Dig­i­tal Adop­tion Dy­nam­ics In Man­u­fac­tur­ing

An Ac­cen­ture re­search finds that bal­anc­ing dig­i­tal in­vest­ments is key to driv­ing sus­tain­able growth in In­dia’s man­u­fac­tur­ing sec­tor

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Man­u­fac­tur­ing busi­nesses in In­dia are keen to in­vest in dig­i­tal tech­nolo­gies but are strug­gling to de­rive tan­gi­ble busi­ness benefits due to an im­bal­anced ap­proach to dig­i­tal in­vest­ments, ac­cord­ing to Rein­vent­ing Busi­ness with In­dus­try X.0, a new re­port from Ac­cen­ture.

Ninety-three per­cent of the ex­ec­u­tives sur­veyed – who rep­re­sent 29 man­u­fac­tur­ing and pro­duc­tion com­pa­nies in In­dia with an an­nual turnover of at least US $1 bil­lion – want to lever­age dig­i­tal for growth, with 76 per­cent in­tend­ing to use dig­i­tal to cre­ate new, ex­pe­ri­ence-driven rev­enue op­por­tu­ni­ties. How­ever, only 31 per­cent plan to use dig­i­tal to drive greater op­er­a­tional ef­fi­cien­cies, likely miss­ing out on bot­tom-line im­prove­ments.

“There ap­pears to be a sin­gu­lar fo­cus on rev­enue growth, with busi­nesses ne­glect­ing an im­por­tant re­quire­ment of the dig­i­tal era: the trans­for­ma­tion of op­er­a­tions to un­lock trapped value,” said Anindya Basu, ge­o­graphic unit and coun­try se­nior man­ag­ing di­rec­tor – Ac­cen­ture in In­dia. “Busi­nesses in In­dia must place equal em­pha­sis on us­ing dig­i­tal to drive ef­fi­cien­cies at the heart of the busi­ness and us­ing the freed-up funds to drive strate­gic in­vest­ments in new prod­ucts, cus­tomer ex­pe­ri­ences and busi­ness mod­els that cre­ate long-term value.”

For ex­am­ple, Ac­cen­ture re­search has found that in­dus­trial equip­ment com­pa­nies glob­ally could re­duce their to­tal cost per employee by al­most 20 per­cent and in­crease their mar­ket cap­i­tal­iza­tion by nearly 25 per­cent if they com­bine in­no­va­tive tech­nolo­gies such as au­ton­o­mous ro­bots, ar­ti­fi­cial in­tel­li­gence, blockchain, big data and 3D-print­ing.

In­dian man­u­fac­tur­ers have been strug­gling to achieve glob­ally competitive scale and pro­duc­tiv­ity. While the in­dus­trial sec­tor in In­dia has grown 6 per­cent an­nu­ally

since 2011, to more than US $700 bil­lion in 2016, the value ad­di­tion per employee is one of the low­est in the world, at only US $6,000.

AN AC­TION PLAN FOR SUC­CESS

The Ac­cen­ture re­port sug­gests that the right com­bi­na­tion of dig­i­tal tech­nolo­gies could help In­dian in­dus­trial com­pa­nies ad­dress this is­sue, as the tech­nolo­gies hold the po­ten­tial to drive dra­matic ef­fi­ciency im­prove­ments and ex­po­nen­tial rev­enue growth. Specif­i­cally, the re­port rec­om­mends that com­pa­nies adopt a new ap­proach that Ac­cen­ture re­fers to as In­dus­try X.0. It is an ac­tion plan for be­com­ing more adept at em­brac­ing tech­no­log­i­cal change and dig­i­tal tech­nolo­gies to man­age the shift from in­dus­trial man­u­fac­tur­ing to pro­duc­ing and de­liv­er­ing dig­i­tal prod­ucts and ser­vices and sup­port­ing them in the field.

Ac­cord­ing to the re­port, In­dian busi­nesses should take six ac­tions to de­rive value from In­dus­try X.0:

Trans­form the core: Drive new lev­els of ef­fi­ciency by build­ing core en­gi­neer­ing and pro­duc­tion sys­tems around dig­i­tal tech­nolo­gies. En­sure that phys­i­cal ma­chines and soft­ware sys­tems are tightly in­te­grated for pre­dic­tive main­te­nance, and help scale au­to­ma­tion to op­ti­mize pro­duc­tion runs and im­prove over­all equip­ment ef­fec­tive­ness. Cre­ate hy­per-per­son­al­ized ex­pe­ri­ences: De­sign and de­ploy prod­ucts, ser­vices and plat­forms that con­stantly adapt to chang­ing cus­tomer needs. Use big data to gen­er­ate real-time in­sights to en­able de­ci­sion mak­ing, and en­hance the cus­tomer and work­force ex­pe­ri­ence through smart, dig­i­tal touch­points.

In­no­vate busi­ness mod­els: Cre­ate new busi­ness mod­els to drive dif­fer­en­ti­ated cus­tomer value propo­si­tions well be­yond the point-of-sale in­ter­ac­tion. Use the in­ter­net of things (IoT) and In­dus­trial IoT to de­velop con­nected and in­tel­li­gent prod­ucts that can be mon­e­tized via soft­ware­based-ser­vices and pay-per-use rev­enue mod­els.

Build a dig­i­tal ready work­force: Re­cruit, train and re­tain tal­ent with skills, such as soft­ware en­gi­neer­ing and ma­chine learn­ing, for the dig­i­tal en­ter­prise. En­cour­age col­lab­o­ra­tion be­tween peo­ple and ma­chines.

Build new ecosys­tems: Build an ecosys­tem of sup­ply chain part­ners in­clud­ing start-ups and cus­tomers to scale new dig­i­tal busi­ness mod­els rapidly. Tap into in­ter­nal and ex­ter­nal sources for new ideas, while nur­tur­ing in­no­va­tion clus­ters to pro­to­type early-stage tech­nol­ogy use cases.

Pivot Wisely: Syn­chro­nize in­no­va­tion and growth through bal­anced in­vest­ments in the core busi­ness and in new busi­ness. Stay fo­cused on tra­di­tional performance met­rics while keep­ing an eye on dis­rup­tors, and con­tin­u­ously in­ject dig­i­tal tech­nolo­gies into main­stream op­er­a­tions.

“In­dus­try X.0 will un­leash a new level of en­ergy into the man­u­fac­tur­ing in­dus­try,” said Raghu Gul­la­palli, man­ag­ing di­rec­tor - in­dus­trial, Asia Pa­cific, Africa, Mid­dle East & Tur­key (AAPAC), Ac­cen­ture. “To har­ness the true po­ten­tial of dig­i­tal for prof­itable growth in the fu­ture, In­dian com­pa­nies need to look at im­me­di­ate-term value ex­trac­tion from legacy data and build a pro­gres­sive roadmap for con­nect­ing their prod­ucts, equip­ment, sup­ply chain, peo­ple and cus­tomers. Com­pa­nies that em­bark on this journey in a holis­tic man­ner to­day will emerge as the dig­i­tal lead­ers of to­mor­row.”

RE­SEARCH METHOD­OL­OGY

Ac­cen­ture sur­veyed se­nior ex­ec­u­tives from 29 com­pa­nies across 12 man­u­fac­tur­ing and pro­duc­tion in­dus­tries in In­dia with an­nual turnover in ex­cess of US $1 bil­lion. The com­pa­nies were a part of a larger sur­vey of more than 900 se­nior ex­ec­u­tives from large in­dus­trial com­pa­nies across 21 dif­fer­ent na­tions to un­der­stand how com­pa­nies de­ploy dig­i­tal tech­nolo­gies and the benefits they de­rive from them. The re­search iden­ti­fied a set of 10 tech­nolo­gies crit­i­cal for In­dus­try X.0: 3D print­ing, ar­ti­fi­cial in­tel­li­gence, aug­mented/ vir­tual re­al­ity, au­ton­o­mous ro­bots, au­ton­o­mous ve­hi­cles, big data an­a­lyt­ics, blockchain, dig­i­tal twin, ma­chine learn­ing and mo­bile com­put­ing. Us­ing both sur­vey data and com­pany fi­nan­cial data, re­searchers per­formed an Eco­nomic Value Mod­el­ling anal­y­sis to iden­tify the tech­nol­ogy combinations with the big­gest im­pact on topand bot­tom-line value re­lease, as mea­sured by mar­ket cap­i­tal­iza­tion and cost-per-employee. They then iden­ti­fied the op­ti­mum mix of tech­nolo­gies by com­bin­ing re­sults from ma­chine learn­ing and prin­ci­pal com­po­nent anal­y­sis.

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