Australian manufacturers have been urged to find alternative ways of doing business or risk being overrun by competitors with lower costs.
That is according to Greg O’Loan, regional vice president for the software solution company Epicor, who predicts that 2018 will be another “year of change”.
“As the world has gotten smaller, Australian organisations face increased competition from international businesses,” O’Loan said.
“For manufacturers, rising energy costs and strong competition from overseas companies mean Australian companies need to continue to find efficiencies throughout the business.
“This must happen against the backdrop of Industry 4.0, which is a new way of manufacturing that leverages automation and data exchange through the Internet of Things (IoT) and cloud technology.”
Industry 4.0 is characterised by a new reliance on interoperability through IoT, O’Loan continued, as information is made more transparent through augmented and virtual reality, and improved insights through analytics, business intelligence, and automation.
“Businesses need to bring competitive products to market,” O’Loan continued. “They can then consider leveraging non-traditional ways to market to protect their existing customer base and expand into new markets. Manufacturers that cling to traditional business models will find it hard to drive growth.”
No longer reliant on distributors and retailers to sell their products, manufacturers can now go straight to market themselves by adding ecommerce functionality on their website and realising higher margins on sales.
Manufacturers’ margins are under pressure because manufacturing is inherently energy-hungry, O’Loan explained, and added that, in the face of rising energy costs, these businesses need to make a choice.
“Some companies have no choice but to stay in Australia because of the high amounts of intellectual property involved,” he said. “This is often the case in high technology or unique manufacturing environments. It can also be counterproductive to offshore manufacturing of very large products because the cost of transporting them back to Australia can be high.
“So it’s essential for manufacturers to be smart about how they approach their business in the next few years. They must consider the various options available, including new technologies, which can help streamline their operations.”
For some manufacturers, this could mean an increased focus on manufacturing execution systems (MES), which can operate as standalone software or integrated with an enterprise resource planningERP system, such as one offered by Epicor.
“Australian manufacturers need to combine smart manufacturing, appropriate labour costing, and efficiencies in the organisation to reduce costs and get control over spend,” O’Loan continued.
“They can do this by implementing an ERP platform that’s designed for the manufacturing industry, integrates MES functionality, and is built to overcome these challenges.”