top of page

The digital imperative for manufacturing enterprises

The global manufacturing landscape continues to be in a state of flux. Various external forces and challenges continue to influence manufacturing enterprises.

  • Emerging Manufacturing Hotbeds: Manufacturing hotbeds are moving from developed regions such as North America and Europe to China and India. However, even these emerging economies are seeing a rise in operating costs making it important for organizations to explore how they could reimagine their operating models and technology landscape to optimize processes and reduce production costs

  • Growth of Protectionist Policies: Calls for nationalism and rise in protectionist policies are resulting in manufacturing moving back to developed nations. In order to offset the higher labor costs and maintain operating margins, manufacturers are investing in digital technologies to automate a significant share of manufacturing processes

  • Increased Regulations: Changing regulatory frameworks in the context of Green Manufacturing, Emission Control, Electrification for Automotive, Cybersecurity etc. are forcing enterprises to make their production data more transparent to regulators. As a result, a key priority is for enterprises to digitize their existing process and production data.

  • Commoditization of Products: The rapid commoditization of products and increased competition from new-age startups requires manufacturers to offer personalized, value-added services to create meaningful differentiation. It is in this context that organizations are creating closed-loop production processes to capture feedback and continuously improve product design

  • Fluctuations in Commodity Pricing: Volatile global commodity pricing requires manufacturers to be create a more closely integrated supply chain to better manage supply costs and inventory

Amidst all of this, the economy has been crippled by the outbreak of Covid-19 and manufacturers today find themselves in an unprecedented situation categorized as a Black Swan event. The impact has been significant leading to:

  • Major supply chain disruption: More than 200 of the Fortune 500 global firms have an established presence in Wuhan, the epicenter of the pandemic. As a result, enterprises today are experiencing significant challenges due to their dependency on China. As the pandemic spreads further and with more countries going under forced lockdowns, global supply chain will be tremendously disrupted. For a majority of businesses, lead times have doubled, and shortage is compounded by lack of supply chain facilities. These challenges are predicted to grow even further in the coming days.

  • Labor shortages: Lockdowns across the globe have majorly cut off access to physical labor for global enterprises. As a result, labor intensive industries such as industrial manufacturing, automotive, agriculture, construction etc. have come under tremendous pressure

  • Changing customer sentiment and buying behaviors: Expectations of massive layoffs, deferment of bonuses and uncertain job markets have led to a sense of panic among the general public. As a result, post the pandemic crisis, customers will tend to focus mostly on essential goods and avoid discretionary spending leading to weak demand for most of the industries

Global enterprises will continue to feel the reverberating effect of the COVID19 epidemic for months or perhaps years to come. The weak growth outlook and volatile economic environment are expected to persist in the foreseeable future.

What does this situation mandate?

In this situation, it is imperative for enterprises to double down on Digital Transformation and build necessary operational resiliency to survive this new reality. The COVID-19 pandemic has showcased the resiliency enabled by emerging technologies and ubiquitous connectivity, and organizations should use this time to accelerate the transition. The immediate focus of investing in digital transformation initiatives should be to:

  • Drive autonomous operations to reduce dependency on labor and ensure social distancing till the situation is brought under control

  • Leverage data analytics to gain detailed insights into the evolving nature of business and augment decision making capabilities in the context of ever-changing nature of supply and demand which is outside the control of stakeholders

  • Enable self-service options for customers to ensure that services aren’t affected, and consumer requirements are catered to without any form of disruption

In order to achieve this, global enterprises will need to:

  • Transform into agile, digital organizations that can constantly innovate and adjust products and processes based on evolving market demands

  • Explore new revenue channels and markets to overcome weak demand in larger economies

  • Invest in digital technologies to improve overall efficiency and reduce operational costs

  • Focus on building new-age talent that can drive innovation and create a sustainable competitive advantage

  • Drive collaboration across business units and production functions to increase production efficiency

  • · Build a connected, transparent supply chain and mitigate unforeseen logistics related disruptions

Operating in new market realities:

The emerging market realities require global organizations to rethink their future and make necessary investments to build a ‘Digital/ Smart Enterprise’ in order to stay competitive and relevant when the industry rebounds.

Agile enterprises can turn this period of uncertainty into an opportunity to upscale their operations to meet impending demands that will no doubt fluctuate for the foreseeable future.

14 views0 comments

Recent Posts

See All


bottom of page