By George Santiago, General Manager, RS Components, Philippines
Over the next three years, the Department of Trade and Industry’s proposed industry support package will render technical support to small, medium, and large companies. This will accelerate the adoption of Industry 4.0 technologies to catalyze manufacturing and economic growth.
But what can manufacturing businesses in the Philippines do now to get ahead of the curve and drive business growth amid lockdowns? How can enterprise technology aid business recovery in the sector? E-commerce and e-solutions might just be the answer.
The industry at a glance
The Philippines has a robust manufacturing sector. It is known as one of the top-performing manufacturing sectors in Southeast Asia. Any slump in rates was usually due to poor weather conditions, but many local manufacturers had positive hopes for their exports. There was a solid rise in domestic demand and employment rates in the industry was on a steady incline.
Many manufacturers also had traditional business models and some were hesitant to invest in technology as labor came at lower costs. But this changed drastically once the pandemic hit and even lockdowns eased gradually. In recent months we’ve seen more demand for automation tools and digital solutions from manufacturers who are returning to their operations, but at the same time, they want to keep their people safe and follow physical distancing measures. We also anticipate higher demand for these in the coming months as companies accelerate their digital transformation.
In September, we saw a decline in manufacturing output for the fifth straight this year. Despite these numbers, trends in volume and value of production over the last three months point to a gradual recovery.
When lockdowns were first imposed, manufacturers struggled with low consumer demands, and limited mobility leading to lower production rates. Businesses learned how to use technology as part of their strategy to react quickly so they could continue to meet customer needs.
With the help of the right technologies, manufacturers have been able to turn this around. They have been able to resume delayed projects and are finding new ways to manage operations and engage with customers. We’re also seeing a gradual recovery of demand in the country.
One positive outcome of the lockdown was the acceleration of digital transformation in the industry. Manufacturers are embracing technology and consumer shifts to digital, which has led to the e-commerce and automation boom we see today. As consumers continue to stay home and even as quarantine measures are easing, manufacturers and suppliers look to e-commerce and innovation to maintain their competitive advantage and also to enhance reach.
When the pandemic went global, we received many requests from customers — most of whom work in essential services such as medical, manufacturing, and industrial — to supply them with critical parts needed to maintain their operations. We were able to continue interacting with customers online to help them find and source the necessary tools and components through our website and our extended range, and we continue to do just that.
Getting ahead of the curve
To accelerate recovery and future-proof themselves, businesses must make the jump to go digital or fear being left behind, because both B2B and B2C customers are now transacting differently. During the pandemic, consumers shifted to digital, where they were able to shop and receive purchases at their doorstep quickly. Customers will continue to expect the same (if not higher) level of ease and shopping experience in the future.
Businesses must keep the customer and consumer journey in mind when planning their digital solution strategies. They need to keep in mind ease of transaction, ease of searching for products, ease of customer service, and ease of payment. By building an ecosystem of ease, businesses can better support consumers through their buying journeys.
Building an agile supply chain is also key. Working with digital specialists and suppliers who are experts in providing value-added sourcing services and implementing purchasing and inventory management solutions help businesses reduce procurement costs and unplanned spending, improve efficiencies, and strengthen their supply chain — enabling them to deliver the ease of shopping their customers now expect and meet market demand. There are available web solutions helping large manufacturers with high volumes to standardize purchase-to-pay processes and maximize cost reductions across all their suppliers.
That said, businesses can most definitely implement their digital transformation on their own if they invest in the right tools, digital capabilities, and talent. But the change must happen quickly if they want to remain a key player in a highly competitive market.
Collectively, enterprise technology such as artificial intelligence (AI) and the Internet of Things (IoT) are great tools. They can assist manufacturing businesses to maximize their efficiency all while promoting health and safe operations for their people. The health of employees should always be at the forefront of business solutions. Enterprise technology can help maintain production rates while keeping employees at a safe distance from each other to minimize the spread of the virus. It can also optimize production lines at reduced costs.
Many don’t realize the substantial savings from streamlining their procurement and supply chain processes. Enterprise solutions, like what was mentioned previously, can also be adapted to help businesses save on costs and run more efficiently, without the need for complicated integration systems. Our eProcurement system, for instance, gives manufacturers better visibility of the wide range of industrial products so they can select key components that best fit their requirements and the system also gives them more control over their procurement costs. These technologies also help ensure data accuracy — minimizing errors and reducing Purchase to Pay process costs.
There are three enterprise technologies essential to improving productivity and reducing cost for the manufacturing industry today: AI, supply chain management solutions, and the IoT.
I would say it’s now essential for factories who wish to keep up with changing consumer demands. As consumer demands shift on a daily, innovative manufacturers can deploy AI and machine learning to study these behaviors and to pinpoint and layout future buying patterns. With this knowledge in their back pocket, manufacturers can plan production outputs based on consumer demands, reducing production waste and costs.
AI is also great for quality assurance and detecting errors. AI-driven inspection tools can be used to identify defects on production lines at a faster pace and with greater accuracy.
On the supply chain, AI-driven automation can improve and speed up processes. Tedious processes of lining up materials needed for production and materials ready to go to market can be handed off to machines, who can do so efficiently. This also gives manufacturers the ability to better track parts and products on factory floors, all the way until the end-product reaches the customers’ doorstep.
Supply chain eSolutions
Common challenge manufacturers and engineers encounter today is lost time and lower productivity due to unscheduled maintenance and unforeseen incidents — like the pandemic. When this happens, they need to find parts and technologies urgently to minimize business impact. By moving procurement solutions online, it will give manufacturers a convenient avenue to continue operations, and maintain production outputs.
Also, with global supply chains disrupted, consumers lean on local suppliers to get their products quicker. To meet local demand, manufacturers can integrate web-based procurement and purchasing solutions into their systems for better visibility of stocks and control over production, allowing faster time to market for manufactured products at reduced costs. Customers with complex industrial requirements can also save time searching and negotiating with multiple suppliers and simplify their procurement process.
Lastly, one of the biggest contributing technologies in manufacturing has to be the Internet of Things, Industrial IoT (IIOT) to be exact. Globally, we can expect to see more than 75 billion IoT devices installed by 2025. When it comes to data, IIOT technology can deliver real-time operational data, allowing manufacturers to make adjustments on the go and to manage factory units remotely — a necessity especially today.
IIOT can bring automated machines to factory floors, it can enable in-factory logistics and production scheduling to achieve consumer-to-business smart manufacturing. IIOT sensors can ensure ongoing monitoring of the production line from start to finish, allowing operators the ability to fine-tune the manufacturing process, reducing time and cost.
The Philippines’ manufacturing sector has a bright future ahead, provided businesses take steps needed to adopt Industry 4.0. Global distributors contribute to this by educating manufacturers on technologies needed to realize the benefits of automation, industry 4.0, and IIOT and helping them implement critical technologies to keep operations running smoothly.
The technologies discussed above are all part and parcel of Industry 4.0 and can catalyze growth in manufacturing through greater data analytics, automation, and an increase in production quality. These lead to greater local and global export demands.
These technologies can also help manufacturing businesses remain competitive by reducing costs and keeping people safe. By eliminating processes rendered irrelevant with tech, manufacturers can save on operational costs, while maintaining efficiency in production lines. For example, smart sensors for predictive maintenance can help manufacturers reduce product defects and errors, detecting and reporting these early in the production cycle. These sensors also prompt relevant people in charge who can then address these errors. This reduces, possibly even eliminates, production downtime.
According to a McKinsey study, the projected economic impact of digitization in Southeast Asia is between $216 billion to $637 billion a year by 2025. If harnessed successfully, industry 4.0 can propel the manufacturing sector forward and can enable the innovation needed to compete with global manufacturing powerhouses. As manufacturing is one of the Philippines’ major economic contributors, increased adoption will help boost the nation’s economy as a whole.
Do you have a forecast on how soon will the industry overcome the losses/challenges it experienced during this pandemic?
We know this is linked to the industry’s ability to shift its ways of working and to innovate. We experienced this first-hand. Early this year, we saw the need to adjust quickly by ensuring our people are safe and able to work from home, and that our customer channels and website remain accessible for clients searching for parts or booking urgent orders online. Our digital capabilities allowed us to react quickly and to help customers maintain operations.
These are key factors to recovery and future-proofing the sector. Equipping businesses with the know-how and supportive policies, so they can invest in the right technologies and in people to transform their organization — make plants more efficient, ensure they are using the right tools to ensure safety and minimize risks at the workplace – contribute to a faster recovery.
On top of deploying the right technologies, having a customer-centric mindset will help manufacturing businesses go far in their recovery journeys. Businesses must continue to keep the customer in mind when adopting new technologies and processes to cope with market changes. That said, the personal or human touch also goes a long way, especially as more interactions go digital. It’s important for businesses to maintain relationships with customers. If businesses get this right, it leads to brand loyalty in the long-run.
Agility has also been a strong theme for businesses during the pandemic. Many traditional businesses have not been able to adapt to the shift to digital as companies who were able to be more agile. Adopting the right technologies, such as those mentioned above, will enable business agility.