By Anthony Murphy, VP of Product Management at Plex, by Rockwell Automation
Automotive manufacturers face many operational challenges, from managing on-the-floor manufacturing systems to tracking inventory and quality across production facilities and the supply chain. Adding to these existing challenges, the pandemic and an ongoing chip shortage have nearly crippled the automotive manufacturing industry.
To overcome these challenges, manufacturers need to have full visibility and clear communication with partners across their ecosystems. Recognizing this need, smart manufacturing investments grew by 64% among automotive manufacturers in 2021 – a higher rate than other industries.
Shiloh Industries is a U.S.-based automotive manufacturer that provides electrification solutions, lightweight structural systems, specialty stamped metal systems, and driver control systems. Recently they began to expand operations and increase value by acquiring other auto manufacturing operations around the world.
With each of these new locations came different, disconnected ERP systems. At one point Shiloh was operating seven different ERP platforms, none of which worked well together. These non-consolidated systems forced employees to grapple with siloed data, and labor-intensive approaches produced inaccurate reporting. The time taken to reconcile erroneous reports, data entry errors, inaccurate forecasting and scheduling further drained the company’s resources and labor time. Shiloh’s IT team knew they needed to create one single enterprise-wide enterprise resource planning (ERP) system, which could serve as a single source of reliable, real-time truth to guide its business decisions.
Shiloh is not alone in making these technological investments, 88% of automotive manufacturers view smart manufacturing as key to the future success of their organization. But the recognition of smart manufacturing technology’s value extends far beyond the automotive industry. Gartner recently reported 61% of all manufacturers believe smart manufacturing technology gives them a competitive edge.
Old systems will cost you
With disparate ERP systems, Shiloh struggled to track inventory and deliver on customer promises. This challenge is not unique to Shiloh, however. In fact, manufacturers that fail to move forward on digital transformation initiatives see their revenue drop 9% on average, as opposed to those that have gone fully digital and see a 26% increase in their revenue.
Shiloh got smart with upgraded manufacturing systems that provide structure under a unified ERP system. When implementing their new system, the focus was adopting a strong, proven, leading smart manufacturing solution to drive production efficiency. The new system would also need to manage business operations like an ERP platform. Shiloh didn’t just want a typical top-floor, financial ERP system, they wanted to approach their transformation from the factory floor up.
This is exactly what they managed to do, Shiloh found tech investments paid off with a reduction of scrap and an improvement in their inventory tracking, up to 99% efficiency, which in turn improved customer relationships and profits.
Learning from Shiloh’s Transformation
The first step to any transformation journey is establishing stakeholders and who will be leading the charge. Once that team is established, they must determine the focus and objectives of the modernization project. In Shiloh’s case, stakeholders knew they would need to find a platform that would allow them to integrate across their multiple operations. They also knew they needed a solution that would offer strong manufacturing execution systems (MES) so the upgrades would benefit the entire organization, including shop floor workers.
To get the funding support for their plan, IT leaders needed to make a business case for investing in modernizing their systems. In Shiloh’s case, they established a team of experts to research the challenges and prospective solutions.
A recent survey found 42% of automotive manufacturers say adapting to new regulations and standards is the top obstacle to growth, still 77% of automotive manufacturers lack smart manufacturing processes and supply chain planning solutions. So, if those 77% would consider smart manufacturing upgrades, it might help them adapt better to new regulations and standards, which as stated above is one of the top obstacles to growth. Making the business case for investment in a smart manufacturing solution becomes an easy argument to make when you just look at the numbers.
The Proof is in the Profits
After implementing a unified smart manufacturing system, Shiloh is better able to oversee all aspects of manufacturing. All of this makes Shiloh a more attractive company to partners and investors, and in this case, making them a target for acquisition by Grouper Holdings, LLC. As part of the acquisition, Shiloh brings a smart manufacturing system that ensures that when big decisions hang in the balance, stakeholders will have reliable, real-time insights on which to base those decisions and deliver the best outcomes.
About the Author:
Anthony Murphy is Vice President and head of Product Management for the Application group and is responsible for Plex’s core customer facing products such as ERP, MES, and QMS. Prior to Plex, Anthony worked in manufacturing, holding a variety of roles across functions such as IT and software development, Logistics, Operations, and General Management. He has a deep passion for manufacturing and Plex’s customers and engaging with them to solve key problems and deliver competitive advantages.
The post Aligning Automotive Operations for Improved Agility appeared first on Industry Today.