The Future Trajectory of Manufacturing

The time has come for manufacturing companies to acknowledge that more automation must be embedded in their processes.

2020 showed the world that having durable, well-constructed “physical” processes – the factory and supply chain – is essential to ride out global supply and demand shocks and maintain operational resilience. Companies across manufacturing sectors are boosting investment to ensure the factory does not become a bottleneck but rather a source of resilience, competitive advantage, and innovation.

Automation is critical when keeping staff physically present in the office and factory becomes difficult. Greater automation – from controls to intelligent machines and robot automation – improves speed, flexibility, quality, and innovation in all business processes.

The future of operational processes revolves around more automation – not just physical equipment replacing human labor, but the way information is captured, handled, analyzed, and shared to support processes.

Successful digitally driven operational excellence is substantially linked to data excellence. Companies that do not take this issue seriously will not be able to rapidly scale technology across industrial deployments. They risk being sidelined.

IDC forecasts that by 2023, 75% of organizations will have comprehensive digital transformation road maps – up from 27% today. This will result in true transformation across business and society. IDC predicts that industrial enterprises that fail to implement – by the end of 2021 – an enterprise data governance model that enables resilient decision making will begin to underperform on profitability by as much as 10% each year.

Seizing the opportunities arising from optimal data integration can create a differentiation advantage for every business. Awareness of this is fueling the rapid transformation now under way.

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What is the Nature of the Transformation?

In the factory, many things will still seem to be as they were before the COVID-19 pandemic. But a transformation – indeed, a revolution – will be occurring in terms of technology. The business will be in the process of being reshaped to be more efficient and responsive.

Factory life cycles are long. Technology innovation in factories has traditionally evolved at glacial speed. This means most factories are heavily on the brownfield side – and companies must continuously adapt their equipment and machinery to make the enterprise viable for the future.

For most organizations, transformation has nothing to do with creating blueprints for greenfield projects (e.g., gigafactories to deliver electric vehicles). Rather, it is a question of identifying the technologies whose deployment will position existing factories to be successful in the next decade.

Interoperability is key – the era of “standalone” solutions and processes is coming to an end. Organizations must start operating on the basis that all data and information produced in processes should be accessible by multiple applications.

The value of information is proportional to the audience that can benefit from it. By making technology investments more meaningful to the broader organization, integration drives ROI.

The big risk companies face is winding up with siloed, disconnected projects that they fail to integrate successfully. IDC research shows that 60% of companies are still deploying (very) isolated solutions, missing out on the benefits of full integration.

Real-time integration of data and operational processes is not easy. We constantly see the following issues:

Insufficient data quality; lack of universal standards due to different, obsolete, and inflexible legacy systems from multiple vendors
Lack of data integration; proliferation of data silos
Lack of organizational readiness (wide variations between function and organization in the vision of smart manufacturing)
Lack of digital skills (employees need constant supervision/support from IT departments)

Key Takeaways for Industrial Leaders

Examine the cost of doing nothing. Doing nothing is not a strategy. Companies that are not pursuing integration because their systems “seem to work” are missing many opportunities that may not be self-evident. Decision makers may have siloed perspectives and navel-gazing attitudes. But as time slips away, their competitors are constantly evolving.
Preparation and assessing the status of the company are essential before starting major spending on integration. It is vital to evolve the ways technology, ROI, and impact are measured. How is the technology going to help the company become more resilient? How can worker experience with these new elements be increased? Companies must create a technology framework that includes both the organization and the architectures that foster an integrated approach.
Rethink the way people contribute and bring value to the company. How are you going to bring a hybrid (remote/on-site) workforce environment into operational processes? Factory people are less frequently regarded as “arms and legs” these days – more often, they are seen as “brains.” Job descriptions are becoming more complex and articulated. Companies expect every employee to eventually be able to take key decisions on process execution (at the appropriate level). It is important for middle management to have a good understanding of technology elements to achieve the best outcomes. Non-experts are increasingly capable of using technology – and manufacturing organizations should have specialists on board to ensure that tech deployments are relevant and bring value.

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If you want to hear more on this topic, don’t miss our two-part podcast – Predictions for the Future of Smart Manufacturing – where we discuss these findings and more.

Published September 1, 2021

Jan Burian

Head of Manufacturing Insights, EMEA, IDC

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Lorenzo Veronesi

Associate Research Director, IDC

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