Why 2019 will be the year manufacturers turn challenges into opportunities

Andy Coussins, senior vice-president and head of sales, international, Epicor Software.


Johannesburg, 31 Jan 2019
Read time 6min 30sec

2018 has been a year of transformation all round. We have seen the world's economy shift. We have seen uncertainty in the markets brought about by various tariff wars. Nevertheless, as the Epicor Global Growth Index has shown, we have seen businesses continue to find ways to grow, says Andy Coussins, senior vice-president and head of sales, international, at Epicor Software.

Given this changing landscape, the task of looking ahead and pinpointing what lies ahead seems a trickier task this year than ever before. It certainly feels like 2019 will provide businesses, and manufacturers in particular, with some challenges.

Crucially, however, I also wholeheartedly believe that, if businesses put the right technology to work, these challenges can very quickly become opportunities.

Here, I lay out five potential challenges or opportunities, depending on whether you have a mindset for growth.

1. Finding the opportunity in macro-economic changes

The past 12 months have been shaped by a series of dramatic macro-economic events that have strummed up uncertainty and shaped economies around the world.

In the US, aggressive trade tariffs have been making it difficult for business leaders to know what to invest in and how much to invest, and are set to impact raw materials and export prices. In the UK, too, trade tariffs are predicted to squeeze margins as the country moves closer to Brexit.

Uncertainty is challenging. However, those that are agile, pioneering and able to adapt quickly to change can reap rewards. In fact, challenging environments often present unparalleled opportunity for those ready to step up. Manufacturers using modern technologies and software can keep themselves agile enough to respond quickly and adapt to market changes. In the UK, for example, technology is making it possible to bring every part of the manufacturing process on shore, where once it was more cost-effective to outsource various elements to Asia. Elsewhere, too, software such as enterprise resource planning (ERP) solutions are enabling manufacturers to adapt their entire supply chains to peaks and troughs in demand to allow for changes in the market.

2. Don't get stuck on the big data bandwagon

Many businesses are guilty of thinking technology can fix all of their problems. Over the last few years, we have therefore seen tech investment go through the roof, and according to research in the Epicor Global Growth Index, technology remains a high priority for 74% of high growth companies.[i]

With new technology comes new data. Many business leaders have therefore been left up to their knees in a quagmire of big data, with 77% in the manufacturing sector agreeing that they are having to deal with more and more information every day.

In 2019, however, all of this investment will come to a head. Business leaders stuck on the big data bandwagon will spend next year asking: 'How can I realise the value of my tech investments? And how can I get the most out of all of this information?'

For those who can put their data to good use, 2019 will be a good year. We can expect to see smart manufacturers use data from their ERP systems to generate real insights. Many will be seen using predictive analytics to preempt shortages or high demand in the supply chain, for example, and those who do this well will quickly become preferred and reliable suppliers to their customers.

3. Embrace cloud, it is shifting the competitive landscape

According to IDG, 73% of enterprises have at least one application, or a portion of their computing infrastructure, already in the cloud. However, despite its prevalence elsewhere, manufacturing has been slower to adopt cloud than other industries. According to some reports, digital services such as cloud computing now provide at least 25% of the total inputs that go into finished manufactured products. However, this barely touches the surface of what is really possible.

For manufacturers, cloud technology makes industry-specific software much more accessible for small players by lowering the total cost of ownership for users, something that will redraw the competitive landscape in 2019.

4. Embrace the 'Amazon Effect' to unleash growth

When we shop on Amazon, the consumer journey is all very easy. This user experience is now something that customers are beginning to expect, not just in the B2C sector, but in the business world too.

In fact, according to recent research, more than eight-in-10 business buyers want the same experience as when they're buying products for themselves. Ultimately, therefore, the manufacturers who will succeed next year will be those that can create highly customised products that are delivered faster than any competitor.

This is the challenge presented by the Amazon Effect, and it's a tough one. Epicor research shows the majority of manufacturers (65%) expect to tackle stresses and challenges next year, but 2019 will see some manufacturers respond to this challenge with online user journeys, personalised product offerings, and customer engagement pre-purchase through to delivery and beyond.

5. Bridge the skills gap with robotics

A people and skills shortage continued to plague the manufacturing industry in 2018, and this is only set to continue into 2019. In fact, in the UK alone, there's an estimated shortfall of 186 000 engineers every year until 2024.

Implementing new technology and ways of working can help businesses maintain and improve production levels despite their resourcing pressures. Realising this, 41% of businesses are already implementing some form of robot technology. This includes Dacia's factory in Romania, which uses 800 robots to make a new car every 54 seconds.

Because robots can automate repetitive tasks, they are an effective way of relieving a strained workforce from manual or difficult labour.

However, the pressure is still on businesses to encourage new recruits into industry. Here, too, the businesses that can use automation effectively will be at an advantage, with Epicor research showing 41% of young people want the opportunity to work with the latest tech. Robotics and AI are a big draw for young talent, and with software solutions like ERP enabling their investments, businesses can truly take advantage of these innovations.

Embracing opportunities in 2019

There's no doubting the challenges that businesses have been, and will continue to be, up against. But, put technology in the right places and it's possible to turn these challenges into opportunities. ERP solutions will continue to be central to the implementation of successful manufacturing technology in 2019.

ERP, after all, sits at the centre of an organisation. It orchestrates, automates and provides businesses with the crucial insights needed to remain agile. For more insights about the latest trends in global business growth, read up on the Epicor Growth Index.

[i] The research for the Global Growth Index was conducted by Morar Consulting on behalf of Epicor in December 2017. The research questioned 2 450 business decision-makers and employees in businesses in 14 countries across the globe, about their growth performance in the past 12 months.