Information technology is changing the competitive dynamics in the manufacturing industry. For example, manufacturers are using technology to improve their operational efficiency and use it to put pricing pressure on their competition; or significantly improve customer service and use it to steal market share from the competition; or identify new business opportunities before anyone else and use it to grow their topline.

However, technology is a double-edged sword -- it is not just a source of competitive advantage, but it can also be a source of disruption for the competition. A recent study by the consulting firm McKinsey concluded that executives feel that companies are most vulnerable to three technology-enabled threats: a) shift in customer expectations to a better or differentiated offering, b) significant changes in product and service delivery costs and c) the emergence of new products or services from competitors.

The only way to prevent being disrupted is to pursue the information technology agenda aggressively yourself. Such an approach will not only provide you the competitive advantage you need to grow, but it will also ensure you are not the one who gets disrupted.  But given the vast opportunities in investing in IT, how do you decide where to invest first? In this article, I will describe a simple but proven framework to help make prioritized decisions.

As a first step, you can start with mapping your current business processes and their key operational metrics for each of the product lines/business units. Using this information and comparing it to industry best practices/metrics will give you a starting point for identifying the processes that need attention. Once a short list of such processes has been identified, the next step is to prioritize IT automation opportunities in these processes based on their potential business impact and the relative ease with which they can be realized. A 2X2 matrix (see Figure) will enable you to zero in on those opportunities that offer the highest business impact.

In order to construct the 2X2 matrix, you need to answer two questions for each of the shortlist process candidates:

• What are the quantifiable benefits from addressing the identified issues in this process?
• What is the effort in implementing the solution, including change management?

Let's look at some examples of investments under the 'low hanging fruit' category (top left quadrant of the 2X2 matrix):

Analytics: As organizations create and store more transactional data within their business systems, they can collect more accurate and detailed performance information on everything from product inventory to revenue by customers/product line.  Analytics technology can help companies not only develop scorecards or track trends for key operational metrics, but also calculate insightful information such as product and customer profitability to help make better decisions. McKinsey in a recent analysis noted that a one-standard-deviation increase toward use of analytics correlated with about a 5% to 6% improvement in productivity and a slightly larger increase in profitability in those same firms. The implication for companies is that by changing the way they make decisions by increased use of analytics technology, they're likely to be able to outperform competitors.  Many mid-sized manufacturers are in early stages of deploying such technology. Business analytics has become very affordable now for mid-sized companies and has the potential to significantly improve the quality of their business decisions.  

Mobile: According to a recent Forrester study, businesses of all sizes are increasingly seeing mobile as an opportunity to drive innovation across a wide range of business processes. For example, mobile CRM apps enables the sales reps, field service staff and their managers to access information about their customers where ever they are instead of needing to call the office to chase the information down. This enables the company to respond rapidly to their customer's issues and needs. Similarly maintenance management mobile apps enable the service staff to verify the maintenance order including tasks and materials needed and execute the order -- all from mobile devices when standing next to the equipment. Project management apps in the engineering industries address a need for real-time visibility and communication for both off-site monitoring from company headquarters and on-site inspection and reporting at the project location. Mobile is increasingly enabling organizations to accelerate the velocity of their business processes, which can be a significant source of competitive advantage. Vendors of enterprise systems are pre-packaging mobile apps with their solution, making mobile technology extremely affordable for mid-sized companies as well.

View article on one page