors into more and 100,000 trucks so far, and the devices transmit more than 10,000 data points per day for a single truck.

• As IoT continues to enter the consumer space, everyone will have the opportunity to start enjoying the benefits. At a pilot smart factory in Kaiserslautern, BASF has tested fully customized shampoos and liquid soaps. RFID tags with a consumer’s requirements such as type of soap, fragrance and labeling are attached to empty soap bottles on an assembly line. The tags simultaneously communicate with production machines, allowing each bottle on the assembly line to be different from the next. Reducing turn time and manually adjusted product runs, along with increased consumer satisfaction, this technology shows a glimpse of what’s to come.

Businesses that are proactive in utilizing this innovative technology can gain the benefits of IoT and maximize the value of their current ERP systems. There is still a lot to learn about the capabilities of IoT and its impact on ERP, but we are recommending that now is the time to start leveraging IoT as a competitive advantage. With the real-time data analysis, potential for better products and more lines of products, as well as increasing customer service value, IoT and ERP will soon be a standard business model.