This article was written by David Parrish, global senior director of industrial machinery and components marketing for SAP. | @parrish_denver

More and more customers today are looking for highly customized products. At the same time, manufacturers are under pressure to produce efficiently at mass-production costs. One way organizations can meet this challenge is by integrating business and manufacturing systems with automation technology. Traditionally, these systems have run independently of each other, but the factories of the future will have a fully integrated system from sales orders to manufacturing orders to delivery confirmations. Known as connected manufacturing or Industry 4.0, this integrated approach can help manufacturers operate more efficiently using a variety of data sources from both operations and enterprise systems. More specifically, companies are able to turn massive amounts of data into action by using advanced analytics to identify bottlenecks, troubleshoot issues, understand asset interdependencies, and reduce costs.

To understand the true potential of integrating business and manufacturing systems from the top floor to the shop floor, it is helpful to review the situation many companies operate in today. Typically, traditional shop management processes are manual and time intensive. Getting manufacturing performance data to the top executives is a slow process, subject to human error and interpretation. Often it begins with plant managers creating spreadsheets from system-generated reports. Executives review these spreadsheets at the end of each week and use the data to create visual dashboards for higher-level management. Unfortunately, complicated graphs and spreadsheets do not give enough actionable items to help until after the fact. Another example is shop-floor supervisors physically dispatching job packets. Operators receive a hand-delivered stack of papers with their jobs for the day and verbally report back completion to their supervisors.

It is fairly obvious to most manufacturers that paperless systems improve efficiency by reducing manual work. But imagine what could be accomplished if a company could use technology to create real-time connections among the automated manufacturing floor and all other business systems, both internal and external. Not only that, but what if the data was instantly converted into visuals, so all employees could easily analyze and understand the information?

With information at their fingertips, managers can identify and resolve issues up and down the supply chain to increase efficiencies, improve profitability, and raise customer satisfaction. In fact, the seamless integration of plant information with business systems presents so many opportunities, companies are just scratching the surface of what is possible. Below are a few examples of existing processes being transformed by connected technology:

• Plant production planning: Smart planning, forecasting, and clear visibility into operations and finances are essential to maximizing plant resources, especially when adding assets from an often dizzying array of mergers or acquisitions. Using an integrated system allows managers to easily assign which plant manufactures which products for a given order and strengthens on-time delivery performance.
• Employee performance: People on the plant floor get real-time feedback on how their actual work compares to planned output. They can immediately see the value they are contributing to the whole business and the impact their work has on customers.
• Product traceability: Connected manufacturing systems enable transparency and collaboration across the entire supply network, starting within the four walls of a manufacturing plant and extending across global supply chains.
• Production warehouse: Connecting the shop floor to other business systems allows decision makers to optimize material movements between warehousing and production. By integrating real-time material availability with real-time manufacturing capacity, days-in-inventory reductions of 15 percent or more are common.
• Manufacturing accountability: Workers at each production station are now guided by visual displays of standard work instructions, elapsed assembly times, and customer-specific requirements for various features and options. As a result, manufacturing efficiency increases, and production cycle times are compressed significantly.
• Sourcing: By making strategic sourcing a key component of an overall strategy to cut costs and maintain a competitive edge, companies with connected systems have increased productivity by finding and qualifying new suppliers faster. Additionally, they are able to gather feedback on suppliers from all departments, so they can evaluate a wide range of performance metrics, such as price, quality, and on-time delivery performance.

Real-time, connected manufacturers enjoy many benefits not available to companies still working within a more traditional environment, which typically has misaligned departmental silos, manual processes, and disconnected systems. Putting the right data in the hands of decision makers when they need it allows companies to take immediate action in response to changing market conditions. Companies report more effective communication and consistent oversight when the factory floor and the front and back offices share a single powerful database. Also, sharing information helps encourage the development of ideas or better solutions from all parts of the organization. Finally, integration between the shop floor and the top floor can reduce manufacturing costs by increasing overall equipment effectiveness and minimizing unplanned downtime.

Although there are many practical applications of an integrated technology solution, one of the biggest advantages is that it allows everyone from the machine operator to the CEO to have a voice. Placing the power of information in the hands of all employees and supply-chain partners can create a collaborative environment in which everyone plays an important role in solving problems. In this way, companies can thrive, enjoying a continuous stream of innovative ideas that can quickly become reality.

Cybersecurity risks need to be assessed and mitigated as industrial plants find value in communicating more data internally and externally to improve performance and maintenance. The ISA99 standards on industrial automation and control systems (IACS) security provide a framework for analysis and protection.

About the Author
David Parrish, global senior director of industrial machinery and components marketing for SAP, previously held various product and industry marketing positions with J.D. Edwards, PeopleSoft, and QAD. Parrish has a BS in advertising from the University of Illinois-Urbana, an MBA in transportation management from the University of Colorado-Boulder, and a CPIM from the American Production and Inventory Control Society (APICS).
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A version of this article also was published at InTech magazine.