The industrial sector has long been a cornerstone of the global economy, producing essential goods and providing employment for millions. However, the macroeconomic pressures of recent years have exposed the vulnerabilities of traditional manufacturing processes, with disruptions in supply chains and production and a depleting talent pool leading to significant challenges for many businesses.
In response, industrial businesses are searching for ways to bolster their competitiveness, resilience, profitability, and growth. In doing so, most business leaders in the sector now recognize the time for incremental or piecemeal transformation has passed. What’s needed now is a more comprehensive overhaul of the entire business, centred around a strong digital core.
To maintain their commitment to reinvention in these turbulent times, companies need a cohesive, consistent, and integrated approach to transformation. And such an approach should look to address not only the use of new digital technology, but also the implications for business culture and talent.
The importance of digital in manufacturing
Digitalisation and automation are among the primary drivers of long-term competitive advantage and growth in the industrial sector. However, there’s still a lot of untapped potential among industrial companies. For example, the research suggests a staggering 81% of tasks that US workers currently undertake in the industrial sector could be reinvented through digital augmentation or automation.
This reinvention promises outsized rewards. Embedded into the digital core of the business, technologies like artificial intelligence, the Internet of Things (IoT), cloud computing, and big data analytics – collectively referred to in the context of ‘Industry 4.0’– can transform operational efficiency and reduce costs and even drive the development of new digital service driven business models. Not only that, they’re also key to intelligent and data-driven products and services, responding faster to market changes, anticipating customer needs, and developing new revenue streams.
Take supply chain management, for example. This is an area where digital can have a significant impact in generating transparency and thus strongly boosting resilience in transportation and logistics. Technology like IoT sensors can optimise efficiency by offering real-time visibility over supply chains, identifying bottlenecks and inefficiencies as they happen.
Similarly, machine learning can provide new levels of insight into customer demand, enabling companies to increase inventory stability and improve logistics. And, more broadly, greater digitalisation improves communication among manufacturers, suppliers, customers, and logistics partners. By collectively sharing real-time insights like this, ecosystems can significantly optimise supply chains, reduce lead times and improve product quality.
Talent and culture in manufacturing
Technology alone cannot deliver the total reinvention required, however. Industrial businesses will also need to address their organisational culture and their talent needs, especially the seemingly ever-present skills gap within the sector. The research found that talent shortages were the second most prevalent factor slowing down reinvention efforts, impacting almost two-thirds (64%) of industrial organisations surveyed.
To overcome this challenge, there needs to be a focus on talent and technology acumen, as reskilling and new digital-related skills in areas such as software engineering, data science, and experience design are becoming increasingly important for industrial companies. One way to do this is to develop a data-driven understanding of the organisation’s current skillsets, at both the individual and the organisational level. This allows the company to identify and address skills gaps both holistically and on a case-by-case basis, which is key to unlocking opportunities to upskill the workforce while ensuring the business has access to the talent it needs.
Culture is equally important. Businesses will quickly fall behind if digital skills and data literacy aren’t made core competencies throughout the entire organisation. Successful reinventors will therefore look to instil digital acumen not only across the C-suite but also, most importantly, consistently throughout the rest of the business.
Reinvent for long-term growth in manufacturing supply chains
The combination of rapidly advancing digital technology and root-and-branch enterprise reinvention is triggering an industrial renaissance. Business leaders must urgently respond or risk falling permanently behind the curve. Those who act fastest and transform furthest will reap the greatest rewards in terms of revenue growth, access to talent and improved reputation.
This reinvention also goes hand in hand with sustainability, which will become an ever more critical factor in meeting future customer needs and expectations. Industrial companies have enormous opportunities to use digital transformation to tackle decarbonisation, and so differentiate themselves from competitors, while enhancing their brand and gaining a competitive advantage in the market. Sustainable manufacturing practices can also provide vital cost savings and help build more resilient and agile supply chains.
Industrial companies that continue to embrace digitalisation and drive reinvention will be better positioned to thrive and create long-term value for their stakeholders. This is the time to think big, think total enterprise reinvention, and target outsized future growth for the business.