We live in a world where change, uncertainty and challenges in the manufacturing and supply chain are a given.
Supply chains, especially, are changing dramatically because of geopolitical events. This, coupled with research showing that manufacturing has hit a productivity plateau in the US since 2008, makes things even more challenging. The sector also remains underinvested, with studies indicating a 20% decline in SME operating margins since 1997. According to McKinsey research, the US manufacturing sector will need to spend $15 billion to $25 billion annually for almost a decade to recover its top position.
These are bleak numbers, indeed. So, how can manufacturers adapt to these changing dynamics in a world where being big is not enough and they must also be agile and efficient to stay on top? The first step towards this goal is to optimize processes.
Simply put, optimizing processes means continuously designing and managing an organization’s processes to incorporate efficiency, agility and resilience. The journey begins with understanding the organization’s processes through:
- Process discovery
- Process monitoring
- Process enhancement
These aspects require a multi-level capability framework or system that can provide real-time insights and predictive analysis. It should identify anomalies and address potential issues before they escalate, enabling organizations to transition from being reactive to an adaptive or predictive mode.
Using AI-based ERP for process optimization
Companies like QAD are helping organizations optimize their processes through ERP updates like the QAD ERP O³, which uses artificial intelligence (AI)- enabled process intelligence to ensure that processes are implemented correctly and aligned with their design and execution.
Process transformation through the QAD ERP O³ platform also allows organizations to use AI and AI-based apps for various processes. For example, for inventory management, an organization can use AI to check for inventory planning parameters set at the beginning of the ERP implementation and revisit those to make suggestions on how inventory can be continuously optimized while meeting customer service requirements.
Finally, AI within an ERP system like the QAD ERP O³ also allows for self-service administration, where users can create or modify reports through analytical tools. This allows the organization’s IT department to focus on strategic process improvement endeavors.
Stay tuned for the second part of this three-part series, where we will discuss how manufacturing can be optimized by transforming systems within the ERP.
