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Economic recovery for industrial manufacturers through purpose-built cloud ERP

By Contributor
Thu 14 Jul 2022

Article by Infor A/NZ vice-president and managing director Jarrod Kinchington.

For many industrial manufacturers, the road to post-pandemic recovery may seem distant and blurry. Global volatility, lingering gaps in the supply chain, and prolonged disruption of normal buying channels continue to create a chaotic picture, especially for those with dwindling cash reserves. The longer the disruption continues, the more pressing the need to kick-start positive cash flow becomes. Fortunately, technology can help industrial machinery and equipment (IM&E) manufacturers take advantage of pent-up demand and motivate customers to reignite paused projects.

Those who make industrial machinery and equipment have some distinct advantages over other vertical industries and may be strategically well suited to nudge stalled projects from their holding position. Some infrastructure and facility initiatives can only be put off for so long before public or workforce safety is compromised.

While off-highway and OEM equipment is expecting a downturn and supply bottlenecks are still interfering with sales, overall growth is expected. One analyst predicts that construction machinery sales will grow 9% in 2022 and another 5% in 2023, reaching pre-pandemic levels.

Public stimulus programs are offering a much-needed boost, while roads and bridges are only at the beginning of emerging opportunities. Large public and commercial facilities, parking garages, stadiums, utilities, and manufacturing plants are also needing attention, sometimes in the form of repairs and other times to support expansion or modernisation.

Consumer demand for greater environmental sustainability is causing enterprises to examine their fleets, garages, material handling equipment, machinery, and equipment. Replacing energy-guzzling machinery with equipment with a small carbon footprint will be a priority for many companies in the near future.

In fact, a study shows that 88% of industrial businesses are now prioritising sustainable manufacturing. “In a strategic move to increase operational efficiency while simultaneously reducing cost, many industrial business leaders have recently been prioritising sustainability throughout their facilities,” says Thomas Index.

These changes in priority will trigger purchases of new industrial machinery and equipment, spurring growth for the IM&E industry. From wind-powered generators to electric forklifts in the warehouse and motion-controlled lighting, plants and facilities will be redesigning systems from the ground up.

Eight keys to customer-centric IM&E

Manufacturers can help instigate forward-movement by turning to customer-centric technology to help their customers re-engage in the buying cycle, feel comfortable with the investment, and be inspired by new product offerings and the promise of greater value. Attentive care and guidance may be just what customers need to move past nervous hesitations about the global economy and, instead, focus on growth potential.

Modern Enterprise Resource Planning (ERP) solutions, deployed in the cloud, often include tools that will help manufacturers align with their customers, whether they are in industrial manufacturing, utilities, municipalities, or commercial construction.

Attentive care. The procurement agents for heavy machinery and equipment are not so different from packaged goods consumers. Their purchases may have 6-figure price points, but the driving considerations are similar. Buyers of forklifts, generators, cranes, and road equipment worry about safety, availability, ethical sourcing, product reliability, and if their selection will cast them in a favourable light to their peers. IM&E customers are ready to issue purchase orders but want reassurances, reinforcement and added value from suppliers. They expect a red-carpet buyer’s journey where all of their questions are answered quickly. 

Collaboration. IM&E manufacturers can better align with customers by offering portals and tools for communicating product details, specifications, delivery, and service status. As many IM&E purchases are make-to-order or engineer-to-order, manufacturers need to open doors of communication while still protecting proprietary data and system security.

Connected supply chain. Like most manufacturing verticals, the IM&E industry has experienced bottlenecks in the supply chain that have slowed the ability to fulfil orders. While the current disruption will likely find a balance in 2022, the experience has also taught manufacturers the value of complete visibility in the supply chain and not being caught with a single supplier. With real-time views in the extended supply chain several layers deep, manufacturers can better make strategic plans for the delivery of parts and components.

Complexity. Many unique features of industrial machinery and equipment make manufacturing operations complex. For example, the size of the equipment, high value of parts, specialty materials, high-tech elements, and compliance mandates all add complexity to the shop floor processes. Steps need to be synchronised to avoid delays. Quality must be monitored to reduce waste, and shop floor teams need easy access to order information so they can be sure of the exact specifications. Glitches in the process can lead to highly expensive waste.

Configuration. Configure, Price, Quote (CPQ) solutions play a valuable role in helping customers select product details, creating a memorable customer experience and a highly personalised product. CPQ solutions step the customer through selection options, recommending logical combinations, and make sure the selections are within compliance mandates. These solutions provide a quote, visual rendering and generate a Bill of Materials so the order can proceed to production. The technology transforms the buying process, helping buyers get the exact combination of features they want while preserving productivity and efficiency for the manufacturer.

Innovation. One of the most effective ways to re-engage with potential customers is to demonstrate the innovative new product features developed. Product innovations tend to generate excitement and help the customer see potential return on investment and value. Using a Product Lifecycle Management (PLM) solution will help speed product launches, streamlining steps, and documenting stages, including testing and any industry compliance needed.

After-market service. Large pieces of equipment frequently need service contracts. The manufacturer/supplier will offer contracts for maintenance and repairs. Field service is an ideal way to be closely aligned with customers, building the relationship and laying the groundwork for upsell and repeat sales. But, from dispatching field technicians to inventorying replacement parts, field service requires management of many moving parts. It requires a purpose-built solution to ensure efficiency. As an added bonus, service contracts and tiered warranty agreements can generate revenue.

Servitisation. The concept of servitisation is not new, but it is obtaining renewed interest as a strategy to help potential customers overcome cash flow issues. Rather than buying the piece of equipment, the customer contracts with the supplier for the result. So, instead of purchasing paving equipment, the customer might buy x miles of paved road for $x. The customer is assured of getting the final result. The supplier uses equipment sensors and internet of things (IoT) technology to track performance of the machinery on the job site.

The data generated from the piece of equipment helps the supplier monitor work accomplished, if maintenance is needed, or if the machinery is being operated correctly—the types of things that will lead to cost efficiency, a predictable margin, and the ability to make a profit on the pay-for-what-you-use model. Servitisation can be a winning model for everyone—as long as sensor data can be collected, analysed, and consumed quickly and easily. The quality of the data—with context—is the key to achieving operational performance with room for supplier profit.

Final take-away

Challenges abound for manufacturers as post-COVID economic recovery limps along. For IM&E manufacturers, though, some opportunities on the horizon are reasons for optimism. A focus on infrastructure, sustainability, and innovation will trigger IM&E customers to rekindle stalled projects.

Armed with cloud-based modern software solutions, IM&E manufacturers can seize stirrings of opportunities and fan them into greater impact. Cloud-based ERP solutions, purpose-built for IM&E, offer important features. Advanced analytics, internet of things (IoT) capabilities, and Configure Price Quote solutions will give IM&E manufacturers the necessary tools to step up response time and confidently promise prospects they will get the job done – on time and as specified.

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