A lot of manufacturers are slowly bringing back business to North America, with new orders coming in and backlogs becoming robust. This is backed by data from the Institute for Supply Management, whose “Report On Business in Manufacturing” for the month of August 2013 showed its PMI, a key indicator of business outlook, at 59 percent, indicating strong growth in the industry. However, there are areas where the recovery may hit a road block. That includes the issue of equipment and software, which may not be ready to face the new era of customizable orders and flexible demand. The issue at the center of the matter is the need to upgrade.
Citing a study from Morgan Stanley, the Wall Street Journal reports the average age of industrial equipment, from computer numerical controls to milling machines, is currently above 10 years. That amount of time means that machines are more likely to break down from age or wear and tear, making for expensive repairs in terms of cost and lost productivity. More importantly, though, they are likely unprepared for the latest innovations and cultural developments in manufacturing. For example, a lathe may need to be prepared to make different adjustments for custom orders, which takes time without current equipment and software to back it.
Keeping with the program
Along with hardware, the software may also be out of day with legacy ERP systems. Many companies, for example, may still be using a classic Navison solution, rather than work with Microsoft Dynamics NAV. The lack of updates is understandable to a certain extent: Most manufacturers want their factory solutions to last for some time to make a successful return on investment. However, as the business models of companies change over time, what worked in the past may not be particular effective and useful in the present time. As a consequence, there may be several workarounds put in place just to keep up with orders, which bogs down business by creating inefficiencies.
It is essential, then, to not only upgrade equipment to ensure that progress is maintained, but that business growth remains possible and consistent as manufacturing orders come back to the United States and Canada. As ERP Focus notes, there is a lot to gain from a new implementation, including reducing those workarounds to save time and increase customer satisfaction. It can also increase visibility in physical inventory management, which provides a better grasp of the supply chain and greater preparedness in the event of a demand spike.
To discuss Microsoft NAV solutions for manufacturing, join the Microsoft Dynamics NAV for Manufacturing LinkedIn group.