Over the last several years, challenges related to geopolitics, technology, the pandemic and climate change have shaken the foundation of industrial manufacturing - creating tectonic shifts in how manufacturers think, operate and deliver their products and services.
The pressure to make products smart and connected, digitize the factory and operations, create more automated and reliable supply chains, and deliver on rising customer expectations presents significant opportunities to move toward radical growth. Yet many manufacturers’ current approaches – driven by siloed teams, functions rather than strategies, and static views of competitive and operational landscapes – present significant risks on the road to reinvention.
Legacy manufacturers trying to speed ahead into the future of smart products, digital platforms and new service-oriented business models urgently need a better way forward. A hybrid, innovation-led approach that incubates future businesses while simultaneously optimizing today’s products and operations can provide practical, value-driven solutions in both the short and long term.
Disruptive forces shift operational priorities
The range of disruptive forces manufacturers are experiencing has implications across the entire enterprise. These forces include:
- sector convergence
- power shifts within value chains
- evolving customer expectations
- volatile macroeconomic environments
- tougher workforce dynamics
- sustainability pressures
- transformative technologies
In response, manufacturers are prioritizing digital transformation and innovation-related investments. According to the EY January 2023 CEO Outlook Pulse survey, virtually all (97%) of industrial manufacturing CEOs indicate that continuing digital and technology transformation to deliver growth and operational advantages is either a very or fairly important near-term priority, despite near-term economic uncertainty.
Through these investments, manufacturers seek to revolutionize processes by implementing innovations such as digital twins, artificial intelligence and machine learning. At the same time, they are advancing product and service offerings across the value chain that are smart and connected.
However, to fully realize the significant opportunities arising from disruption and the value of these investments, manufacturers must tie them to a unifying vision of where their markets are headed.
A different, innovation-focused approach to manufacturing transformation
Forging a new path to the future will require manufacturers to put their growth agenda at the center of transformation. This plan needs to be backed by a detailed strategic roadmap that accounts for both the innovations needed to succeed, as well as the transformation required to launch and scale these breakthroughs in the market. It must also be developed with an enterprise-wide outcome in mind, breaking down functional and geographic silos.
While not every initiative needs extensive cross-organizational coordination and buy-in, many of the most prominent areas for manufacturers’ business reinvention are inherently interdisciplinary. Effective transformations demand engagement with a range of intersecting value drivers, including product and service innovation; customer experience; intelligent and sustainable supply chains; workforce and talent; and business model innovation.
(Learn more with Advanced Manufacturing Realized — via EY.com US)