It is no secret that outsourcing manufacturing to Asian countries is becoming increasingly difficult. As these countries develop stronger economies and their standards of living increase, their workers are demanding a raise in salary, making offshoring strategies more expensive. Other factors like sudden trade-wars, new taxes or unexpected threats like the COVID-19 epidemic, can multiply the challenges for manufacturing at a low price.

Recent developments in the field of automation, robotics, analytics, and the introduction of centralised cloud Material Requirements Planning (MRP) Software offer an attractive proposition for reshoring the supply chain for Australian manufacturers.

Besides the simplicity of manufacturing within the country, onshoring offers excellent local benefits too. Whilst some low skill jobs are eliminated by automation in the manufacturing process; high skilled opportunities are created in controlling and connecting intelligent machines, automated warehouses, and developing AI. The introduction of high skilled workers leads to an increase in the standard of living within the country. 

Other benefits of reshoring include an upturn in the quality of the manufactured products as tighter control of the supply chain network can increase the final quality of the products. Besides, as more than 80% of Australians prefer products made within our country, manufacturers have another strong reason to build their products onshore.

A Centralised IoT Platform for Cutting-Edge Technologies

Most manufacturers are already using IoT to a limited extent. However, some have seen the signs and taken it to the next level, with a number of sensors and through APIs, they are leveraging the advantages of monitoring production, automated distribution of products, allocation of resources and even tracking of logistical supply.

Artificial intelligence, 3D printing and all the innovation that comes with adopting Factory 4.0 will make it much easier to manufacture. However, controlling these hardware and intelligent gadgets in a centralised platform can be a difficult task. This is where an IoT based ERP like NetSuite with a robust true-cloud API comes in handy.

NetSuite helps with the adoption of new supply chain IoT technology, by connecting all data from the sensors and peripherals into a centralised platform where all data from CRM, finances, payroll and inventory live. This data consolidation enables better reporting, advanced dashboards and a more informed decision-making process.

Easy to Scale Whenever Needed

MRP software has definitely evolved over time. We’ve come a long way from an era where every business had to use the same basic boxed software without customisation passing through a time where platforms could have so many variations that they felt into over-configuration and never-ending installation processes. Nowadays, however, with the evolution of SaaS, businesses can gradually enable modules on-demand as they grow.

Why is scalability important?

In a world where disruptive technology happens more often, profitability hinges on the ability to adapt quickly to new platforms and trends. Investing in platforms that can do virtually everything can represent a significant expense, and they usually go underutilised, whilst with modular software, you pay only the modules that you use and the investment required is drastically reduced.

Stockpiling Inventory to Address Demand

When a company decides to reshore their operations, inventory can be maintained in bulk as the production volume goes up. It often happens that there is a shift in focus from current sales to future sales. This leads to stockpiling of the inventory, and if it’s not managed correctly, it can lead to a supply chain disaster.

NetSuite is built with a number of tools and features that facilitate inventory management, from tracking inventory in various locations to keeping stock of safety inventory. Furthermore, you can plan the demand and distribution needed to meet it. NetSuite clearly suggests when and where to restock so that your decision making can be used for something more substantial.

Onshoring poses a bright future for Australian manufacturers.

We can say that the reshoring of manufacturing hasn’t looked this promising in the last two decades. Moreover, by adopting technologies related to factory 4.0, the possibilities will only get better and better.

One thing is clear: businesses that fail to adopt these changes are going to perish. Emerging technology like 3D metal printing, artificial intelligence, automation, and robotics will make your competitors produce goods of better quality locally and at a rapid pace.

NetSuite is a one-stop solution for all manufacturing challenges. By providing end-to-end services ranging from financials to warehouse and fulfilment, this best-in-class ERP software can help you embrace the new manufacturing era.

References

• Transform Manufacturing from Offshoring to Rightshoring in 3 Easy Steps
• Australian Manufacturing Technology Magazine (AMT) February/March 2020
• Government must develop plan to support manufacturing jobs
• Technology brings new hope to Australia’s manufacturing sector
• NetSuite Planning and Scheduling
• NetSuite Inventory Management

In the past decade the manufacturing industry in Australia has changed dramatically, and so has Manufacturing Software (also known as MRP software). Interestingly, the concept of Enterprise Resource Planning software was born in the manufacturing industry. In the late 1960’s, two pioneers of early mainframe computing, Black and Decker and Toyota were the first two major companies to invest significant amounts of time and money in software that at the time was considered revolutionary.

The main functionality that was available on these systems was the ability to calculate material supply and input requirements and estimate production yields. For companies like Black and Decker, this meant that hey could more confidently increase production, demand and supply plans and streamline the administration of both new product design and continual production improvement.

Modern Manufacturing Software is Changing

In the 1980’s decade, the concept of ERP really became common terminology and the MRP software’s functionality started to expand into other areas of a manufacturers core operation.  At this point in time, different software vendors started to roll in more functionality, which made these software packages more useful across the wider business.

Most commonly, accounting and financial management functionality became a part of a core MRP Software’s functionality set, but it wasn’t until recently that software vendors started to look at the requirements of a growing manufacturing business more holistically.

When broken down, most business can be divided into a few key business units. These units should work together seamlessly from marketing and sales, through to procurement and production and finally in accounting and financial management.

Traditional ERP software was designed to help streamline only two of these key business areas. Demand and Supply Planning, and Procurement and Inventory Management. However, as time has progressed and technology has gotten better, modern manufacturing software has evolved into complete business solution, with the intent on providing a single system to manage an entire manufacturing operation.

So, how does Traditional MRP Software Compare to Modern Manufacturing Software in 2019?

When comparing modern Manufacturing Software, you should expect to see the same functionality as traditional and legacy ERP systems, as well as other integrated modules that extend the functionality of the application and eliminate the need for managing multiple systems.

Industry 4.0 and the IoT are changing manufacturers view of software systems.

We now live in a world that is increasingly connected. Smart Phones now have more computing power than top end PC’s just ten to fifteen years ago. Devices are connected. Data is aggregated.

Now more than ever, manufacturers are turning to technology to give themselves a competitive advantage and to increase the efficiency and effectiveness of their businesses. Hardware, software and sensor technology are now making it possible to automate the collection of information, and modern manufacturing software is giving manufacturers. Similarly, as technology progresses the equipment and machinery that form the core of a manufacturing operation are now coming with this type of sensor technology as standard, as well as controller units that are designed to be integrated too.

Modern Cloud Manufacturing solutions, such as NetSuite have an open API and a set of developer tools to allow quick and flexible integration. This means, that any data being captured by a machine, can now be sent to your ERP and used for business intelligence, dashboarding and reporting and planning.

The impact this is having on manufacturers is huge, as they can now access this information and actually do something with it. Rather than collecting data without an end game in mind.

Modern technology, like artificial intelligence and machine learning is now allowing unprecedented levels of automation on the factory floor. This is not only increasing the efficiency and production levels, but it is also driving lower cost of production.

Where this can be of real value, especially in industry with high risk operations, is the minimisation of manual/human intervention in the manufacturing process.

These automations and workflows can all be driven by the sophisticated in-built tools in a modern ERP/MRP solution.

Key Benefits of Modern Manufacturing Software, like NetSuite.

Modern cloud manufacturing process software is offering users many tangible benefits. These include

So, who is using NetSuite Manufacturing Edition?

 Over the past 20 years, NetSuite has established itself as a leader in providing manufacturers across the world with a world class MRP and manufacturing management software.

NetSuite has customers across a range of manufacturer types. These include:

1. Make to Stock/Forecast.
   Traditional Widget Manufacturing
2. Assemble to Order.
   Assembling products from bought components after an order has been placed by the customer.
3. Make to Order.
   Organisations that make a set range of products on order.
4. Process Manufacturing.
   Customers who rely largely on formulas and recipes
5. Configure to Order.
   Manufacturers who have a base level of product that can be configured to specific user requirements.
6. Field Repair and Service.
   Manufacturers that also provide after sale field service and support.
7. Engineer to Order.
   Design and manufacturing of large or complex products or systems.
8. Project Driven.
   Project based manufacturers that wish to track project progress and job costing.

Industry revenue in the timber flooring and carpet retailing and distribution sectors has been affected by strong import growth and increasing competition from substitute flooring products. However, higher demand from the residential housing and construction market has helped sustained upward momentum in this niche industry.

Australia’s housing market price falls in the short term will be underpinned by a stable economic growth, record-low interest rates and a steady population rise. High overseas migration is likely to increase in the following years and with stable economic conditions supply is still expected to be less than demand. This is a good forecast for the construction market and its suppliers.

Seizing Growth Opportunities and Differentiation

To beat overseas competitors and stand out in an extremely competitive market, successful flooring and carpet businesses are seizing new opportunities to grow with cloud-based software designed to streamline the operations of the carpet and flooring retail, wholesale and installation industry. Leaders in this space are streamlining business operations in order to develop new products and services, improve supplier relationshiops and order and inventory management, meet customer demand, manage eCommerce, and make informed, data-driven decisions in real-time.

Whilst technology is enabling Australian manufacturers to migrate to Advance Manufacturing in order to deliver the personalised products the industry, Aussie companies are not focusing on modernising. The trend in the industry is to increase marketing expenditure, states the AMGC in their report: Advanced Manufacturing, a New Definition for a New Era, and the results haven’t been very promising.

In the report, it is concluded that more Australian companies introduced new marketing methods (18.5% – 25%) and new products (20.6% – 24.3%), but overall trading  fell 13.3%. Only around one-fifth (19%) of Australian manufacturing companies increased their IT spending but may not be getting the most out of their investment.

There is a huge opportunity for Australian manufacturing companies to modernise their business models. Only 8% introduced a new product-related service in 2013-2014, and only 6% used flooring industry specific ERP’s . The digital divide opens an interesting window of opportunity for companies to differentiate as ‘service champions’.

Cloud Technology for Flooring and Carpet Businesses

NetSuite is a cloud-based, single business management platform eliminating the need to update multiple customer, vendor, inventory and marketing systems. Using NetSuite, a single system solution, provides you with the ability to:

• Have a single customer record across the entire business, allowing you to profile, predict and push 1:1 marketing campaigns, using NetSuite’s unified CRM functionality.
• Automate workflows across your business.
• Gain real-time visibility into full business operations across all stores.
• Use NextService, a native to NetSuite field service solution, to schedule deliveries and installations via mobile app, complete with GPS routing for drivers, compliance checklists for field service staff when they arrive at the job, and customer sign off upon completion.
• Use the mobile app to schedule service calls – this could be for after-care treatment of flooring, repairs, maintenance, cleaning services and more.

Upgrading to a modern, scalable, cost-effective system means that your IT strategy is future-proof, providing you with more time to spend on building a seamless customer experience and business strategy.

References:

• AMGC. Advanced Manufacturing. A New Definition for a New Era.

It’s a relatively unknown fact that the Manufacturing Industry pioneered MRP and ERP technology, long before other industries caught up. In the 1960’s, two leading manufacturers, Black and Decker and Toyota were the first major manufacturing companies to make a significant investment into what was at the time known as MRP or “Material Requirement Planning” software.

This software, by today’s standard was relatively basic in the functionality it offered, however it provided a competitive advantage to organisations by providing the automation of calculations related to demand and supply planning. This information was used to optimise procurement, inventory management and warehouse management and was the starting point for the integrated business management platforms that are in use today.

So, what is a legacy MRP Software?

Materials Resource Planning, (which later changed to Manufacturing Resource Planning) provided a limited scope of functionality, mostly to do with optimising procurement, demand and supply planning and manufacturing WIP and Routing. Until recently, manufacturers would also need to maintain Accounting and Financial Management software, as well as Sales and CRM software to cover off all departments of their business.

The problem is though, that having too many disparate systems creates complexity, adds to IT overheads, and limits the usability of data being collected in each silo.

Enterprise Resource Planning (ERP) a new era for business software.

In the early 1990’s, a new breed of software packages started to gain momentum. Whilst MRP provided some support to manufacturers, they were wanting a more consolidated solution to manage the increasing complexities of manufacturing.

As manufacturing became more advanced, so too did the software that was used to manage the front and back office functions of a manufacturer. ERP, a term coined by Gartner extended the traditional MRP platform to include more advanced and integrated features such as Accounting and Financial Control, Warehouse Automation and Advanced Demand Planning. Whilst this was a step in the right direction, there were still several areas of a manufacturing business that were largely unsupported.

Cloud technology brings everything together.

Most recently, the concept of both ERP and MRP have largely been dwarfed by the concept of a complete Business Management Platform. These platforms provide deep functionality across all areas of the business including:

… the list goes on.

But the point of the software is to provide growing businesses with a single source of truth and a simplified software ecosystem. Cloud Business Management Platforms, like NetSuite offer just that. A modern technology stack to manage every facet of a growing manufacturing business.

By having everything in one platform businesses can get greater insights into their data and get better business intelligence to support strategic and operational decision making.

NetSuite is the world’s first, and leading Cloud Business Management Platform. With over 40,000 organisations across the world having already embraced the cloud BMP, it’s easy to see why NetSuite is chosen more than any other Cloud BMP.

For over 5 years, Klugo have been helping Aussie businesses embrace this revolutionary system and take back control of their businesses. NetSuite has solutions for all types of business, across a wide range of industries and at any stage of their growth cycle.

So, what are the impacts of embracing a complete Business Management Platform Solution?

• No Integration– Because a BMP is a single system across an entire business, there is no need to worry about building or maintaining integrations between different legacy systems. This modernising technology not only saves massive amounts of IT Overheads, it also minimises the risk associated with regular upgrades to the system. 
• End User Personalisation – When a business is running on a cloud BMP, each user has more control over their dashboards and roles, to ensure that they are only seeing information and functionality that is relevant to them. One of the biggest gripes we hear for our customers when talk about their old systems, was the fact that navigating and finding information was difficult, largely due to the clutter that functionality which didn’t relate to their roles caused. With NetSuite, users can design how they wish to see information through drag and drop tools. Managers can empower their users and associates to make the most of the software and increase their businesses’ efficiencies.
   
• Simple cost structure – When looking at the IT costs of a business, companies who are not embracing True Cloud BMP’s face uncertainty and risk. Depending on the industry, businesses will be spending money on software licenses, maintenance and support agreements, hardware and infrastructure, API development and maintenance, servers, whether cloud or on premise, and the risks that come along with security, backups and storage. True Cloud BMP’s offer all these technologies rolled into a single powerful business differentiator for just a monthly fee.

The Australian manufacturing industry has undoubtedly contracted when compared to other booming sectors in the past two years. Due to this fact, many manufacturers are leading their industries by implementing more efficient and automated systems to not only support their individual growth but to allow them to scale without increasing overheads in an industry where margins are falling.

While MRP software has been around since the 1960’s and has gone through generations of technology upgrades, and system advances, its core the business use case of the software is still to increase efficiencies in ordering and procurement, streamline workflows on the shop floor, and provide more accurate data around demand and supply planning. Manufacturers with a single system that supports their businesses from end-to-end have a strong market differentiator. These innovating companies can get a clear picture of past, current and future performance and make educated decisions that ultimately save time, money and resources.

Australian manufacturing industry’s undeniable decline.

Over the past ten years, Australia has seen an undeniable decline in the performance of manufacturing compared to other industries. What does this mean for key Australian industry players that are exporting to Asia and Pacific region?

It means that businesses in this market need to pioneer new and better ways of managing their customers, their accounting, their systems and their operations, or they will face continued erosion of their bottom line.

A paper by economists Georgeson and Harrison,  states that manufacturing is still an essential part of the Australian economic growth plan. It produces $100 billion of output each year, ranking sixth among ANZSIC industries. Manufacturing accounts for over 930,000 jobs. The manufacturing industry is in the middle of a much-needed structural change, as it is in most developed economies.

However, we still see a decline in overall output in percentage terms. This lower percentage does not mean the industry is falling; it only shows that it is growing less than the rest of the economy. Therefore, there is a door open for manufacturers that want to differentiate in their business from the competition.

Manufacturing and exporting are rebalancing says economist Julie Toth: “In the last ten years, Australia switched to produce more consumables and fewer heavies.” There are growth pockets in products and services including food, beverages, groceries, specialist machinery, pharma, cosmetics, vitamins, supplements, building materials, textiles and furniture.

23% of the industry had moved to Advanced Manufacturing by 2013. Advanced Manufacturing or Industry 4.0 is the ability of companies to capture customers’ needs and transform them into products quickly through the use of integrated systems, sensors and technologies.

These leading companies combine the competitive advantages of a multidisciplinary team and digital transformation. The market niches in which they compete have low volumes. These smaller niches require a specialised service that offers quick response, cost-and value competitiveness and after-sales support.
China, South Korea and Japan need support to fulfil their demand for efficient buildings, sustainable energy, and new transport infrastructure. These cities offer excellent international trade opportunities for innovative manufacturers.

The specialisation of the industry will lead the way in manufacturing for Asia and Pacific markets. Australian’s technology and engineering skills can respond to the region’s rapid urbanisation. Over the next decades, there will be an incremented demand in the Asia trade for specially-designed and custom goods. Gregory O’Brien, Australian Government’s labourer, in his paper “Australia’s trade in figures,” said eight of our top ten markets are in the Southeast Asia region: China, Japan, South Korea, India, New Zealand, Singapore, Malaysia and Taiwan. 

Australia’s top ten export markets.

Technology relieves complexity and supports exporting through automation and systemisation.

Companies exporting to the Asia Pacific region know well that the process takes time and requires high and continual investment. If supported by robust domestic demand, exporting it’s a noble path of growth with a substantial return.

The export path requires strategic controls that allow managers to lead and adjust the supply chain quickly to different market demands. Australian Business models may be unfitting in other countries for cultural, regulatory, and other reasons.

Modern cloud systems provide levels of control and flexibility that have not been easily achievable in legacy on-premise MRP solutions. These systems improve operational efficiencies and provide a robust framework to ensure the business can grow and expand, while still have full visibility on the overall performance of each area of the company. 

ERP systems are essential for any business that is wanting to scale in the manufacturing sector. With the complexities that arise when considering the transactional relationships between inventory, procurement, panic and preventative maintenance, multi-location warehousing and distribution, foreign currencies, taxes, laws, languages and many other global preferences.

“Manufacturing businesses should focus on centralising their data in the cloud and making it easily accessible by users in different locations and satisfying different roles and responsibilities within the organisation.” Said Klugo’s consultant, Michale Dean.

Companies with systems operating in silos will spend countless resources on communication technology to connect their databases with APIs and integration. While these types of solutions may get to the point where they are working, there will always be added risk with an increase in the number of software vendors a business’s needs to deal with on a day to day basis. Also, the ability to report across siloed systems means data is rarely live, and often inaccurate. 

In contrast, Cloud ERP solutions, such as NetSuite provide a single platform technology which eliminates the need for integrations, offers live and accurate data and does it in a way designed for delivery over the internet. 

Investing in dynamic systems from the start gives a manufacturing company an edge over the competition in an increasingly competitive space. It is smarter to start with the right platform than trying to move into it in the future.

Also, for modern manufacturers involved in exporting, ERP software provides a lot of digitally transformative opportunities to automate and simplify global trade and investment with full automation and support of multi-company, multi-entity, multi-currency and multi-language requirements. 

NetSuite has customers all over the world, and a particularly strong following in manufacturing from the European Union, Hong Kong, and Southeast Asia.

NetSuite Manufacturing Edition is a fully featured solution to cater to the needs of a growing manufacturer. The platform provides a single solution that includes: 

• Sales and CRM Management.
• Accounting and Financial Control.
• Advanced Inventory and Demand Planning.
• Warehouse Management.
• Import-Export
• MRP functionality to manage Work Orders.
• Complex WIP and Routings.

References

• Manufacturing Value Added Percent of GDP.
• Parliament’s Library: Australia Trade.
• Regional Impacts of the Accelerated Decline of the Manufacturing sector in Australia.
• Australian Manufacturing: Trends, Influences and Outlook