The UK manufacturing industry is of critical importance to the nation’s economy. The sector currently employs 2.5 million people, accounts for 51% of UK exports, and has an output of £183 billion. This all adds up to the UK being the ninth largest manufacturing nation in the world. 

However, growth in the industry is being hampered by external global pressures including market uncertainty. Skill shortages are another impediment, with many blaming the education system for failing to rectify the skills gap. 

According to the Bank of England, the UK is in the early stages of a two-year recession, caused by rising energy costs, higher borrowing costs and currency volatility. British manufacturing output has fallen for three months in a row as of September 2022, while orders have declined for a fourth consecutive month. This is due to weak global market conditions, high transport costs and longer lead times, along with lower export demand. 

Manufacturing requires IT investment

Some of these challenges are outside the control of manufacturers. However, if the sector could find a way to manage some of them by becoming smarter in their operations, the returns would be very worthwhile.

This would require a shift among UK manufacturers towards and even beyond the smart factory concept. Smart factories combine advanced technologies like IoT sensors with cloud computing to optimise efficiency and quality of manufacturing. These connected factories are able to run autonomously, identifying and repairing any errors themselves without the need for human intervention, while providing workers with intelligent data to improve performance. 

The autonomous factory goes a step beyond this, where human presence isn’t required to efficiently fulfil orders, and manufacturing benefits from faster workflows, enhanced productivity and reduced human error. 

The future requires IT built on solid foundations

However, upgrading from the current factory model to a smarter and eventually autonomous version is going to require a hefty amount of capital outlay. To convince the board to back this type of investment, manufacturers need to have the right foundations in place to build their smart factory. Core to this is ensuring that the IT systems that have been developed over the past few decades to run manufacturing businesses, are sufficiently integrated and secure. 

Getting the right technology platform in place for the smart factory is certainly a complex task. After all, manufacturers are not likely to be running the vanilla version of a single ERP and database system for their core financial, HR and supply chain functions, one that was installed from the box and has never changed since. Instead, these ERP platforms are highly customised versions, making a simple switch to available cloud equivalents of these applications out of the question. 

A complicating factor is technology vendors planning to switch off full support for existing applications. This puts extra pressure on manufacturers to make a decision within a set timeframe. 

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The measured path to smart transformation

However, that does not mean an immediate and total shift over to the cloud is the only way. Organisations should be wary of rushing ahead with complex and expensive ERP upgrade projects simply based on an end of support deadline imposed by a vendor. Instead, these dates can be viewed as an artificial deadline by which time vendors would like all their customers upgraded to their own cloud applications.

Manufacturers should be focused on optimising their existing applications and evolving them over time rather than in one ‘big bang’. This approach ensures the business has the framework and resources in place to manage the transition to smarter and autonomous processes. 

Manufacturers can extract more value from current systems and ensure better integration between applications by enhancing the systems they already have – not by switching everything out for new applications simultaneously. 

While UK manufacturers face challenges from economic volatility, lower export demand and skills shortages, there is potential for growth among those organisations that shift to the smart factory model.

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