One of the key advantages of Indian manufacturing used to be low labor costs. This is no longer the case, as advanced economies are increasingly automating routine low-skill tasks, and wages are gradually rising in India. Technology-led re-shoring and localization are going to be leading trends in some advanced economies, and Indian manufacturers will likely face competition from emerging, low-cost economies like Vietnam, as well as prosperous industrial countries like China and South Korea.
These countries are already capitalizing on the opportunities associated with new-age technologies like cloud, IoT, artificial intelligence (AI), 3D printing, blockchain. India can’t afford to lag behind, and smart manufacturing will be essential to keep pace.
The rise of smart manufacturing
Technology has been spurring a wave of innovation in the manufacturing sector, and new-age technologies are penetrating the manufacturing industry much faster than expected.
Most manufacturers today agree that digital is not limited to one or two functions but can apply to the entire business lifecycle: from concept and design, engineering, sourcing and procurement to supply chain logistics, warehousing, customer experience, strategic functions and governance.
Digitalizing operations can increase efficiency, quality, safety and transparency. It can also reduce costs, timelines and errors. But to access these benefits, manufacturers need a way to manage their digital operations effectively. Smart manufacturing offers a solution.
Smart manufacturing is the umbrella term for new-age manufacturing. It refers to manufacturing that is connected, flexible and that thrives on the new-age technologies. Unlike traditional operations, smart manufacturing is not limited to the four walls of a factory but spans the entire manufacturing value chain. One Gartner survey shows that 86% of manufacturing leaders believe smart manufacturing is an integral component of their digital supply chain strategies, and 84% agree they expect smart manufacturing to increase their competitiveness.
Challenges to adoption
It’s clear that today's businesses no longer perceive technology as a bottleneck; rather, there is widespread acceptance that a smart manufacturing ecosystem — a manufacturing value chain embedded with new-age smart technology — is the future. So why aren’t more manufacturers capitalizing on the benefits of digital transformation?
The challenges that many manufacturing organizations face today are three-fold:
1. Defining the future of manufacturing
With so many opportunities and challenges on the horizon (e.g. streamlined operations and enhanced supply chain management, geo-political conflicts and climate change) many organizations feel the need to redefine their vision for the manufacturing organization of the future. However, aligning on that vision can be challenging. There are many points to consider, and using them to take an informed decision, one that will drive the entire organization forward at the desired velocity, requires significant analysis and coordination.
2. Aligning solution themes to top-line and bottom-line aspirations
From connected products to digital manufacturing to new business models, there are many solutions available that can deliver real value to manufacturers. The challenge is finding the best solutions for organization. Manufacturers need to align on solution themes to achieve short-term and long-term business aspirations on top-line and bottom-line performance.
Wipro has identified six key solution themes to empower digital transformation through its engagements with global manufacturers:
- Connected and smart-product ecosystem
- Digitalized customer and channel experience
- Aftermarket and service transformation
- Connected and digitalized factory operations
- Digital supply chain
- Connected workforce
3. Maintaining steady, successful monetization efforts
By end of 2024, Gartner estimates that only about “half of global heavy asset manufacturing organizations will have succeeded in monetizing their data." Every initiative will cost effort, time and money. Therefore, there will be continuous pressure on monetization, either direct or indirect, to sustain the transformation program.
Enablers of digital transformation
Technology has contributed significantly to the success of businesses like Tesla in automotive, and Amazon in retail. Going forward, companies with little or no tech-enabled operations are likely to have lower gains than companies which are supercharged with new-age technologies.
There has been rapid innovation in IoT, AI/ML, and cloud. IoT is providing access to real-time data from products and equipment. AI/ML has solved many complex business problems across the manufacturing sector. Cloud, especially, is becoming a technology bedrock because of its scalability, resiliency, and cost-effectiveness. When paired with other new-age technologies like big data analytics, artificial intelligence, RPAs, and IoT, cloud can deliver significant business results.
An example of this is Wipro’s cloud transformation program for a leading food manufacturing company. Wipro migrated SAP workloads to a stable, scalable, agile cloud infrastructure platform, thereby increasing performance, reducing operational costs, and completely virtualizing setup.
For the report Making Business Thrive: A Cloud Leader Roadmap for Achieving 10x ROI, Wipro surveyed 1,300 cloud executives and observed that cloud leaders are driving a 12% increase in their bottom lines by using cloud. The same survey revealed that cloud leaders achieve a return on investment 10x more than cloud beginners. They do it by embracing the critical role cloud plays across their enterprises, from streamlining operations and accelerating product development to combining the cloud with new-age technologies to amplify revenue generation and bottom-line performance.
Continuous, incremental, and accelerated monetization of benefits
There are three main approaches that manufacturers can take for digital transformation: technology-led, business-led, function-led. Because of limited resources, attrition, skill gaps, and legacy issues, organizations may find it hard to choose the best approaches to maximize benefits. Even when they do decide, implementing these approaches can take time, meaning there is always the risk of loss on investment.