Economic growth by adding a robust D2M layer to business processes
Mr,.Madhura De Silva
Sri Lanka is not in the subset of countries that embraced global industrialisation revolutions at the same pace as other developed countries. The country is still in the developing country classification although the world has passed three industrial revolutions whilst many developed countries are now adapting to the 4th Industrial revolution. Our manufacturing sector was mainly focusing on the apparel industry that created many employment opportunities. However, Sri Lanka is yet to become a developed country due to inadequate industrialisation and modernisation of agricultural practices.
We have a large workforce mainly categorised into skilled, semi-skilled and unskilled with more than 1.2 million public servants who mainly provide services with no direct contribution to the manufacturing sector. There are many professionals from Accounting, HR, IT, and General Management fields that contribute to support functions of manufacturing industries. Unfortunately, much required skills to develop the manufacturing sector are unavailable due to the high brain drain and unwillingness to invest in the latest technologies in the world by business leaders.
Manufacturing of
local import substitutes
Investing in research and development is vital to identify innovative solutions to produce low-cost import substitutions. The Government is poised to achieve industrialisation in Sri Lanka by promoting locally made products. However, the challenge is to produce import substitutes at a low cost as consumers will not be willing to pay higher prices than imports due to inefficiencies of our local producers. If the high-priced local product regime continues people will start demanding imports and the demand for local products will decline except for environmentally friendly local products that should be promoted by creating subjective norms and changing attitudes of consumers.
To avoid the above predicament the country should first start identifying industries that do have a national competitive advantage in order to cater to the local demand and to export the oversupply with value additions, identifying import substitutions that had not taken place due to bureaucratic bungling, identifying import substitution that is not economical to produce in Sri Lanka, and identifying innovative products and processes through extensive research and development (R&D) initiatives. Promoting of uneconomical production of import substitution will increase inflation and liquidity issues. Corporates that operate in industries that have the potential to invest should start investing in R&D and the Government should be a catalyst for industries that do not have the capacity to invest in R&D activities.
Current state of automation
of transaction processing
In some private sector and state-owned companies, staff ratio of support functions to value chain functions is 1:1 that is even after implementation of Tier 1 ERP systems which sometimes may not be required for the given nature and size of operations. In many Sri Lankan companies, ERP implementations take more than one year due to disagreements between vendors and process owners. Many implementations take place without agreeing on the blueprint that depicts the to-be process and system architecture. ERP implementations is still fraught with lack of basic functions such as bank reconciliations, three way matching processes, MRP raising, standard journal entries, gate passes, lack of dashboard to management, budget and KPI reporting, and taking more than 15 days to finalise monthly accounts and etc.
In spite of many challenges in automating their transaction processing related to order to cash (O2C), procure to pay (P2P), acquire to retire (A2R), Report to Record (R2R), Treasury, businesses do continue with tireless efforts and energy of the C-level executives, but circumstances may lead them to sometimes operate with an micro vision due to lack of data. Many finance professionals in Sri Lanka still put a lot of weight in transaction processing when the world is moving towards digital finance with RPAs and Data Analytics to transform the finance functions as the main business partner to the Board of Directors.
In the above backdrop, it is vital that companies introduce KPIs to ensure that accurate, complete, valid, and owned information is processed efficiently. KPIs for the entire organisation and each business process should be visible to the C-level based on their hierarchy through a digital dashboard accessible on palmtops. Accuracy of KPIs should be ensured through an independent assurance process. If the organisations could reach this level of maturity then ERP implementation could be concluded and rated as a successful implementation.
Automation of design to
manufacturing (D2M) processes
Industrialisation through the introduction of machinery fuels the obvious growth of the manufacturing sector in the world. Many companies in Sri Lanka also have introduced state of the art machinery by investing substantial sums of money to yield higher productivity and to produce high-quality products. Product designing is currently being done by 2D and 3D designing and modeling software. However, in some extreme cases due to lack of awareness on designing software, drawings are being done manually and the final product is manufactured after many trial and error manufacturing of product prototypes. Identifying customer requirements, designing, and selling should be carried out within a much shorter D2M lead time than before due to the high level of competition that drives aggressive new product design and development processes.
Product Life Cycle Management (PLM) solutions will digitise the entire new product development process which is one of the most important elements of your growth strategies. This digitising will ensure achieving of an enterprise-level digital strategy through converting data in the manufacturing black box accessible to all decision-makers including funding providers, marketers that will optimise collaboration. PLMs were historically used for discrete (assembly) manufacturing processes, however, process manufacturing could also gain equal advantages by introducing PLMs for Recipe Management and processing through digitisation of manufacturing processes.
Manufacturing Execution System (MES) is a dynamic information system that provides critical data from order release till the final product. Information could be disseminated to relevant stakeholders of the organisation. Integration of MES and ERP will provide data that is required to record and analyse transactions that otherwise would be manually collected and analysed for management decision-making processes to identify inefficiencies, bottlenecks in production, reconcile inventory, demand planning, track variances etc. Manual analysis of the large volume of data is impossible and that would result in such analysis not being performed leaving redundant data which is critical to drive businesses towards excelling.
PLM and MES would be integrated to ensure that designing and manufacturing share data back and forth to enhance the quality of products and also to ensure effective and efficient production planning.