VOICEBOX: Opinions from the manufacturing industry

Let's be prepared for the next big thing

How increasing investments in risk resilience can help Australian organisations avoid pre-pandemic unpreparedness. Helen Sutton, Senior Vice President of EMEA & APAC Sales at Dataminr gets ready.

The lessons learned from the COVID-19 pandemic continue to surface—chief among them is the need to improve risk preparedness as it plays a critical role in ensuring business resiliency. It’s a lesson that Australian organisations learned early on. Before the pandemic, two in three of those organisations had a continuity plan in place, but only half of the plans included a pandemic scenario. This left them vulnerable to both the effects of COVID-19 and the pandemic’s cascading risks, such as supply chain disruptions, staffing shortages and spikes in cyber crime. However, even after a pandemic fueled two-plus years, investment in business resiliency remains relatively low among Australian businesses, according to a recent study of more than 300 Australian corporate security decision makers. The study, which was commissioned by Dataminr and conducted by Antenna, surveyed the decision makers on how their business has managed risk and resilience over the last 18 months—and which risks they expect to continue to face throughout 2022. Let’s take a look at the study’s key findings and what they reveal about Australian organisations’ ability to navigate today’s evergrowing risk landscape. Detecting risks and disruptive events

While 75% of organisations believe that business risks have dramatically increased, a third are still not confident about their ability to identify risks and events in real time. And, only 19% strongly agree that their organisation has the ability to comprehensively and continuously discover risk indicators that may impact their business. This is concerning given that the importance of identifying and reacting to business risks in as close to real time as possible has grown exponentially—and the types of risks organisations are faced with are increasingly complex. Corporate security leaders can stay ahead of such risks with real-time alerting tools like Dataminr Pulse. For example, with Pulse, our Australian corporate security customers know first and react faster to potential threats and crises as Pulse detects these risks far in advance of traditional public information sources. In return, many customers have reduced the financial damage associated with being unprepared for major crises and disruptions. Focusing on the right risks

The study found that over the past two years Australian businesses have mostly built resilience around COVID-19 risks. This created a significant blindspot as attention must also be paid to the plethora of other risks that continue to threaten business operations and continuity. Here’s how Australian corporate security leaders prioritized risk: • COVID-19 related risks, 67% • Staff retention, 45% • Supply chain disruption, 40% • Cyber crime, 40% • Climate change, 25% • Unknown risk, 20% Unknown risks are those that have not yet come to light. And while hard to anticipate, Australian corporate security leaders that embed real-time information tools into their workflows can easily spot such risks and determine the potential impact of each.

Investing in risk management

64% of Australian organisations are confident that they have what they need to effectively manage risk in 2022, yet almost a third have zero investment in risk resilience. This indicates a significant disconnect between what businesses have invested in (or not) and the level of confidence each has compared to the reality of the market. This gap puts Australian businesses at risk of returning to prepandemic levels of unpreparedness. It’s not enough to believe the right risk management strategies and capabilities are in place. Significant investment in risk management tools and strategies is a must if organisations are to have the flexibility and preparedness needed to remain resilient in the face of known and unknown risks. Also key is how responsibility for risk management is distributed throughout an organisation. 72% of Australian organisations have given existing employees additional risk management roles and responsibilities and 71% have created a risk management team. This is a positive sign as it indicates Australian businesses are relying less on external experts and resources (50% hired external professionals), choosing instead to focus on upskilling employees and spreading responsibility for risk management across multiple functions. While Australian businesses have made progress in strengthening their resiliency, the study shows us that many still have a fair amount of work to do to be truly resilient.

Download the report from: https://explore.dataminr.com/c/ covid-19-and-business-resilience-in-2022 dataminr.com

Innovations for the future of Australian manufacturing

Are Australian manufacturing companies ready for what is required to come back from the brink? Greg O'Loan, Regional Vice-President (Australia and New Zealand) for Epicor Software, looks at the trends.

It will come as no surprise to anyone that Australia is no longer the manufacturing powerhouse it was in the 1950s and 1960s. Manufacturing currently makes up only 6% of Australia’s GDP, and as a country we only produce 68% of what we use. In fact, the OECD recently ranked Australia last in manufacturing self-sufficiency amongst OECD countries. Nor is Australia unusual in this regard. Since the 1970s, companies in the US, Europe, and Australia have outsourced their manufacturing to countries that are able to provide better value for money when it comes to production. In recent years however, there has been a subtle shift. The US-China trade war, the COVID-19 pandemic, and the Russian invasion of Ukraine have resulted in shortages of everything from commodities like oil and wheat, to technological staples like microchips and semi-conductors. A study by McKinsey in November 2021 found that up to 90% of companies were looking to onshore some of their manufacturing processes, and with the new Australian Labor Government promising to invest $1bn in Australian manufacturing, the local manufacturing sector might well be ready to stage a comeback. A boom in manufacturing will ultimately be good for the Australian economy, and as the dust clears from this year’s Australian Manufacturing Week, here are five ways that Australian companies can help create the future of manufacturing: Play to manufacturing strengths

Australia has already seen significant growth in the creation of renewables, the manufacturing of industrial machinery with sophisticated or make-to-order production lines, and the production of fabricated metals that use local materials. In addition, the previous Coalition government invested heavily in aerospace and defence manufacturing, which has in turn led to significant growth in these sectors. Australian companies could follow their European counterparts - manufacturing specialist, high-end biotech and green technology products. However, a world in which Australia produces electric vehicles, solar panels, and pharmaceuticals for the rest of the globe, we would require the current Australian Labor Government to create a supportive government policy that provides the incentives that the corporate sector needs to justify substantial investments. Boost productivity by capitalising on the latest technology

As Australian companies consider onshoring their manufacturing, this can often be a good opportunity to introduce technological innovations into the production process in ways that boost productivity by using less labour and space. In particular, companies that are able to harness the latest technology, such as digital twinning, predictive maintenance, and 3D printing techniques can lower their production costs and improve their environmental sustainability. While the factories of the past were focused on streamlining their production systems and processes, the factories of the future will be driven by data. Data analytics tools such as scenario analysis and probabilistic modelling can help connect the top floor to the shop floor, giving companies better insight on their manufacturing operations. Real time manufacturing data can also enable companies to diagnose problems and take corrective actions, allowing them to find solutions and iron out issues before they occur. Having a smart factory floor means that companies will be able to optimise their inventory planning, manage their stock, and ensure optimal order fill rates, all of which will keep customers happy. Use robotics, automation, and interconnectivity to save on costs

While global shortages, supply chain issues, and inflation are all pushing companies to bring their production lines back onshore, the process can be complex. Companies that are looking to bring their production lines back onshore will have to contend with issues such as energy and energy costs, and manufacturers will consequently need to find cost savings to compensate for the increased expense. Introducing robotics into a production line can help to save on labour costs, while shifting to cloud-based connectivity can help to improve scheduling, and Australian companies that are looking to onshore are already bringing these technological innovations into their production lines. The shift towards smart machines and digital connectivity has been evident for some time now, with a Gartner survey in 2020 finding that 47% of companies intended to increase their investment in IoT. The importance of this trend was very much reflected in this year’s Australian Manufacturing Week, and as the benefits of automation and end-to-end connectivity have become increasingly obvious to companies around the world, Australian manufacturers will need to adapt if they do not want to be left behind. Address labour shortages within the Australian manufacturing sector

For Australian companies looking to onshore their manufacturing operations, the high cost of labour, and the ability to attract and retain talent will be key challenges. The labour shortage is real, and Australia still lacks the highly skilled staff that it needs to create and sustain a modern manufacturing sector. Australia as a country will need to reconsider the role of skilled migration in addressing this issue. However, this is a long-term strategy that will require time to implement. In the meantime, Australian manufacturers can work on retention strategies, and continue to invest in upskilling their existing staff. Here again, technological innovations can be a useful aid. Cloud technology can help companies to stay competitive by making it easier for employers to offer staff members the flexible, work-fromanywhere environments that they have become used to. Advances in virtual and augmented reality make it easier for manufacturers to train their workers while they’re on the job. In addition, building data analytics and visualisation into company software allows employers to have better oversight of staff performance, enabling them to make faster and better staffing decisions. With all of this in mind, the crucial question then for Australian companies: Are you ready for the manufacturing comeback?

epicor.com

Debt collection woes

How manufacturing businesses can prevent bad debt. Emma Berry, Business Development Manager at CreditorWatch gives some well-heeled advice.

For the vast majority of business owners, debt collection is not something you want to spend too much time dealing with. Whether you’re in it, chasing it, or just trying to stay one step ahead of it, you probably feel that the hours grappling with outstanding payments could be better spent working on your business. But the fact is, debt is an inevitable by-product of being in business. The minute you start extending credit and dealing with multiple stakeholders, you are exposing yourself to credit risk. It’s only a matter of time before unpaid invoices and debt collecting agencies are part of your daily routine. While this is true of all businesses, there are certain aspects of the manufacturing industry that make it especially high risk. The longer a debt remains outstanding, the harder it is to recover. In this article, we will share advice on how you can use due diligence measures like requesting a credit check or credit score to keep your manufacturing business from being sunk by bad debt. Reliance on complex supply chains

Running credit checks on all your business partners is the most effective way of reducing credit risk, but that’s often more complicated than it sounds. The manufacturing industry is particularly susceptible to credit risk, and recent global events have made it even more so. Part of the reason for this is that many manufacturers are heavily reliant on global supply chains, which often involve a complex network of contractors and sub-contractors, second and third-tier suppliers, and various other stakeholders. Keeping tabs on all of them is a huge undertaking. Delving into the credit history of each of these entities takes time and money. For this reason, many manufacturing companies don’t request a credit report or credit score for their partners and customers, or they will only request them for the companies they deal with directly, assuming those companies will perform their own due diligence. Needless to say, this isn’t always a safe assumption, and what you don’t know absolutely can hurt your business. Staff shortages

Another problem in the manufacturing industry is that, unlike other sectors, the majority of the work cannot be performed remotely. While the COVID-19 pandemic saw some entire industries move to a remote working model, this was not possible for manufacturers. In order to create their products, staff and materials need to be on site. Staff shortages can lead to serious disruptions with farreaching consequences. Financial mismanagement

Along with these challenges, manufacturers are subject to the same issues arising from financial mismanagement that can befall any business. Poor communication, weak credit policies, and inefficient debt collection procedures can lead to outstanding bills and missing payments. Many business owners will not even notice that a particular client’s payments have become increasingly unreliable until they receive notice that that client has liquidated their business. Credit checks are indispensable when it comes to safeguarding your business against bad debt. However, there is no such thing as zero risk. Even when all necessary precautions are taken, you can still find yourself holding the check when the unexpected happens. This is why efficient debt collection needs to be a cornerstone of your financial strategy.

How to prevent bad debt and get paid faster

While you can’t eliminate all credit risk, you can minimise the severity and frequency of bad debt and limit its ability to impact your business. The most effective way to do this is by first of all performing a thorough credit check for every business you deal with before extending credit to them. The second is to optimise your debt collection process, which will allow you to recover your money quickly wherever possible. Due diligence

CreditorWatch offers a number of highly effective tools for the purpose of due diligence. Our comprehensive credit reports provide you with a detailed financial history of all the businesses you are dealing with. RiskScore, the most predictive credit score on the market, takes data from our 55,000+ customer base and over 11m trade lines to calculate with accuracy the likelihood of a company defaulting on their payments in the next 12 months. A Financial Risk Assessment evaluates a company’s financial health and their chances of leading your business into financial hardship. Monitoring and debt collection tools

Our systems include interactive trade programs like DebtorLogic to keep you updated about changes to the financial health of your partners and customers. You can also set alerts so you are notified of any adverse behaviour or high-risk indicators, such as court actions or default notices from other companies. You can then prioritise collections for those businesses and change your payment terms to stay ahead of bad debt. AI technology is used to automate the debt collection process, saving time and money associated with the administrative costs of trying to recover bad debt. Periodic reminders, overdue notices, letters of demands, and official payment default notices let your customers know you’re serious, and the CreditorWatch name carries the weight to get their attention. Our customers average a 53% increase in recovering payments when they use the CreditorWatch logo on their statements. So much of the manufacturing sector depends on events in the wider world, but credit checks and debt collection are two factors you don’t need to leave up to fate.

creditorwatch.com.au

Moving to the cloud and S/4HANA with the right data

Brent Paterson, Managing Director Australia and New Zealand, SNP Group has some advice for manufacturers about the move to SAP S/4HANA.

In 2027, organisations using SAP’s enterprise resource planning (ERP) central component (ECC), along with other legacy products, will no longer provide support for these products. While SAP may potentially issue bug fixes or patches in exceptional circumstances after this date, manufacturers who haven’t transitioned to a new ERP solution could be opening their business to security and operational risks. Finding a new solution is essential to avoid these risks and, whether moving to SAP S/4HANA or a different cloudbased solution, it's important to make this move sooner rather than later. While it may be tempting to wait until the 2027 deadline, doing so will reduce the amount of time available to make a wellplanned and staged transition before support stops altogether. For manufacturers who choose to delay, the quality of decision-making may be impacted with an increase in cost and a challenge to find SAP partners who are available to manage the process. Instead, manufacturers should start the planning process now so that the transition can occur in an orderly and low-risk manner. Starting with the end in mind

How the transition is conducted is less important than achieving the organisation’s goals once the transition is complete. There is no one-size-fits-all approach that manufacturers can take to get to S/4HANA. Instead, it’s essential to start with those end goals in mind and consider what the organisation is looking for from its ERP architecture. Then, the transition plan can be mapped out in a way that delivers maximum value. For example, if a manufacturer is looking to make faster decisions around which products to make or which suppliers to use, then they need to be able to examine relevant data and use the insights from that data to make better decisions. To achieve this, they need to understand what data will be required, then ensure that data is migrated over to the cloud and S/4HANA. Most manufacturers, especially if they’ve been using ERP and other manufacturing management solutions for some time, will have a massive amount of data on hand. Most of this data will remain relevant to the business and should be moved across to S/4HANA. For example, it could include manufacturing quantities and sales, logistics information, supplier data, and more. This information is invaluable for strong decision-making. However, migrating all of the organisation’s data may not be feasible. Migrating non-essential data can incur costs around infrastructure and data storage. It can also increase the amount of downtime that occurs when the manufacturer cuts over from the old system to S/4HANA. This should be a key consideration for manufacturers because every moment that a facility isn’t operating costs money, and the delays in being able to supply products can potentially damage the organisation’s reputation. The importance of minimising downtime

With downtime being so costly on a number of fronts, manufacturers must find a way to minimise downtime in the S/4HANA transition. With data playing a key role in how much downtime occurs, it’s crucial to determine what data must be migrated and to seek a deployment that minimises disruptions. Ideally, this should include near-zero downtime. Near-zero downtime is challenging but can certainly be achieved. It hinges on a carefully considered data migration plan, which prioritises high-quality data that can be put to use to drive stronger decision-making. Data shouldn’t necessarily be automatically carried over from existing ERP systems. Instead, the deployment team should analyse historical data and identify the most valuable data to migrate well before making the transition. This can seem like a daunting task for manufacturers whose core business is not data management or technology migration, but making products. Diverting resources away from manufacturing activities towards the transition to S/4HANA can compromise the business’s ability to grow and protect its revenue streams while transitioning. For this reason, it’s crucial to work with a data transformation specialist who can help manufacturers understand their data and determine how to treat that data before transitioning to the cloud and S/4HANA. The right partner will help manufacturers maintain compliance over supply chains and maximise the benefits of their ERP solution. For manufacturers who rely on SAP now, and who will rely on S/4HANA in the future, it’s also important to choose a partner with deep expertise in S/4HANA and data management to achieve the best possible outcomes.

snpgroup.com

Albanese's Made in Australia future calls for a localised and resilient supply chain

The need to redevelop our supply chains has grown exponentially by a geopolitical environment that is becoming more hostile to global trade, says Paul Soong, Regional Director at E2open ANZ.

The topic of supply chains has quickly moved from a subject for the board room to something now discussed around most people’s kitchen tables. Global threats from COVID and diplomatic trade tensions have exposed companies to costly disruptions, trickling these expenses down the consumer with headline inflation in Australia spiking to a startling 5.1% between March 2021-2022. With the general public now intimately aware of how fragile our supply chains can be, they are swinging to leaders who are making developments in supply chain resilience and optimisation, and businesses must follow. Our new Albanese Government has created big plans for the supply chain industry, developing a local spending and procurement program worth $15bn under its ‘Made in Australia’ Plan. Pertaining to small and large businesses alike, this is an opportunity to utilise our local markets, pathways and partners and leverage innovative technologies to mitigate the risk of future external impacts through a more robust network. Identifying alternative sources

The need to redevelop our supply chains has grown exponentially by a geopolitical environment that is becoming more hostile to global trade. Overseas suppliers of key resources are becoming major supply chain vulnerabilities and organisations have even had to adjust to shorter leading times and a much faster turnover of goods as a direct result from changing consumer demands. Diversifying supply chain partners will ultimately help ease the pressures businesses are experiencing across the networks by providing sources that allow for greater visibility, control of goods and the ability to resolve problems quickly. However, despite these clear benefits, it is the consumer that is ultimately driving this case in Australia. According to recent research from Roy Morgan, 90% of Australians aged over 14 say they are more likely to buy products made in Australia, which is a sharp 88% increase over the past four years. Consumers have been becoming well aware of the environmental and health benefits of local goods and have shown a greater willingness to support local businesses. Looking towards suppliers that are sustainably sourced and developed will help build consumer confidence that is needed more than ever with the consumer sentiment index dropping nearly as low as the levels seen in the height of the pandemic. It’s clear that companies who don’t build new commercial relationships as part of their core value proposition will feel the impact in terms of both reputation and revenue in the future. Optimising Australia’s manufacturing sector

With businesses now looking to new, more reliable suppliers, there is still little growth or options offered in our manufacturing sector. Currently, 98% of trade in Australia is connected to or reliant on sea freight in some way which has led to businesses becoming heavily reliant on distant suppliers. This over-dependency ultimately led to the demise of Australia’s manufacturing sector with its GDP falling from 30% in the late 1950s, to a shrunken 5.5% in 2021. Of course, Australia did not feel the true impacts of this until the last two years with barriers faced in getting goods on and offshore causing a ripple effect along the entire supply chain. According to the OECD, Australia ranks last in manufacturing self-sufficiency and without support to advance this sector, Australia will remain in this vicious cycle of high vulnerability in times of crisis and poor supply chain visibility. It is now no longer about competing with other countries but instead we must focus on becoming resilient. A new report from the Centre of Future Work reveals that $180bn in new sales, $50bn in additional GDP and over 400,000 new jobs can be achieved if we rebuild our manufacturing sector back to a size proportional to our national needs. While it seems our sector is far from reaching this goal, the government’s initiative will provide an opportunity for the manufacturing sector to finally transform and become resilient. Investing in a $1bn Advanced Manufacturing Fund, the main efforts will focus on rebuilding Australia’s industrial base that will create new capabilities to develop transport, resources and renewables. The key to this plan is creating local job opportunities and implementing advanced technologies such as AI and automation so that each stage of the supply chain has more granular accuracy lending abilities. Such a significant investment in labour and local resources will finally allow for businesses to diversify their operations in more robust relationships. Where automation technologies fits in

Whilst the lingering impacts from the pandemic are still a challenge for supply chains, businesses are at their strongest when using technology to find innovative solutions to problems. The Labor government’s Critical Technologies Fund of $1bn will give the manufacturing sector the well-needed boost to implement sophisticated AI technologies to optimise their operational and industrial processes and ensure visibility across the supply chain. A key challenge for manufacturers is the high costs and labourintensive tasks that are required across multiple stages of production. However, AI and robotics technology can enable companies to automate these routine activities to lower costs and allow for human resources to be optimised in a more valuable and effective way. Through predictive learning, AI can forecast demand for products and pricing efficiently and identify failures at a granular level, to allow for more streamlined operations with minimal business disruption. With this technology set to greatly transform how manufacturers operate, its main purpose will be in refocusing human effort to create more innovative results and solutions that will significantly advance the sector. The solution is clear and strongly supported by our federal government: redefining our networks, applications and use of data can achieve greater supply chain velocity, minimal disruption of goods and a future economy of resilience. e2open.com

CX-led digital transformation will deliver market success to Australian manufacturers

One of the effects of the COVID-19 outbreak has been the acceleration of Australian manufacturers’ digital transformation initiatives. Jason du Preez explains.

The outgoing Federal Government recently committed $750m towards turbocharging advanced manufacturing, recognising that Australia needs to have more on-shore capabilities. In addition, the Federal Government will invest $44m in four new artificial intelligence (AI) and digital capability centres, with grants of up to $11m available for groups that “apply AI in ways that either advance the national manufacturing priorities set out under the Modern Manufacturing Initiative, or the Digital Economy Strategy’s digital growth priorities.” The pandemic has fundamentally changed how we work and live, and has driven accelerated adoption of digital channels such as eCommerce and social commerce across multiple industries. Australian manufacturers have pivoted their businesses to ride out the challenging environment. Many have responded to rapid change by shortening their supply chain, placing emphasis on justin-time deliveries, and creating value for their customers. While this started before the pandemic, the trend towards direct-to-consumer selling (D2C) has accelerated and is set to continue. The pandemic has put a universal pressure on the need to maximise convenience and speed. Regardless of where your company operates or manufactures its goods and services, manufacturers that remain frozen with a fragmented, outdated, and incomplete view of their customers will see their competitors accelerate away from them and create an insurmountable gap that cannot be closed. Advantages of digital transformation

Manufacturers that invest in digital transformation to significantly improve the accuracy and completeness of their customer data will improve customer retention and acquisition and increase revenue share. CRM systems enable manufacturers to intuitively store customer details, such as addresses, telephone numbers, key contacts, purchase history and more. This data can be particularly beneficial to sales agents as it allows them to understand a manufacturer’s customers better and identify opportunities to drive additional revenue. Innovations in Artificial Intelligent (AI) have moved the dial on customer experience (CX) efforts. AI is single-handedly putting CRM back at the heart of CX, providing the foundational technology needed for manufacturers in Australia to drive engagement and deliver experiences that keep customers coming back for more. Many Australian manufacturers are still wrangling ERP systems with limited functionality. Others who have moved to using a CRM, haven’t integrated their CRM with other ERP systems to create a uniformed data view. With marketplaces more competitive than ever, customers are in the driver’s seat, not businesses. That’s why manufacturers must do all they can to stand out from the crowd, or risk finding themselves irrelevant. One way that Australian manufacturers can differentiate is by consistently providing an amazing CX. By doing so, businesses can even look to add a price premium. According to research by PwC, valued customer experiences can allow companies to charge up to a 16% price premium on products and services, and reap the benefit of improved customer retention from increased loyalty. By consistently providing an exceptional customer experience, manufacturers can boost customer retention, improve customer satisfaction and increase up-selling and cross-selling. Manufacturers need to be consistent with their customer experience approach across every customer touchpoint/channel. This is increasingly important as firms roll out new ways to connect with their customers such as eCommerce websites, self-help portals and automated chat facilities. It’s no good providing a stellar experience when the customer first reaches out and then falling short with your online ordering offering or after-sales service. Once customers have had an exceptional customer experience, they expect it for every interaction regardless of the medium or channel. Customer interactions should always be consistent, personalised and customised. For manufacturers, acknowledging the customer’s history with the business is paramount. Manufacturers need to have mechanisms in place to quickly bring up basic information such as how long they have been a customer, their purchase history/ preferences, any issues they’ve had in the past. Having this digital intelligence ensures a seamless overall customer experience. CRM data can also be used in the development of new products and solutions based on customer needs. Such tools automatically capture customer information and instantly present it in an intuitive way, so the departments that need to take advantage of it can do so effortlessly. The key to creating an amazing CX is knowing your customer. By collecting high quality customer data and ensuring it can be easily retrieved and used, manufacturers can understand their customers’ needs and deliver products and services across multiple channels. Digital transformation efforts that are customer-centric ensure an optimised CX ultimately improve customer retention and increase revenue.

Jason du Preez is Senior VP, Asia Pacific, SugarCRM sugarcrm.com