Welcome to the Introducing the Industrial Manufacturing Industry course. At the end of this learning journey, you’ll be able to speak about the Industrial Manufacturing industry in the language of your customer and articulate the end-to-end solution story for the Industrial Manufacturing industry.
What is Industrial Manufacturing?
Industrial Manufacturing companies create all sorts of machinery and components from large industrial machines to small household products. These products can include pipes, packaging materials, pumps, compressors, transformers and everything in between. They play a significant role in how we transform raw materials into finished goods on a large scale.
At SAP, we divide industrial manufacturing into five sub-categories:
- Energy and Power Equipment
This includes machinery and systems involved in the generation, distribution, and utilization of energy within manufacturing processes.
- Transportation Equipment
Refers to the machinery and vehicles used for the movement of goods, materials, and people.
- Automation and Control Systems
These are technologies and systems used to enable control, monitoring, and optimization of industrial operations.
- Industrial and Commercial Machinery and Equipment
This category involves a diverse range of machinery, tools, and equipment used in various industrial and commercial settings.
- Heavy Equipment and Material Handling
Essential components in industries such as construction, mining, logistics often fall under this category.
Evolution of Industrial Manufacturing
The evolution of industrial manufacturing can be understood in 4 distinct phases. Industry 1.0, Industry 2.0, Industry 3.0 and Industry 4.0.
As you can see, industrial manufacturing has evolved significantly through four distinct phases, each marked by groundbreaking innovations and advancements. From the mechanization of the Industrial Revolution to the digital integration of Industry 4.0, these developments have continuously reshaped production processes, increased efficiency, and reduced costs.
Let's now explore what the industrial manufacturing industry looks like today and how it's continually evolving with modern technologies and practices.
Challenges in the Industrial Manufacturing Industry
The industrial manufacturing industry faces a variety of complex challenges that impact operations and growth. From supply chain disruptions to the need for advanced IT systems, these issues require strategic solutions to maintain competitiveness. These challenges can include:
Supply Chain and Cost Increase Challenges
Rising labor costs in regions previously known for cheap labor.
Increasing cost of capital due to central banks raising interest rates.
Supply chain disruptions have led companies to consider relocating their manufacturing operations closer to their home country (near-shoring), or within their own country (on-shoring).
IT Challenges
High IT costs and long implementation times for projects.
Legacy ERP systems causing integration and real-time data issues, along with high maintenance costs.
Transitioning business models requiring significant IT capability changes.
The need for flexible manufacturing to produce highly configurable products while maintaining profitability and predictability.
The need for scalability and technology modernization to stay competitive and support growth ambitions.
Operational Efficiency and Flexibility
The need for continued agility during acquisitions, divestitures, or entering new markets.
Leadership's need for real-time business visibility and analytics to make data-informed decisions.
The necessity of operational efficiency by running industry-standard, manufacturing-specific processes.
Let's summarize what you've learned:
- Industrial Manufacturing involves transforming raw materials into finished goods.
- Key areas of innovation and opportunity in the industry include Clean Power, Sustainable Transport, New Food Technologies, and Circular Economy.
- Several challenges faced by the industry include supply chain interruptions, increased labor and capital costs, need for updated ERP systems, and business model transitions.
- To stay competitive, the industry must adapt to challenges like near-shoring and on-shoring, and improve operational efficiency through analytics, industry-standard processes, and technology modernization.