The field of manufacturing is undergoing a major shift. There have been a number of terms used to describe this evolution, from Industry 4.0 to the 4th Industrial Revolution. But no matter what term is applied, the goal is to describe the integration of connected, digital technologies with the tools, processes, and core concerns of manufacturing.
Already, technologies like IoT, machine learning, big data, and ERP for manufacturing are changing the way that manufacturers operate and shifting the priorities of the manufacturing industry as a whole. A recent report estimates that by 2020, manufacturers across verticals will invest 5 percent of all revenues on new technologies. That may seem like a paltry figure, but it translates to $906 billion annually.
The embrace of new technologies and data-driven methods is quite clearly the next big step in manufacturing. Over the same period that digital investments are expected to rise, manufacturers are predicted to annually save $421 billion in costs and earn $493 billion in additional revenue. Considering that Industry 4.0 is still in its infancy, the scale of those figures could grow substantially in coming years.
This is all exciting news for manufacturers who are willing to invest in new technologies and adopt new approaches. But it is essential to realize that the manufacturers who are resistant to change are doing more than just losing out on cutting-edge capabilities and opportunities. They are also putting the future of their enterprise in serious danger.
As the investment totals reveal, data-driven technologies have been broadly embraced in the manufacturing sector. That means the companies that do not adopt them are putting themselves at a distinct competitive disadvantage. As the bulk of the industry begins relying on connectivity, analytics, and automation to improve efficiency and productivity, the manufacturers who lag behind will find that it is nearly impossible to remain relevant no matter how strong their product or brand is.
This is the short-term consequence. But manufacturers must also realize that this is just the start of many transformational changes coming to the industry. In countless and unpredictable ways, every aspect of supply chains, manufacturing processes, and business as whole is changing. The pace of this change is faster than ever, and the scope is singular in the history of manufacturing. The process of building anything and everything is getting smarter in immeasurable ways.
The manufacturers who choose to invest in new technology and talent to stay ahead of the curve are building adaptability and agility into their operations. The changes they are making now are ultimately about being able to make further changes in the future. That flexibility is key, because new technologies and more customized manufacturing processes are all moving quickly through the development pipeline.
A manufacturer who remains committed to outdated and rigid ways of doing things will struggle now and find that the future is extremely uncertain. Embracing new technologies may be optional currently, but it will be a requirement soon. The longer that manufacturers wait to join the present, the harder they will find it to participate in the future.
The good news for manufacturers who have been late to the party is that it does not take a major investment in new technologies or staff to begin building a data-driven approach to manufacturing. The first step is to put a platform in place that empowers you to collect, store, reference, share, automate, and analyze more of the data that will soon become the lifeblood of your operation. Leveraging data will not guarantee your success, but it will keep you from falling far behind.