Digital transformation in the manufacturing sector is accelerating. More than ever, digital processes rely on cloud infrastructure, machine learning, and other technologies. This poses an important question: Can ‘all-in-one’ software solutions ever provide the scalability and forward-compatibility manufacturers need to meet shifting demands in this challenging market?
There are many factors to consider, so in this blog we outline a methodical, step-by-step approach to help identify which IT solutions meet the specific needs of your manufacturing business.
Step 1: Outline key capabilities
Today’s market is awash with modular solutions and specialized platforms for manufacturers.
On one hand you have ‘comprehensive platforms’ that offer an array of functionalities. These range all the way from material requirement planning (MRP) and production process management to financial and ecommerce functionalities.
And, on the other end of the scale, there are numerous modular solutions that excel in specific areas such as machine learning or demand planning.
Core capabilities
As a bare minimum, your chosen solution must be able to handle common processes and documentation such as Bills of materials (BOMs) and Manufacturing Orders (MOs).
Many commercial off-the-shelf-solutions (COTS) will support these, but you also must consider your own unique processes as well, because this is how you gain a market advantage.
Requirements for innovation and collaboration
Modern manufacturing increasingly requires close partnerships to manage supply chains, predict costs, and enable lean and responsive (pull) production. These hinge on data sharing via specific platforms (e.g. Netstock, MRPeasy, NetSuite, Exact S/4 HANA, Tradecloud One, etc.) – or between platforms with APIs or other connectors.
Identify which platforms your partners are already using, and see how you can integrate these data sources with your own data streams and systems.
Emerging technologies
Some capabilities will support your growth in the future, so your IT solution must support these when the time comes. Your organization must be able to implement process upgrades quickly, so you can gain the advantages of innovation sooner.
Flexibility, reliability, and high-performance
This is a ‘non-negotiable’ that any IT solution must offer. Manufacturing facilities are a significant investment, so they must be supported by a reliable, high-performance IT infrastructure.
You must have the flexibility to improve your processes by integrating machine learning, advanced algorithms/AI, and predictive maintenance.
It’s worth considering the value of low-code for providing the flexibility needed for gaining new advanced capabilities. For example, by using the high-performance USoft platform, a large facility can be automated with Intelligent Process Orchestration (IPO).
There’s a strong case for implementing IPO; experience shows that at least 30% of human decision-making processes can be automated with IPO, resulting in significant efficiency gains and cost savings.
Step 2: Differentiate to succeed
Once you’ve created your list of required capabilities, the next step is to organize them into three categories:
- essential features you need to differentiate in the market today,
- standard features used across the industry, and
- optional extras that can be added later (nice-to-haves).
By understanding how your business can use digital capabilities to differentiate itself in the market, it becomes clear whether a COTS solution can meet this need on its own. If not, the alternative is to build more functionalities around it to add the capabilities and intelligence needed to support your business processes.
Step 3: COTS, custom build, or hybrid?
At this stage it should become clear if a commercial off-the-shelf solution (COTS) can meet your needs on its own, and to what extent.
We often refer to this as the ‘fit percentage’, as this gives a clear indication of how well it fits your organization’s requirements. A high-scoring fit percentage means that most of the required functionality is readily available.
A high fit percentage is often found in Finance or HR cases, where processes tend to be standardized across all industries. By contrast, a low fit percentage is seen more often when requirements are more comprehensive, unique to your organization, and with highly complex use-cases.
If it falls short, then it may be worth thinking about how you can meet these needs, for example:
COTS-only (high fit percentage, 90 to 100% fit): This is a good option, but only if the COTS can meet (almost) all your requirements.
COTS with customizations (medium fit percentage, 70 to 89% fit): Customization is one approach, but it comes with considerable drawbacks. It’s often costly to implement and maintenance requirements mean that you can’t devote resources to innovation. In the meantime, your COTS becomes more inflexible and harder to update.
Total custom build (low fit percentage, <70% fit): This aims to build a solution that meets all your requirements. While high-coding used to be the default method, this is now seen as a slow and costly way of working. Instead, with a high-performance development platform, low-code can be used to build powerful core software in very short timescales, while also safeguarding easy-to-maintain, flexible, and highly scalable solutions as you continue moving forward.
COTS with intelligent add-ons (hybrid) (medium fit percentage, 70 to 89% fit): This is a best-of-breed approach and a strong alternative compared to the previous medium fit option. This approach squeezes the most value from each solution, without customizing the COTS directly. Instead, the added functionalities are built as standalone applications surrounding the COTS core, using low-code.
As well as looking at the fit percentage, an organization must also look at the business case. Many organizations will find themselves in the ‘medium fit’ category, in which a COTS solution meets some of their needs, but requires additional functionality. In this case, they must carefully consider whether the COTS is good value for money, by evaluating the functionality it actually gives your business.
For example, it may be a better alternative to fully custom-build a solution. Even when the fit percentage is 70-89%, the cost-benefit ratio can be more favorable for a full custom build when all the costs are taken into account, especially as low-code software development can enable the addition of new functionalities very quickly.
As part of this evaluation, it’s important to be aware that, contrary to what is still often thought, low-code does not equal low-capability. While many low-code platforms are indeed designed for simple ‘citizen developer’ use cases, others are specialized in dealing with complex and business-critical contexts.
With a development platform like USoft, for example, organizations can gain the dual benefit of speed and performance. For example, one client replaced a legacy COTS and operations-critical GIS solution; this only took 7 weeks from start to finish. In another demanding use-case, a lab-automation solution for plant phenotyping, was developed within 6 months, despite having rigorous requirements involving robotics and a custom AI integration.
Step 4: Eliminate non-scalable and rigid solutions
Now you can start to eliminate unsuitable solutions. Things can change quickly in the manufacturing world, and businesses that can adapt quickly to new realities will always have an advantage.
IT solutions must be highly scalable, with the ability to support operations across a growing array of facilities, machines, locations, regions and partnerships.
- Cloud-based infrastructure is more scalable than on-premise solutions, using highly elastic processing that can scale-up or scale-down as needed.
- Reliability and high-performance are a must, so strive to select solutions that have proven themselves to excel in complex data environments and demanding situations. For example, at Schiphol Airport the USoft low-code platform is used as a Complex Event Processing engine for powering Intelligent Process Orchestration solutions across the airport’s daily operational processes – a clear demonstration of reliability and performance.
- Consider software built using your Business Rules. Business Rules are simple language statements that specify the criteria for triggering key processes and decisions (like the criteria that should be met before a product is finished and passes a QA check). Software built on Business Rules is more stable and stays highly adaptable over time.
Business rules are crucial for building resilient and adaptable software, but they can also help assure the success of software development. Without a firm grasp on an organization’s business rules, IT projects will fail to adequately reflect the business need, resulting in a significant gap between the delivered functionality and what is expected.
When this gap is discovered, a flurry of discussions follows – and these almost always revolve around business rules – the reasons why certain functionalities are needed.
At USoft we highly recommend putting your business rules first, by integrating them into the earliest stages of the specification process. This can save a lot of time and resources.
Step 5: Finally, rank solutions for cost
Ultimately, this is a business decision – so you must keep a strong focus on ROI. We’ve already determined the ‘return’ as a fixed value (your required capabilities), so the only thing left is to rank solutions based on cost.
There are various costs to consider:
Initial costs – setup costs, implementation and training costs, subscription costs, development costs, and any new technology/software purchases.
Opportunity costs – when solutions restrict access to opportunities this must be estimated as the value of ‘lost business’. Long implementation times or the limitations of a COTS solution are key factors.
Total cost of ownership (TCO) – this is a better measurement than initial costs, because it includes maintenance burden over time as well as ongoing platform costs. For example, solutions built with USoft typically have a TCO that is 40% lower (compared to high-code or COTS alternatives).
Our recommendation for IT solutions in manufacturing
Depending on your business, a standard COTS solution designed for manufacturers will serve the majority of key requirements in the industry. But it will not allow you to differentiate yourself in the market.
So, we recommend a hybrid approach that combines a COTS solution, such as AFAS, SAP, or Microsoft, with intelligent add-ons that give you the extra capabilities you need. This is the best way forward when a COTS solution already meets 70% to 80% of your requirements, and you can rapidly build additional capabilities with low code.
However, a proportion of manufacturers will find that a COTS solution only supports 70% or less of their required capabilities. In this case, the best solution is often a full custom build, using low-code technology in combination with a high-performance development platform.
A solution custom-built with low-code can be delivered very quickly, and have a lower implementation cost too. It can be built to exactly match user needs and their preferred methods, so training costs are minimized and start generating value sooner.
Whichever solution you select, it should always support flexibility, adaptability, and scalability. This way, you will have all the capabilities you need today – and in the future.
