Why companies should keep tabs on AI, sustainability management and Manufacturing-X
Weilerbach, January 22nd 2024 – According to the experts at proALPHA, one of the leading providers of ERP+ software solutions, artificial intelligence (AI), sustainability management and initiatives to promote future data economy are the key trend topics that companies should keep in mind with regard to ERP systems in 2024.
"In general, companies are faced with the challenge of being able to respond more quickly and flexibly to markets, geopolitical crises, and economic changes," says Björn Goerke, CTO at proALPHA. "Only those who intensively engage in the emerging trends in the ERP environment will be able to prepare their company for the necessary transformations, for example, the so-called twin transition consisting of digital and sustainability agendas." In addition, it is important to respond to current and future crises as well as to tighter legal regulations, for example, regarding sustainability reporting or the Supply Chain Act, and thus to remain competitive.
The top 3 trending ERP topics in 2024:
"AI in particular is no longer a toy, but increasingly decides who gains a competitive edge and who doesn't. Moreover, decision-makers should put more focus on initiatives with the purpose of establishing a German or European data economy, such as Manufacturing-X. Only those who prepare their data and systems for this development will be able to achieve a leading position in this global race," says Goerke.
Artificial Intelligence (AI) – especially large language models (LLM)
Against the backdrop of the rapid development of AI, its integration into ERP systems and business applications will become ever more important to companies this year. AI not only helps you manage the increasing complexity and volume of business data, but also creates innovative ways to optimize, accelerate and enhance the efficiency of business processes. Moreover, it opens up new opportunities for making data-driven business decisions. Among other things, AI can act as some kind of digital business consultant, knowledge manager, and innovation driver. What companies should pay particular attention to has been thoroughly described by the proALPHA experts in the blog post "AI-Powered ERP Systems: When Data Lead to Actions".
ChatGPT takes natural language processing to the next level and improves the communication between users and the ERP system. However, the integration of ChatGPT not only has the potential to enhance the intelligence of the ERP system, but also to generate innovative solutions for agile, adaptable and user-friendly corporate management. For instance, knowledge management can be supported by ChatGPT to enable efficient information retrieval and management. This can be achieved through Q&A systems, natural language support, content creation, chat-based knowledge management, and the management of unstructured information.
Sustainability management
As of January 2024, many mid-sized companies are obliged to submit sustainability reports in compliance with CSRD (Corporate Sustainability Reporting Directive). In light of these increasing regulations and laws, along with society's growing awareness of environmental issues, companies are forced to implement sustainable business practices. The study "CO2-Management with Business Software“ published last year by CIBA in cooperation with FIR at RWTH Aachen on behalf of proALPHA shows that ERP systems offer the highest information availability. Together with machine and plant data from the MES (manufacturing execution system) they cover 70 percent of the information required for accounting for carbon emissions. ERP and MES systems provide companies with a wealth of information for supplying the GHG protocol with all the required information. This is a good foundation for companies to build on.
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"Only those who intensively engage in the emerging trends in the ERP environment will be able to prepare their company for the necessary transformations, for example, the so-called twin transition consisting of digital and sustainability agendas." Björn Goerke, CTO at proALPHA |
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However, efficient accounting and effective emission reduction also require dedicated carbon management tools. Effective sustainability management integrated into the ERP system enables companies to analyze their environmental impact, optimize resource consumption, and promote socially responsible supply chains. This also includes the integration of reporting functions to create transparency for customers, investors and other stakeholders. In addition, ERP systems can assist companies in incorporating sustainable practices into their business strategies. This involves selecting environmentally conscious suppliers, efficiently using renewable energy sources, and optimizing production processes in terms of sustainability. More details can be found in the proALPHA blog post " "Green ERP: Energy Management Made Easy".
Initiatives to promote data economy such as Manufacturing-X
The EU Data Act has been in force as of January 11, 2024. It aims to increase the added value of data by ensuring regulated data exchange and fair use of data between companies, consumers, and public institutions. This paves the way for initiatives such as Manufacturing-X, which are driven by leading companies, associations, and the federal government. Manufacturing-X joins the ranks of the big X initiatives that advance Europe as a data economy, and benefits from the foundations already developed in these projects. As a reminder, Gaia-X is the European platform for data exchange, and Catena-X is its counterpart specifically for the automotive industry. The objective of the X initiatives is to create a unified market that allows unrestricted data flow within the European Union and across industries.
Although Manufacturing-X has initially involved mainly large companies from mechanical and plant engineering as well as the manufacturing industry, SMEs should closely monitor the developments and enhance internal processes already today. The secure, open and scalable data network will inevitably come, and the ability to participate will significantly determine a company's competitiveness and viability in the future.
Therefore, it is vital that you prepare your company and data for the upcoming data economy and find answers to the following questions:
- What is the level of digitalization throughout the company, including the employees?
- Is the technology up-to-date? Do you have the latest version of the ERP system and other business applications? Does master data management work properly? Have the data been cleaned and can they be integrated into data rooms like Manufacturing-X?
- What production data are collected? What is being measured and read out? What other information would be interesting and how can it be obtained?
