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Smart Manufacturing Ecosystems: A Catalyst for Digital Transformation?

Oct. 21, 2020
Manufacturing ecosystems are accelerating digital transformation and results, with early adopters achieving twice the revenue growth, digital maturity and new product/service delivery as their peers.

Ongoing disruption and economic hardship caused by the COVID-19 pandemic have increased the urgency for manufacturers to accelerate smart manufacturing initiatives for future competitiveness. Deloitte and the Manufacturers Alliance for Productivity and Innovation’s (MAPI) new report, “Accelerating Smart Manufacturing: The Value of an Ecosystem Approach,” examined how smart manufacturing initiatives may have been impacted by COVID-19 and suggests an ecosystem approach to help companies stay the course, accelerate digital transformation and drive productivity and performance.

As part of the study, Deloitte and MAPI surveyed more than 850 executives at manufacturing companies across 11 countries in North America, Europe and Asia, representing a factory footprint of approximately 10,000 facilities.

Understanding key concerns

COVID-19 disruption and meeting profitability goals remain the two biggest concerns. More than 70% of manufacturing leaders surveyed are moderately or extremely concerned over the pandemic’s ongoing impact on operations, supply and demand, as well as meeting profitability goals. In many ways, this uncertainty emphasizes the growing importance of adopting smart manufacturing initiatives that can drive agility, speed and performance.

“While manufacturers continue to face a global pandemic and economic and political uncertainty, manufacturing leaders must continue to adapt and invest in the next steps of their digital journeys,” says Stephen Gold, president and CEO, MAPI. “Fully connected enterprises allow manufacturers to expand their capabilities, identify cost savings, and better prepare for the post-COVID era. I anticipate the industry will come out of this crisis stronger and more agile.”

Accordingly, investment in smart manufacturing is expected to rise, taking a greater share of budgets In a separate MAPI CEO survey, 85% of leaders agreed or strongly agreed that investments in smart factories would rise by June 2021, and similarly the “2020 Deloitte and MAPI Smart Manufacturing Ecosystem Study” found 62% of respondents committing to continuing or accelerating investments. Those forging ahead also indicated they are on average allocating 20% more toward smart factory budgets than last year.

Outperforming through ecosystems

Overall, the study found manufacturers reaching outside their organization to deliberately connect with vendors and service providers are outperforming others and expediting their digital transformation.

Eighty-eight percent of surveyed manufacturers agreed that it is important to work with outside partners, vendors and other companies to fully realize their smart manufacturing and digital goals. In fact, an analysis of Fortune 500 manufacturers identified that companies with more than 15 strategic alliances registered twice the revenue growth, compared with companies with fewer than 15 alliances.

The study also revealed that ecosystem-focused manufacturers experienced twice the pace of digital maturity and delivery of new products and services; and had operationalized 31% of their projects versus 15% of projects for those still focused internally.

“As manufacturers grapple with the pandemic and economic headwinds, they are finding digital transformation should be a journey shared with external partners. Companies today are looking beyond the silo of their own organization to establish powerful networks of vendors to source digital capabilities and solutions that drive results,” says Paul Wellener, vice chairman and U.S. industrial products and construction leader, Deloitte LLP. “These ecosystems are driving improvements in agility, efficiency and production at a pace that most companies would struggle to achieve alone. For manufacturers looking to boost competitiveness, scale their smart manufacturing capabilities and thrive in a post-COVID world, the time to adopt an ecosystem approach is now.”

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