Simply put, the CMMS vendors that embrace Industry 4.0 capabilities and thoughtfully embed them into their roadmaps will be the next generation of leaders in the space.

I’ve been in the manufacturing technology industry for over 25 years. Today, I can honestly say that there’s never been a more exciting time for U.S. manufacturing in my career.

Although, the opportunity is even more incredible for the technology players that support this industry. I’ve seen first-hand the critical role that technology can and should play in the future of manufacturing. Both of the software companies I founded, grew, and took to successful exits — Smartware Group and Symbiotic Systems — aimed to help manufacturers work smarter and more efficiently.

With demand now primed to skyrocket and systemic challenges in play, the manufacturing industry has an even greater need for technology solutions, especially those provided by computerized maintenance management systems (CMMS) and enterprise asset management (EAM) businesses.

However, only the CMMS/EAM players who have a proactive, forward-looking approach that embeds Industry 4.0 into their roadmap will be able to fully capitalize on this market opportunity.

Below, I’ll outline the opportunities emerging for CMMS/EAM business owners, explain why to embrace Industry 4.0, and share some insight on how to become one of the next leaders in the space.

CMMS tools can improve manufacturers’ ratio of preventive-to-corrective maintenance and provide better inventory visibility to ensure all of the right spare parts are on hand, and forecast replacements intelligently.

The opportunities for CMMS/EAM in manufacturing

U.S. manufacturers have shown incredible resilience over the past two years in the face of severe supply chain and labor challenges exacerbated by the pandemic. Now, those same challenges are creating a massive boon for the industry.

The persistent supply chain issues have raised greater awareness of the need for the U.S. to re-shore more of its production. Initiatives like the “Made in America” executive order and the Infrastructure Investment and Jobs Act will dramatically increase demand for U.S. manufacturing; additional legislation like the proposed America COMPETES Act could stoke the fire further.

However, re-shoring comes with its own set of challenges. For example, U.S. manufacturing typically carries higher labor costs and more stringent regulatory oversight than offshore operations. So, manufacturers must find new efficiencies to successfully re-shore operations without significant cost hikes.

The industry also faces several other headwinds, some of which have been long in the making.

  • An aging workforce: U.S. manufacturing has one of the oldest and most experienced workforces. As these workers retire, the knowledge and experience they’ve gained leaves with them.
  • A skills gap: Today’s manufacturing requires greater digital and technical skills. With a lack of trades-related education, manufacturers likely will struggle to hire capable operations labor.
  • Supply chain: Disruptions continue to hurt manufacturers caused by potential “stock-outs” (missing critical spares) exasperating downtime.

Manufacturers already rely on CMMS/EAM to improve efficiencies, decrease costs, and ultimately promote profitability. But the challenges outlined above will force them to lean even more heavily on these tools to:

  • Break down internal silos and promote collaboration among maintenance, production, engineering, safety, and other departments
  • Integrate with IoT/real-time data sources and other software systems to break down data silos and fuel analytics for superior data-driven decisions
  • Enable greater focus on preventive, predictive, and eventually prescriptive maintenance
  • Get in front of supply chain challenges
  • Mitigate labor challenges and optimize teams

For instance, unplanned downtime due to breakdowns is one of the industry’s biggest profit killers. Most manufacturers can calculate the cost of unplanned downtime to the hour or minute. With today’s supply chain, there’s a greater likelihood that the manufacturer won’t have the right parts to make repairs or won’t be able to source them quickly, meaning those costly minutes and hours can add up to days or weeks. But CMMS tools can improve manufacturers’ ratio of preventive-to-corrective maintenance and provide better inventory visibility to ensure all of the right spare parts are on hand, and forecast replacements intelligently.

The end goal is to leverage predictive and prescriptive maintenance, where machine learning and artificial intelligence provide next-level analysis to maximize efficiency and limit downtime.

How to create an Industry 4.0 strategy

I cannot overstate the importance that Industry 4.0 will play in manufacturing and especially CMMS/EAM. Simply put, the CMMS vendors that embrace Industry 4.0 capabilities and thoughtfully embed them into their roadmaps will be the next generation of leaders in the space.

While industrial technology has historically enabled businesses to identify and correct points of failure, the advance of big data and analytics capabilities has made it possible for companies to predict and prevent them. The CMMS/EAM providers who can best enable manufacturers to improve Overall Equipment Effectiveness (OEE) and maximize uptime will excel in this space. Industry 4.0 technologies have never been better at enabling CMMS to do this.

Start with IoT

IoT, the internet of things, is a great entry point into Industry 4.0. It serves to optimize maintenance operations and drive up OEE — if implemented strategically — and it lays the foundation for the future of manufacturing technology in prescriptive maintenance.

Take, for example, a machine filter. Rather than relying on manual inspections, a sensor can gauge the filter’s condition and relay that information to a machine interface for monitoring. When the filter is 75% clogged, the interface sends an alert automatically and initiates a work order to change it out.

For CMMS/EAM providers, having an IoT strategy is table stakes at this point – everyone needs to do it. But providers also need to think about the broader Industry 4.0 picture and ensure that their strategies set them up for success over the long term in this rapidly developing space.

Any given factory uses a wide range of assets and systems, and CMMS/EAM tools must have the ability to collect data from all of them.

Embrace agnostic integration

An integration-agnostic IoT strategy is probably the single best approach you can take to set yourself up for success. The end goal for manufacturing technology is to leverage predictive and prescriptive maintenance, where machine learning and artificial intelligence (AI) provide next-level analysis to maximize efficiency and limit downtime. It’s the holy grail, and it’s not too far off from what’s possible today.

For example, if you combine AI and machine learning with that IoT filter sensor from above, CMMS can harness historical data, current supply chain information, and other metrics to optimally determine when to change the filter, instead of using an arbitrary metric (filter is 75% clogged) to trigger action.

But for CMMS/EAM providers to be part of this next evolution in industry tech, they’ll need to collect and process data from every source. Any given factory uses a wide range of assets and systems, and CMMS/EAM tools must have the ability to collect data from all of them.

To achieve this, you need to develop relationships with a range of IoT players, manufacturing analytics players, automation systems and other sources. Too often, I see middle-market CMMS/EAM providers either try to build their own sensors or partner with just a few third-party players. This approach can lead to a great proof of concept, but in reality, your product needs to be able to integrate with every asset on the factory floor to capitalize on all that Industry 4.0 has to offer.

Plan for what’s coming

There are many more exciting Industry 4.0 technologies that CMMS/EAM vendors must work into their roadmaps. Newer advances like augmented reality, assisted reality, and virtual reality are just emerging in the manufacturing space and will have a massive impact. Some of those retiring workers, for instance, could choose to semi-retire instead and use assisted reality to guide less-experienced workers through maintenance processes remotely.

Incorporating this into your product roadmap takes skill, planning, and investment. It will also determine whether you’ll be among the next generation of CMMS/EAM leaders.

Here’s the bottom line.

The opportunities for CMMS/EAM today are substantial and exciting. To seize them fully, CMMS/EAM operators need to take a longer-term view of Industry 4.0 capabilities and set up their IoT strategies with agnostic integration at the forefront. That will take some capital, and providers need to move quickly, but it puts them in a better position to reach the next level in terms of where this market is going. The speed at which these technological developments occur has accelerated rapidly. If you don’t adopt these strategies soon, a competitor will.

 

Learn more about LLR’s team, relevant portfolio companies and investment focus on manufacturing software.