Manufacturing companies are in the midst of a major transition.
The digital transformation of business processes and customer experiences precipitated by new and emerging technologies is creating exciting opportunities, but it also presents significant challenges to manufacturers ill-prepared for this inevitable shift.
To best navigate what’s been dubbed Industry 4.0, or the Fourth Industrial Revolution, manufacturing companies need to adopt a comprehensive and sophisticated IT strategy, or risk being left behind.
Why is Industry 4.0 important to manufacturing companies?
The coronavirus pandemic and subsequent disruption to manufacturing operations and supply chains sharpened into focus the importance of adapting to new trends driven by digital technologies.
Giant leaps in computational power, data processing, and connectivity in recent years allowed many manufacturing companies to not only cope with the disruptions caused by the coronavirus pandemic but to develop an edge over competitors.
They did this by developing an IT strategy that allowed them to maximize efficient resource use, offer new services, and implement changes to production and distribution methods. This enabled successful manufacturing companies to meet increasingly high demands for quick implementation and deliveries.
This is reflected in a survey of Manufacturing Leadership Council members, which found that 82 percent believed the pandemic had “created a new sense of urgency” to invest in new technologies and digitalization.
Productivity gains won’t end with the pandemic though. Isolated spheres in manufacturing systems will continue to align, while separate links in supply chains will become increasingly integrated and interdependent.
In short, information technology and operational technology are converging, and the manufacturing companies that realize this and plan accordingly with an appropriate IT strategy are the ones that will thrive.
What are the benefits of an IT strategy for manufacturing companies?
Broadly speaking, many manufacturing companies increasingly have problems with high labor and material costs, skilled staff shortages, and low customer retention.
Many of these issues manufacturing companies face in this new business environment can be overcome with the development and implementation of a robust IT strategy along entire value chains.
Sophisticated IT tools can reduce production costs by automating manufacturing processes and synchronizing them with one another using ‘Internet of Things’ technology. Supply chains can be more efficient with less human input while extending across multiple locations and teams. Management tasks, from contracts, and employee communication, to productivity targets, can be integrated into one system that’s visible in real-time and delivered automatically.
These are just some examples. Here are other ways that IT strategy can inform best manufacturing practices:
Manufacturing companies potentially have a wealth of data at their disposal to help guide future decision-making, whether that be with regards to environmental sustainability, customer retention, or budgeting.
Collecting data is one thing. Interpreting it and making it actionable is quite another. One survey indicates only two-thirds of manufacturing companies have real-time collaboration tools that can integrate currently siloed legacy data systems to give employees and stakeholders the informational overview they need to make better decisions.
This information, in turn, equips manufacturing companies with the ability to make more accurate forecasts.
A comprehensive IT strategy can also look beyond the manufacturing company’s internal processes to include external variables that might affect future operations.
Around three-quarters of manufacturing companies think they have a ‘customer-centricity gap,’ understood as a failure to meet buyers’ demands digitally.
Improving the customer experience on a manufacturing company’s website is key to rectifying this, and goes beyond simply being able to make online orders. Manufacturing companies must also adopt an IT strategy that makes this process as seamless and stress-free as possible, and this means employing personalization tools so that each customer’s specific needs can be catered to individually.
Interactions with Suppliers
Closer and deeper communications enabled by IT between buyers and suppliers can help make manufacturing companies’ supply chains more resilient and efficient.
IT strategies can further help with this by optimizing supply chains to, for instance, reduce waste, mitigate against risk, and provide for more sophisticated procurements, while fostering collaboration on forecasting, planning and capacity management.
What are the barriers to IT investment and strategy development for manufacturing companies?
If the benefits of an IT strategy are so clear, why aren’t more manufacturing companies implementing one?
As one survey of manufacturing company CIOs found, 62 percent identify aligning IT strategy with business strategy as the single biggest challenge. The barriers to successfully achieving this include:
With daily operating costs skyrocketing due to high energy prices and materials shortages, it’s increasingly difficult to find the money for the upfront costs that an IT strategy necessitates, even if it promises long-term savings and revenues.
Other business priorities
Related to this, the leadership at many manufacturing companies already feel overstretched. This makes it harder to prioritize IT strategy, which is often viewed as a longer-term process.
Shortage of skilled staff to maintain and manage new IT systems
Skilled IT workers are in high demand and low supply across multiple industries. Recruiting in-house talent is a challenge that many manufacturing companies aren’t prepared to take on.
Gaps in senior management’s understanding of new technology
The pace of change under the digital transformation is bewildering to many in senior management positions. This gap in the understanding of decision-makers means the adoption of IT strategies is inevitably slower.
Complexity of new systems
Similarly, once predictable manufacturing processes guided by fairly straightforward IT systems have become increasingly complex. The shortage of skilled staff coupled with senior management hesitancy means many manufacturing companies don’t feel equipped to take on the challenge of understanding and managing these complex systems, despite their clear benefits.
How can manufacturing companies overcome these barriers and adopt an IT strategy?
As outlined, many manufacturing companies are ill-prepared for the digital transformation and the opportunities it presents due to multiple barriers preventing the adoption of an IT strategy.
Most of these barriers have their roots in the assumption that manufacturing companies need to take on the responsibility for developing and implementing an IT strategy on their own, and believe they do not have the capacity, knowledge or culture to do so effectively.
A third-party managed IT service provider can help remove these barriers and enable manufacturing companies to reap the benefits of an IT strategy that’s fit for purpose in the world of Industry 4.0.
From assessing the state of existing IT capacities, consulting on new strategic IT approaches that align with business strategy, to leveraging and managing new technologies, a managed IT service provider for manufacturing companies is a cost-effective way to upgrade IT infrastructure and services.
Manufacturing companies don’t need to spend time and money hiring and training new staff, especially when success is not guaranteed. Instead, they can turn to the expertise and experience of a managed IT service provider with a proven track record in developing and implementing IT strategies that work.