While manufacturers have been aggressively pursuing digital transformation to compete and win in the marketplace for years, 2018 is poised to be a big year for manufacturing.
A top priority this year will be creating an outstanding user experience from beginning to end for manufacturers looking to optimize and scale their supply chain. Although many companies will focus on expansion and efficiency, they likely won’t introduce radical changes to pricing models. And finally, companies will ramp up their transformation to embrace new technologies that have the potential to change the industry landscape.
Here are five manufacturing trends poised to take off in 2018.
1. Digital platforms will look to the future
In 2018, digital platforms will become a central focus and important tool in creating new customer experiences and value chain efficiencies. Digital platforms will be leveraged for both the enterprise value chain and the extended supply chain, and they will serve as critical hubs for the incorporation of key emerging technologies, such as 3D printing, blockchain, and IoT-enabled products.
2. Value chain execution efficiency will fund transformation
The initial financial investment needed for a successful digital transformation might appear steep, but companies will realize that the costs associated with falling behind could prove detrimental to their business. This year CIOs will begin to work with both existing CEO and Chief Digital Officers (CDOs) to ensure that value chain processes are aligned with a clear strategy and that applications directly support these requirements. While this won’t necessarily fund the costs of digital transformation, it will release 10 to 20 percent of IT application costs. In turn, it will also allow a similar figure of enterprise resources to be redirected to the new digital groups from other areas of the business.
3. Legacy applications will become integral to transformation
Legacy applications will shake off their bad reputation this year, as they prove to be a necessary part of a digital transformation. The fact is, valuable processes, business logic, data stores, digital histories and other key resources reside within legacy systems.
Manufacturers will quickly appreciate this reality in 2018 as they look to replace aging applications with agile or nimble apps. To enable digitalization – without the lengthy process of replacing historical records and processes – these legacy applications will be accounted for and will play an important role in digital transformation.
4. The Industrial Internet of Things (IIoT) will take center stage
The IIoT has made it possible for manufacturers to become smarter; now almost every manufacturer has introduced smart manufacturing concepts and technologies to at least one production zone, if not an entire plant. Most organizations, though, have not yet fully scaled smart manufacturing technologies globally.
In 2018, enterprises will expand smart manufacturing practices, moving from small or single plant deployments. Although predictive maintenance and energy management are typically the first initiatives pursued, the industry will put a larger focus on more complicated initiatives, such as in-line predictive production quality, which requires complex algorithms and generates even greater benefits. These AI-oriented implementations will streamline processes and offer benefits including faster cycle times, improved quality, zero downtime operations, lights-out manufacturing and labor cost savings.
5. Pricing models will remain the same… for now
Connected products and services won’t be used to drive outcome-based pricing for most manufacturing segments… yet. Although medical devices and pharmaceutical companies may be moving to an outcome-based pricing model, purchasers of industrial equipment will still need to make capital expenditures for new equipment
Although the outcomes-based subscription model concept continues to be predicted as the outcome of connected products, the company that is typically used as a model, GE, hasn’t seen its market share grow or its stock price increase. This will cause most companies to continue to examine the feasibility, but not implement the practice in the near term.
As the new year begins, supply chain and manufacturing professionals should expect to see digital transformation throughout the manufacturing industry – and will benefit from keeping an eye out for these trends in 2018.