Digitised manufacturing and distribution facilities use interconnected devices, machinery and production systems to continuously collect and share data, hence the popular reference to ‘Smart Factories’. One of the key drivers of digital transformation for manufacturers and distributors is the ability to tap into these data points throughout the manufacturing process and supply chain. This data helps with everything from forecasting demand to managing inventory levels, predictive maintenance, improving overall efficiency, and ensuring timely deliveries. Smart factories represent the next evolution in manufacturing, leveraging advanced technologies to create highly efficient, adaptable, and data-driven production environments.

Companies that fail to prioritise expenditure on digital transformation will quickly find themselves unable to compete in today’s marketplace. Without the right platforms and solutions in place, these manufacturers lack the ability to enhance operational efficiency, embrace data-led decision making and boost overall competitiveness.

Creating a holistic view across the business

The digital age demands agility, efficiency and innovation, yet many businesses find that their existing or legacy systems cannot support their long-term growth aspirations. Legacy systems that fail to support growth strategies impact the company's operations and development, which inevitably impacts the business of tomorrow.

Outdated legacy systems also lead to fragmented data, manual workarounds, and inefficient task management, further impacting the organisation's operational efficiency and development. Effective data integration across departments is crucial for streamlining overall efficiency and reducing operational losses. Manufacturers need a holistic view of business activity, as well as upstream and downstream activity.

A recent study investigating the Global Complex Manufacturing Outlook highlighted how a successful Enterprise Resource Planning (ERP) implementation enables organisations to position their companies for sustainable growth by allocating resources effectively across various functions and departments. This is achieved by using data-led decision making, along with insights generated from detailed data analysis.

An investment into future success

For any company considering an ERP implementation, the considerations are not only the direct financial investment, but also how to effectively manage the implementation process to derive maximum value from the investment. Therefore, it makes sense to carefully consider any implementation before embarking on a digital transformation journey.

The report found that companies should use a diagnostics checklist to evaluate whether an ERP solution can unlock value within the organisation, including questions such as ‘Have you noticed significant discrepancies in data reporting from different departments?’ and ‘Are you facing high maintenance costs with your current system due to manual inputs?’ Questions such as these can help executives quickly assess needs and align departments before the ERP project begins.

On average, the companies analysed in the study allocated approximately 3% of their operating budget to ERP implementation costs. The study revealed, however, that nearly half of the respondents are planning to double their technology spending over the next five years, reflecting a strong commitment to enhancing their technological capabilities. This shift underscores the growing recognition of technology as a critical driver of efficiency and competitiveness in the manufacturing and distribution sectors.

There are several best practices that are essential for manufacturers and distributors to adopt for a successful software implementation. Clearly defining the project scope and aligning it with business processes will help the project avoid budget overruns and scope creep. Another key element is stakeholder engagement, as the research demonstrates that companies whose executives and task team are actively involved will ensure that the project receives the necessary support. Partnering with an experienced vendor will facilitate a smooth transition and maximise the project’s overall value, and of course, robust testing ensures that the chosen software is fit for purpose and meets the organisation’s needs.

Modern solutions address critical data needs

By accelerating their smart factory transformation, manufacturers can predict and prevent costly unplanned maintenance, forecast trends with precision, respond quickly to customer demands and market fluctuations, and streamline and optimise their supply chain operations. The integration of ERP software empowers manufacturers to harness the full potential of smart factories with the use of smart technologies such as digital twins, artificial intelligence (AI), machine learning, IoT and predictive analytics.

Business as usual is definitely not the order of the day. Prioritising digital transformation spending is essential for manufacturers and distributors to stay competitive in a shifting marketplace. While this is likely to be a significant investment for any business, asking the right questions upfront and following implementation best practices can help businesses not only enhance their operational effectiveness, but improve decision-making across verticals and drive sustainable growth.

The adoption of smart factory technologies is expected to grow, driven by advancements in AI, IoT, and robotics. As the industry continues to evolve, those who invest wisely in digital transformation will be best positioned to lead and succeed.