The Internet of Things (IoT) is radically changing the world as we know it — and ERP systems are no exception. In the manufacturing industry, ERP systems already work in sync with the cloud and other technological advances. However, implementation of IoT can truly change the game for many companies. So, what does the future look like for ERP and IoT?
Companies are slow to take the plunge
Currently, ERP and IoT interact very little in most organizations. According to recent research, for many companies, there is not a clear understanding of the benefits of merging the two. Also, manufacturing firms notoriously take years to implement major tech changes. However, in this instance, these delays will cause hesitant and slow-moving companies to be vulnerable to agile companies willing to move quickly.
ERP software challenges
Another reason for the slow merger of ERP and IoT: some companies say neither ERP nor other software like Business Intelligence (BI) tools do a good job of helping them digest and analyze IoT data. While IoT implementation has the power to significantly transfer a company’s operations, software will unleash its power. Having sensors on equipment won’t benefit companies without also giving them the ability to port this data directly into their ERP system. Admittedly, it is an expensive endeavor on the front end: Business Insider predicts that global companies will invest $70 billion on IoT by 2020. However, many smaller companies cannot afford to overhaul their organization.
Another concern is susceptibility to cyber-attacks. The ability to develop new technology far surpasses the ability to thwart attacks. These vulnerabilities happen because many companies fail to employ basic security practices. Ransomware and data breaches aren’t the only threats, but they can be easily avoided through two-factor authentication and the deployment of IT security software that manages access to the data environment.
The learning curve is another challenge, especially as it relates to the ability of companies to provide uninterrupted service in the interim.
How IoT Can Work With ERP
Integrating IoT with ERP can help companies to operate more efficiently. It not only reduces the number of tasks performed by workers, but in many cases, it also reduces the potential for human errors. For example, when it’s time to restock or replenish products and supplies, sensors and other IoT devices can more accurately access inventory than human eyes. Accurate inventory helps to reduce inventory costs and improve tracking from the manufacturing floor to the warehouse. And all of this information can be communicated in real time.
Some equipment is sold with built-in sensors, while other equipment can be retrofitted. In addition to inventory accuracy, troubleshooting also becomes more efficient. Companies can receive notifications when equipment needs repairs or when parts need replacing. Technicians know exactly where to find the problem, and they know which tools to bring. IoT connectivity will result in a greater level of machine reliability and less downtime.
Improving product quality is undoubtedly one of the greatest benefits of integrating ERP and IoT. For example, The Pirelli Tire Company puts sensors on its smart tires and uses this data to help customers maximize fuel consumption and ensure the tires have a maximum lifespan. Other sensors in the refrigerator door, allow the company to determine how many times fridge doors open, which helps them identify when the hinges reach the breaking point. Whirlpool then uses this information to make sturdier hinges.
Some companies use smart glasses — equipped with a tiny camera, microphone, and earpiece — that allow technicians to record their repair work. Technicians can also download training instructions and view the data hands-free while following the instructions printed on one of the lenses.
Other companies use IoT strategies to improve safety since the technology can warn of potential problems.
When ERP processes IoT data, companies can also expect to see improvements in delivery times. All of these advances can help companies to better manage their relationships with customers and improve business analytics.
Since so many functions can be performed without human intervention, companies can save substantially in labor costs. However, some organizations are hesitant to invest in automation for fear of backlash for displacing workers. At the same time, companies will also need to retrain some of their workers to provide the new skills that they’ll need to work the newest technology.
The possibilities of merging ERP and IoT are exciting and limitless. While some companies may initially be hesitant, adopting the integration of these two tools can revolutionize a business, making it more efficient and profitable.