Next year’s news about process manufacturing

By Jakob Björklund

- Last updated on GMT

Internet of things
Internet of things

Related tags: Manufacturing, Supply chain, Enterprise resource planning

The growing importance of traceability – where transactional data meets the internet of things – is one of three key trends set to shape the process manufacturing industry of 2016: including the food and drink sector.

The internet of things is relatively new to process manufacturing, so change won’t happen overnight. 2016 year will be another year for the process industry to watch and learn. There are companies that are leading the charge, particularly in the pharmaceutical industry, which is preparing for the EU Falsified Medicines Directive, expected to go live in 2018.

The technologies that will enable pharma companies to meet this directive are crucial, particularly around traceability. Next year is when they will study and acquire these technologies in order to ensure that they can be rolled out across the global supply chain in time. 

The collection of data via sensors and scales is not new to the process industry – in fact, companies that run asset-intensive processes at really large-scale have been doing it for decades. But, historically, this ability to collect data has come with a big price tag.

The internet of things heralds a new age for increased traceability, one from which small and large companies alike will benefit. Now everything has some sort of sensor and can be traced, from forklift trucks to food and drink storage locations, pallets to trucks.

To illustrate, roughly 25% of our customers are collecting transactional data today, a number that will increase to around 80% in the next five years, as the technology becomes more available and the cost lower.

The two other key trends set to dominate manufacturing in 2016 are the Robot revolution and Customers’ demand for high-level product traceability.

Fastest-growing companies

What‘s internet of things?

“The internet of things means that, when physical objects, ‘things’, become connected, through electronics, software and sensors, they provide valuable data and insights.”

  • Jakob Björklund, IFS

Smart machines, or robots, are working their way into the process industry, expected to perform many routine tasks in manufacturing and warehousing. Technology research firm Gartner predicted that by 2018, 50% of the fastest-growing companies will have fewer employees than smart machines.

I’m not just talking about the machines that you see building cars in adverts. I’m talking about smart machines that are able to make their own decisions. For example, a robot that picks customer orders will decide on the most efficient route and make product allocation priorities in the case of a shortage.

Today, these decisions are carried out by humans, often on the basis of a recommendation from the WMS (warehouse management system) or ERP (enterprise resource planning) system. Companies are already experimenting and we will see wider adoption of smart machines in 2016.

This will also lead to changes in ERP solutions – interfaces will change, they will need to deal with more transactional data and provide information necessary to make decisions rather than making the decisions within the ERP. Efficiency gains aside, the complexity of supply chains and manufacturing processes mean that widespread adoption across the value chain will take longer than 12 months.

Product traceability

The third trend will be customers demanding high-level product traceability across-the-board.

I have a particular interest in the rise of adoption in public cloud services as a platform to manage the data produced by traceability. Namely, providing consumers with the ability to scan the barcode on their sirloin steak at the supermarket and track its journey from farm to supermarket.

This is only possible through traceability in the supply chain – from the manufacturer, who registers the goods which are then picked up by the transport company that can log weight, miles driven and even the temperature of the vehicle, to the shop that registers arrival and logs into its system.

This level of traceability is critical for food manufacturers for whom brand reliability is absolutely crucial. Since the horsemeat scandal of 2013, companies will do everything to ensure that what they sell is spotless. Widespread roll out of this level of traceability is still a little way off so companies will need to spend 2016 developing a strategy to deploy this technology.

Three top trends for 2016

  • The growing importance of traceability – where transactional data meets the Internet of Things
  • The robot revolution to impact the process manufacturing industry
  • Customers to demand high-level product traceability

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