Published 21. Mar. 2017

Internet of Things as a Driver for Smart ERP

Since the dawn of ERP systems, the sole role of machine generated data was to enable the proper execution of the supply chain. With the ongoing adoption of cyber-physical systems and the Internet of Things, machine-to-machine communication enables collaborative shop floor planning and machine generated (big) data presents a value in its own right. This paradigm shift calls for new Smart ERP systems that make use of big data in (predictive) planning throughout the entire value chain and create the transparency for improved governance, risk, security, and compliance management.
Supply Chain and Procurement


IoT Enabled Value Chain

Scenario of an IoT-enabled value chain

Worldwide, economic activities are driven by information and communication technologies. These also penetrate into all areas of life. There is no doubt: We are not only heading for the digital economy, but for a digital world. So the question is, how do we want to live, learn and work in this world?

In their bestseller “The Second Machine Age”, MIT’s Erik Brynjolfsson and Andrew McAfee—two thinkers at the forefront of their field—vividly reveal their vision of the technological, social and economic changes that we will need to adjust to.

The Digital Economy and Society – Industry 4.0

In the framework of their high-tech strategy, the German Government is looking into questions on the future of the digital economy and society. The following areas of action were identified: Industry 4.0, Smart Services, Smart Data, Cloud Computing, Digital Networking, Digital Science, Digital Education, Digital Life Environments.

In the following, potentials of Industry 4.0 are compiled and described:

  • Meeting individual customer requirements: Industry 4.0 allows individual, customer specific criteria to be included in the design, configuration, ordering, planning, manufacture and operation phases and enables last minute changes to be incorporated.
  • Flexibility: Engineering processes can be made more agile, manufacturing processes can be changed, temporary shortage can be compensated for and huge increases in output can be achieved in short space of time.
  • Optimized decision-taking: Industry 4.0 provides end-to-end transparency in real time, allowing early verifications of design decisions in the sphere of engineering and both more flexible responses to disruption and global optimization.
  • Resource productivity and efficiency: delivering the highest possible output of products from a given volume of resources (resource productivity) and using the lowest possible amount of resources to deliver a particular output (resource efficiency). Moreover, rather than having to stop production, systems can be continuously optimized during production.
  • Creating value opportunities through new services: Industry 4.0 opens up new ways of creating value and new forms of employment, for example through downstream services.
  • Responding to the demographic change in the workplace: In conjunction with work organisation and competency development initiatives, interactive collaboration between human beings and technological systems will provide businesses with new ways of turning demographic change to their advantage.
  • Work Life Balance: The more flexible work organisation models of companies that use CPS mean that they are well placed to meet the growing need of employees to strike a better balance between their work and their private lives and also between personal development and continuing professional development.

Smart ERP Systems

The Industry 4.0 networks people, machines, and objects in the Internet of Things and paves the way to new production concepts and fully integrated, digital value chains. Traditional ERP systems are now reaching their limits in terms of planning and managing corporate resources. We now need Smart ERP systems, which are available as software services from the cloud. In a phase where the digital transformation is becoming a reality in more and more companies, a new dimension of digitization opens up: Now objects and machines are digitally accessible at any time and from anywhere via sensors and SIM cards. The usage and the network of autonomously acting CPSs tap new potential for the automation of production and logistics processes. But above all, they create the conditions for new processes and services.

Keyword: social manufacturing and logistics.

IoT-Enabled Value Chains

With the claim of a technological infrastructure, in which all electronic devices can communicate with each other, the IoT is a new paradigm with applications in all areas of life.

Prosumers (producer + consumer) can connect to the network and use big data, analytics, and algorithms to accelerate efficiency, dramatically increase productivity, and lower the marginal cost of producing and sharing a wide range of products and services to near zero, just like they now do with information goods. And in view of the rapid pace with which digitization penetrates into all areas of life, it becomes clear how important not only technological questions are, but also considerations regarding privacy and ethical aspects in terms of data collection (sensing), storing and processing. And where are the limits for the application of artificial intelligence? Or in other words:

What degree of autonomy do we want machines to really have?

A current example is autonomous driving, whereas now people rather talk about partially autonomous driving, although the majority of the technological challenges for full autonomy have already been solved. Undoubtedly the industrial application of the IoT is already the most advanced.

PROMATIS software GmbH will be attending 600Minutes Supply Chain, Germany, on the 22nd of March 2017 as a solution provider. Event discussions include:

  • Digital Transformations – On the Way to Supply Chain 4.0
  • E2E: Holistic Supply Chain Optimization
  • Strategic Partnerships in Procurement and Supply Chain: How to Gain from the Collaboration?
  • Predictive Analytics as Value for Service Logistics
  • Sustainability as a Business Model
For all our upcoming events, visit the Event Calendar »
by Dr. Frank Schoenthaler

PROMATIS Group Ettlingen (Karlsruhe TechnologyRegion), Germany