With backlogs of up to 70 weeks for new machinery, it is more important than ever to look at resources already in place to mitigate risk, ensure business continuity and optimize operations.

Manufacturers are investing heavily in new machinery—from robotics to address chronic labor shortages to smart machines that are more energy efficient and provide real-time insights to improve productivity. However, with backlogs of up to 70 weeks for new machinery, it is more important than ever to look at resources already in place to mitigate risk, ensure business continuity and optimize operations.   Growth-oriented manufacturers are now looking closer at their enterprise resource planning (ERP) software to understand how they can more effectively leverage existing functionality or add new capabilities to improve visibility and control, increase the accuracy and efficiency of interactions with customers and supply chain partners, and close critical gaps in security. Let’s look at the five top ERP strategies manufacturers are embracing to achieve these goals.

Application programming interfaces (APIs) have replaced older integration technologies as the standard approach for linking applications, systems and smart machines internally and with suppliers and customers, providing the agility to move quickly and capitalize on new opportunities. An API basically lets two different software components communicate with each other using a common set of definitions and protocols. The different software programs “talk” through the interface (API) without ever actually coming into contact with each other, eliminating the need for tighter, more complex traditional integration options. As a result, manufacturers can connect in ways that were previously cost prohibitive.   A Deloitte Insights article, API imperative: From IT concern to business mandate, provides useful insights into how APIs enable enterprises to attain greater agility, speed, and scale while pursuing new business initiatives. In addition, APIs are freeing manufacturers up from the constraints of legacy IT, enabling more efficient onboarding of suppliers, partners, and distributors from outside their businesses. Following are seven of the most widely used types of APIs that manufacturers rely on today to increase their production efficiency, quality, and speed.  Analytics and reporting APIs: Manufacturers can gain insights on how to improve the best production workflows, product configuration planning, and production efficiency while achieving greater visibility and control by using advanced APIs with the ERP system for tracking the performance of processes, such as make-to-stock, configure, price & quote (CPQ), and quote-to-cash (QTC). It’s also possible to put in place APIs for customized configure-to-order workflows.   Bill of Materials (BOM) integration APIs: APIs can be used to automate the process of translating an approved quote and its contents into a unique bill of materials (BOM). The most common configurations are defined by a series of APIs, which can query the approved quotes and deliver the configuration model(s) to the production systems in a predefined BOM structure ready to be produced. This drastically reduces errors and speeds up cycle times across manufacturing.   Geometric and 3D modeling APIs: Providing customers and prospects with a visual representation of a customized product increases sales. Scaling geometric and 3D modeling APIs can be used to connect computer-aided design (CAD) and ERP software to provide an accurate, quick rendering of configured products while simultaneously defining the BOM that production will use to create them. These APIs also enable access to a 3D rendered image from any device, anywhere, with the option of saving it for future reference, further accelerating sales cycles.        Graphical interface and application workflow APIs: APIs can help improve ERP and manufacturing execution system (MES) system usability to reduce errors, provide needed visibility, and provide shop floor-wide control to contain costs. Look for more APIs to support responsive design on ERP and MES systems—adjusting automatically to any device’s screen—to strengthen shop floor productivity.     Price management APIs: For manufacturers with a broad product line sold globally through direct, indirect and partner channels, keeping synchronized on the same price list is daunting and prone to errors when handled manually. Price management APIs automate the synchronization of pricing across all selling channels to ensure consistency.   Warranty management APIs: Warranties are inherently rules-based and automated using APIs for their main terms, conditions, internal costs, and pricing. Using additional APIs to calculate the return on investment (ROI) and key financial metrics of warranty programs can save hundreds of hours a year versus manual financial reporting, particularly for manufacturers with service lifecycle management (SLM) strategies where product warranties are a larger percentage of total revenue.     Upsell, cross-sell, and win probability APIs: Manufacturers can use APIs with their ERP systems to automatically track win rates, calculate the probability of winning a deal, and recommend products to upsell and cross-sell based on a customer's previous history—helping to increase average deal size and company-wide gross margin.

Manufacturers need to respond rapidly to supply chain developments and customer opportunities. This creates a greater need for real-time production and process monitoring that can convert data from smart machines and sensors into actionable insights. Here are five key ways that manufacturers are taking advantage of real-time production and process monitoring data that is incorporated into their ERP system.   Root-cause analysis of scrap: Tight global supply chains have made it critical to identify where valuable raw materials and components are being wasted in the production process. Using real-time production and process monitoring, it's possible to do a root cause analysis of what scrap is happening and save raw materials from being depleted unnecessarily during production.   Data for SPC: Throughout each phase of the production process, real-time production and process monitoring provide invaluable statistical process control (SPC) data to keep processes within operating boundaries that optimize the use of materials and avoid costly downtime.   Timely decision-making: Real-time insights into shop floor operations are helping manufacturers to track scrap, identify potential gaps in product and process quality levels, and track standard cost variations—making timely decisions that help avoid post-mortem reporting on production delays or missed customer ship dates.   Support for design to manufacturing: Real-time production and process monitoring are essential for synchronizing the diverse base of manufacturing systems and processes needed to create a successful design-to-manufacturing strategy—providing invaluable insights for every team regarding the quality, speed, scale, and manufacturability of each product produced daily.   Optimal machine performance: Manufacturers are tying the performance plans for every machine tool with real-time production and process monitoring, which is essential for ensuring compliance with tool calibration standards and minimizing variation in product quality. The additional data on machine health also contributes to effective maintenance, repair, and overhaul planning, which extends the useful lives of machinery and improves production scheduling.  

As manufacturers move closer to their customers, whether they are other businesses or end consumers, the value of electronic data interchange (EDI) grows—as does the need for an ERP system with fully integrated EDI capabilities. Through direct communications via EDI, manufacturers can ensure that orders are correct, minimizing errors and improving accounts receivables.   Today an ERP system considered fully EDI capable should:

The alternative to native EDI functionality and services provided with the ERP system is to use one of the dozes of third-party EDI vendors, such as True Commerce or SPS Commerce, although this requires more effort to manage.

Breaches, malware attacks, ransomware and security incidents are gaining momentum and becoming more targeted at manufacturers as hacking organizations become more brazen in 2022. By their very nature, manufacturers' supply chains proliferate threat surfaces faster than any "trust but verify" approach to enterprise security can contain. These diverse supply chains are known for being unsecured and porous, often multiple layers deep, and spanning multiple continents in their geographic configurations.   Moreover, manufacturers’ security strategies and technology adoption have failed to keep pace with increasingly sophisticated attacks. They have long relied on trusted versus untrusted domains at the operating system level, outmoded active directory architectures, siloed security systems with no protection, and an easily hacked and decades old "trust but verify" security architecture that lacks multi-factor authentication (MFA).   Instead, manufacturers need to take a zero-trust, privilege-based approach to securing every threat surface in their businesses, with specific attention paid to supply chain endpoints where the majority of ransomware attacks occur. A zero-trust security framework is based on the assumption that every connection across a supply chain, network, or distribution system is untrustworthy, and it defines least privileged access credentials for every interaction on a manufacturing network. A zero-trust framework that applies a “never trust, always verify” policy for every connection will protect the privileged access credentials cybercriminal gangs want most.   Like a growing number of retailers and other businesses, manufacturers should consider implementing multi-factor authentication as part of their zero-trust strategy. The most common examples are having users validate themselves by entering a verification code sent to their email or texted to their mobile device in addition to providing a name and password.    Manufacturers aiming to strengthen their security should evaluate whether on-premises or cloud-based security approaches best fit their business. Cloud-based solutions often provide more robust security while handling much of the complexity associated with security solutions that has created a roadblock for many manufacturing firms. Many modern ERP providers offer the flexibility to migrate to the cloud—enabling manufacturers to gain the security benefits of cloud deployments without having to learn a new ERP system.

 Beyond the security benefits provided by cloud-based solutions, more manufacturers are looking at different cloud models that will let them reduce the staffing and costs of managing an on-premises data center. Cloud-based ERP solutions can be particularly useful when:

However, just as the reasons for moving to the cloud will differ among manufacturers, so too, will the cloud model. Some companies will find a subscription-based software-as-a-service (SaaS) ERP model serves their needs. Other businesses want to own their software licenses but have the vendor deliver this ERP software as a hosted, managed cloud solution. Still other manufacturing firms will have real-time product and process monitoring instances that require on-premises ERP software minimize the time lag between when data is captured and when the ERP system is updated, especially if data is shared between the MES and ERP solutions.

Manufacturers face more complex, costly and challenging threats than ever. The five updates that ERP systems deliver the greatest value today in reducing risks include rapid advances in API development, real-time visibility, control, and speed; support for EDI transactions; modern cybersecurity support, and flexibility in migrating to the cloud. Taken together, these five factors form the foundation on which manufacturers can more effectively navigate the turbulent global manufacturing environment today.

Louis Columbus is currently serving as principal of DELMIAWorks. Previous positions include product management at Ingram Cloud, product marketing at iBASEt, Plex Systems, senior analyst at AMR Research (now Gartner), marketing and business development at Cincom Systems, Ingram Micro, a SaaS start-up and at hardware companies. He’s also a member of the Enterprise Irregulars. Professional experience includes marketing, product management, sales and industry analyst roles in the enterprise software and IT industries. Columbus’ academic background includes an MBA from Pepperdine University and completion of the Strategic Marketing Management and Digital Marketing Programs at the Stanford University Graduate School of Business. He teaches MBA courses in international business, global competitive strategies, international market research, and capstone courses in strategic planning and market research. Columbus has taught at California State University, Fullerton: University of California, Irvine; Marymount University, and Webster University. You can reach him on Twitter at @LouisColumbus.

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