For 30 years, manufacturers have been focused on improving operational performance by streamlining their systems and processes. With considerable success, too. During that time, the industry has become amazingly effective and efficient at bringing high-quality, affordable products to market.
This ability will, of course, remain vital. In a world of rising consumer expectations on price, deliveries and personalization, getting the right products in customers’ hands when and how they want them is increasingly important to any manufacturing company’s competitiveness.
But there’s now one important difference. Rather than being powered by leaner processes and lower costs, the driving force behind the industry’s next stage of operational improvements will be technology. And, especially, the evolution of data and analytics.
A dramatic shift
The good news is that many manufacturing companies are already considering how to integrate data throughout their organization – as the recent EY Tech Horizon study confirmed. There’s also mounting evidence that the positive effects of seamless data centricity contribute to manufacturing outcomes.
Yet, while change is certainly happening, many manufacturers aren’t moving quickly or holistically enough. To fully harness data’s transformative potential, the industry must undergo a dramatic shift in both mindset and investment. Gone are the days of viewing data as something “owned” by the IT department and of focusing digital spend on packaged enterprise resource planning (ERP) and manufacturing execution systems (MESs).
Instead, firms should begin building distributed data platforms that enable every employee to access and analyze the real-time information they need to innovate, solve problems and make better decisions.
Short-term gain, long-term transformation
For manufacturers, the short-term benefits of doing so will be considerable, letting them bring together markets, customers and employees in a single fluid flow of digital value. In particular, it provides the springboard for more dynamic responses to shifts in their operating landscape – from evolving consumer demand patterns and unexpected supply issues to global black swan events such as the coronavirus pandemic and the war in Ukraine.
Democratizing their data also allows companies to be more proactive and personalized in how they interact with customers across their sales and services channels. And it helps them maintain a more accurate picture of production management and throughput, boosting performance across areas such as waste management, logistics and quality control.
Yet, it’s in the long term where the potential of this modern distributed data approach becomes truly game-changing. That’s because it opens the door to more advanced technologies such as digital twins and augmented reality that, in turn, allow firms to go beyond simply analyzing what’s already happened to proactively predicting what’s about to.
Put another way, companies can move from dealing in data to dealing in decisions, determining in advance how best to respond to opportunities and threats and positively reshaping everything from production patterns and inventory levels to supplier partnerships and risk management.
Time for a little magic
As with any major transformation project, creating this environment is an ongoing process. The key for manufacturers is to act now to build a scalable foundation for doing so.
That starts with shifting as many of their data processes as possible to the cloud, transitioning away from the traditional fragmented on-premises approach to something far more integrated and accessible. They can then also begin maximizing tools such as data visualization and correlation analysis to model complex processes, test hypotheses and sharpen decision-making.
The changes reach further than the technology itself, too. Manufacturers must reconsider the people, job roles and skills they need to thrive – not just on the shop floor but across the business. Instead of viewing only certain roles, processes and functions within the company as “data-based,” everyone should be equipped with the technologies and training required to develop their digital capabilities and put insights at their heart of their job.
As the renowned scientist and futurist Arthur C. Clarke once said, “Any sufficiently advanced technology is indistinguishable from magic.” For manufacturers looking to build on decades of operational improvements and gain a renewed competitive edge, embracing a democratized, distributed approach to data must become their latest trick.
The views expressed by the author are not necessarily those of Ernst & Young LLP or other members of the global EY organization.