Digitalization investments have become pivotal to the growth and modernization of manufacturers, expanding operations, and upgrading existing factories and equipment. 80% of manufacturers are implementing or have tools on supply chain optimization already in place.
Yet, the challenge many companies face at this stage of the process is connecting the big picture vision with day-to-day operations beyond the single-problem fixes. Compared to upstream, the later stages of the manufacturing value stream show less progress, with less than half (41%) of respondents deploying IoT for advanced operational sensing and detection of inventory and warehouses. While there is near unanimity on the requirement to align product development and manufacturing, actually achieving that vision is falling short, especially when teams struggle with collaboration across functions.
Our latest research reveals that the pace of digitalization has quickened in manufacturing with significant investments underway for modernization, expansion, and brand-new factories. To better understand the state of play for manufacturers, we conducted a survey across 199 U.S.-based mid- to large-Cap manufacturing companies and interviewed executives representing a variety of company sizes and industries.
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Top-level findings reveal that manufacturers have made solid progress toward digitalization, especially in places like supply chains, business intelligence, and product development. In most cases, however, this progress is fragmented in silos with high-urgency projects beating out those offering long-term impact for the business. Pilots may succeed, but companies stumble over the details of scaling them. Despite the growing intelligence and revenue being offered in the aftermarket services space, only 28% of respondents have tools in place.
While companies see cross-functional team collaboration as a top obstacle, they also struggle with capturing the ROI of digitalization and capitalizing on valuable data. Manufacturers have digital transformation roadmaps, but they lack the specificity to be put into operation.
Connections Between Business Case and Strategy
Source: Manufacturers Alliance Foundation study
Companies experiencing early success in their digital transformation are discovering that progress depends on expanding the traditional ecosystem beyond the realm of customers, suppliers, and distribution partners. Building ecosystems to solve these problems is challenging, but manufacturers that have started working with ecosystem partners are reaping the rewards. The most successful are innovating at the ecosystem level to cope with the accelerated pace of technological change, although quick adaptability is a concern for 9 in 10 manufacturers.
Read the full report to compare your own digital transformation experience with other manufacturers.
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