Instead of waiting for government action, manufacturers are taking the initiative to create growth by investing in technology that harnesses signals beyond just the sell-side of the business.
Manufacturing activity across Europe this summer fell to levels not seen since the early days of the pandemic when shutdowns and closures brought economies to a near halt. But being the resourceful industrialists they are, modern manufacturers are looking beyond this near-term slump by mining data in search of signals that point to areas of potential growth.
IDC Research’s 2023 State of Digital Transformation Report, commissioned by Rootstock Software, shows that manufacturers see a bright future, particularly because they are investing in technology to support growth.
Industry leaders who have overcome recent hardships are now turning the page to a new chapter of modernisation, as illustrated by these key moves to convert manufacturing signals into a manufacturing decisioning platform:
1) Connecting a comprehensive signal chain
Manufacturers have been effective at modernising the sell-side of the business, for example with Customer Relationship Management (CRM) and order-to-cash solutions, where interactions happen digitally. But manufacturers admit they need to modernise the buy side: 32.2% say this is a top priority.
For example, manufacturers would receive signals of a disruption in raw materials supplies or an extremely large order. Those signals would enable them to quickly adjust production plans or reshore suppliers to close the gap.
2) Increased IT spending
Industry analysts might expect manufacturers to protect their margins, but the IDC survey shows that three-quarters of respondents (75.2%) have plans to increase tech spending over the next 12 months, with more than one-third (37.8%) planning on double-digit increases.
3) Data visibility across the value chain
Manufacturers’ top worry is that they will not be able to leverage the data they have, as it is currently trapped in disconnected sources and siloes. But they cannot become data-driven unless they have a clear view of their entire operations. A modern cloud platform provides the foundation for a comprehensive signal chain including customer, sales, operations, supply chain, inventory, and other data.
In the survey, 66.7% of manufacturers said they are already using cloud ERP, while 28.9% said they plan to make this shift in the next 12 months. That leaves less than 5% as having no plans to move to the cloud – you do not want to be among this lagging group.
4) Automation and intelligence
In manufacturing, labour shortages continue to be an ongoing challenge. Survey respondents see the need for technology to improve staff efficiency and productivity because outdated technology creates barriers to collaboration (37.4%) and cannot provide the data that teams need (33.7%).
5) Digital transformation and monetisation
Precisely 57.7% of manufacturing respondents believe they are either slightly or far ahead of their peers in transforming core processes but know they need to do more to facilitate growth (33.3%) and offer new services (28.9%).
Spurring recurring-revenue is a popular approach, with a first sale leading to ongoing services to, say, maintain or replace consumable components. Tracking whether products require upkeep, parts, or software updates can be done remotely via the cloud if the platforms receive digital signals from IoT sensors. ERP software centralises that data.
Turning digital signals into success – driving decisions
Manufacturers see immense value in building a comprehensive signal chain that provides valuable information about all aspects of operations and their business. These manufacturing signals can be directly evaluated, via a decisioning platform, to drive better, more profitable business decisions.
Cloud ERP platforms are ideally suited for collecting and reporting on such business intelligence while creating a foundation for Artificial Intelligence (AI), machine learning (ML), predictive analytics, and other disruptive technologies to continue generating value for decades to come.
If you want to learn more about where manufacturing executives are focusing their technology spend for the next 18 months, download the 2023 State of Manufacturing Technology Survey Results.
About the author
Stu Johnson, VP of Product Marketing at Rootstock Software, has over 35 years of experience in manufacturing. He understands the technologies manufacturers need to thrive in a today’s digital age.
