Companies in the manufacturing industry are missing an opportunity for greater profits by not digitizing enough. That’s according to research by IDC InfoBrief, sponsored by IFS.
For the most part, manufacturers are busy addressing recurring problems. The survey was done among companies in both Europe, Asia and the Americas. Among the 160 decision makers surveyed, they together identify a top three regarding obstacles to growth and profits. First, the rising cost of labour (61%), higher prices for raw materials (42%) and problems in the supply chain (also 42%). According to IFS, these are given too much priority over adapting business models toward digitalization.
On the schedule
53 percent of those surveyed state that digital initiatives for core operations are still on the strategic roadmap. IFS calls this encouraging, but this terminology is certainly broad. Regardless, the survey shows that a successful transition to digital leads to an average 40 percent increase in profits. They refer to this transition’s “optimized” level as the criterion for such an impressive figure.
A major challenge still lies in the area of persuasion. Where digitization evidently makes for good papers in the long run, 62 percent of those surveyed doubt the return on investment. On this aspect, IFS is sounding the alarm: the manufacturing industry really seems to be missing an opportunity for lucrative numbers here.
IFS recommends going after manufacturers who tap into new ecosystems (28%), generate new revenue streams (26%) and discover new markets (25%) to create a competitive advantage over the competition. So work to be done.
Global Industry Director at IFS Maggie Slowik sees opportunities despite the challenges. “The more digital initiatives deliver ROI, the easier it is for organizations to make a case for further digital investments – these must be enabled by scalable, cloud-based IT solutions to deliver long-term revenue and profit growth.
Also read: The heart of IFS beats in Sri Lanka