FOCUS: Digital transformation in manufacturing supply chain
Monzer Tohme, regional vice president, Middle East & Africa, Epicor Software.
By: Monzer Tohme, regional vice president, Middle East & Africa, Epicor Software
One of the key findings of a recent PWC report found that the buzz around Industry 4.0 has moved on from what some saw as marketing hype in 2013 to investment and real results today. But preparing for a digital future is no easy task. It means developing digital capabilities in which a company’s processes, people, culture, and structure are all aligned toward a set of organizational goals. And for most companies the ultimate aim is growth.
In manufacturing, the challenges for companies are multifarious because digital transformation impacts every aspect of operations and the supply chain, from equipment and product design, through to production processes, logistics and service. Industry 4.0 trends now require new, more sophisticated levels of collaboration across geographies on everything from product roadmaps and engineering specifications to production line management and information about parts.
From talk to action
The PWC study found that companies expect to significantly increase their portfolios of digital products by 2020. In addition, our own research has highlighted the importance businesses are placing on digital transformation today, with two-in-five industry professionals agreeing that digital transformation will offer them strong opportunities for growth in the future.
Whatever manufacturing model they are working to, such as engineering-to-order (ETO), make-to-order (MTO) or make-to-stock (MTS), manufacturers are increasingly working with an ever-broadening range of software systems. The challenge is to ensure that software integrates properly and data is shared effectively across all systems.
Another challenge is that migrating to new solutions can incur heavy costs. Many manufacturers have existing legacy systems and technologies that do not provide the functionality, integration and upgrade capabilities required to become a truly digital organization. These organizations should be prioritising what technology is needed at different points on their digital transformation journey.
The reality is that digital transformation is an ongoing process for most companies–they are required to continuously assess when and how fast to migrate their technology. For some this means struggling with digital debt that can restrict the potential of the business for growth.
Digital debt embodies itself in IT cost burdens, due to decisions taken on legacy technology years ago, but also in terms of unsupported old releases, or isolated systems that may hold a business back from its potential–in fact, in a recent report, Forrester defines digital debt as: ‘the opportunity cost resulting from retaining technologies, systems, and processes that constrain a firm’s ability to become a digital business.’
To avoid being constricted under the strains of digital debt, manufacturing businesses must adopt technology that’s customer-led and insight driven. Forrester recommends three steps for manufacturers to migrate from legacy systems in support of a customer-centric operating model.
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