With digital technologies such as 3-D printing, embedded sensors and Internet of Things (IoT) breaking down barriers between products, customers, retailers, wholesale partners and suppliers, manufacturers realize the days are over of simply making products and selling them at a profit.
Our new research, in fact, points to the onset of a new thinking in manufacturing — one that shuns the abundance of “cost-plus” offerings and heralds the coming of an “experience-centered” strategy. In fact, many manufacturers expect the percentage of revenues driven by digital to nearly double from 5% last year to 9% by 2018, according to our recent study.
To understand what the future holds for manufacturing, Cognizant's Center for the Future of Work surveyed 2,000 executives globally, including 500 senior executives from the consumer and industrial products spaces. Our findings indicate that manufacturers realize they have a massive opportunity to make products that push the envelope of game-changing innovation or new levels of efficiency.
To do that, manufacturers need to strengthen, cultivate and coordinate the ecosystem of partners in an interconnected world of intelligent embedded systems that produce meaningful products, services and experiences for customers.
Key highlights from our study include:
Manufacturers’ digital investments are reaping new revenues.
Digital will become a money-making assembly line over the next few years. While only 30% of respondents believe more than 20% of their revenues currently originate from digital channels that will surge to 78% by 2020.
With the growing recognition that the days of making mass-produced things and selling them at a profit are becoming obsolete, manufacturers have moved beyond “knowing something needs to happen” to “making something happen”; Consider John Deere’s “Farm Forward” crop management ecosystem, GE’s digital jet engines that are instrumented down to the individual fan blade, or even Zume Pizza’s robotic home delivery.
New skills are needed to transform global “making” processes.
New automated systems will work in concert with humans, and better integrate all participants — suppliers, partners, materials scientists, machinists and heads of safety — through digital approaches. A great example is the Airbus factory, in which robots are strapped to the side of fuselages, riveting thousands of holes, with operators “piloting” the robots.
No wonder then, that, roughly 70% of respondents think digital change is boosting the need for innovation skills today and will continue to do so through 2018. Meanwhile, the percentage of respondents who believe AI will have a significant impact on manufacturing by 2025 vs. today jumps nearly 400%. Getting ahead of these systems of intelligence is essential and will likely trigger a surge in analytics skills needed by 2020.
The instrumentation of smart factories will also spur an even greater need for analytics skills by 2020 (from 57% today to 75%). As manufacturers ramp up their IoT initiatives on the shop floor, an explosion of analytics-driven optimization is just around the corner.
Lastly, our respondents anticipate dynamic growth in demand for design skills (whose importance burgeons to 70% by 2020), as well as fabrication skills (71% by 2020, as well). These trends underscore the coming impact of 3-D printing and additive manufacturing and the redoubled attention to the “maker culture” we’re already seeing in the future of work and work processes.
Forget “oil spills” — manufacturers are worried about “data spills.”
In an instrumented world of “things,” there’s universal concern about overshared personal data, with 90% of respondents citing this as a moderate or significant concern. When sensors become embedded in all products, this could perhaps fuel fears of a “Big Brother” world, in which personal data becomes ever more the target of hacks and exploitation.
Regardless of the products made, every manufacturer needs an absolutely robust data security strategy and infrastructure, as well as the creation of a separate function focused on overall digital security.
Digital change makes manufacturing more meaningful in the work ahead.
Consumer demand is evolving — fast — from a desire for “stuff” to more meaningful experiences, and manufacturers will need to adapt their skills accordingly. Their employees increasingly want to work on things that will improve other people’s lives. As such, over 50% of respondents believe that digital technology will allow them to "contribute more meaningfully."
The Work Ahead
So what should the manufacturing industry be focusing on? Some critical factors include:
Accelerate change across the organization. Anticipating the needs of new digitally-driven customers has never been more urgent. The growth of a creative thinking mindset needs to percolate throughout the organizational hierarchy.
Create a lab as a “play-space” to facilitate breakthrough thinking. What can be learned from other industries? (“What if manufacturing was done by Uber? What if an automaker had invented Pokemon GO?”) Curiosity and questioning will help inspire digital production innovation, collaboration and ongoing experimentation for new approaches and services that can be brought to new markets.
Cultivate your ecosystem of partnerships. No manufacturer is an island. Tap into the creativity and capabilities of your partnership ecosystem; successfully exploiting this nexus of participants will be the difference between winning and losing at the digital shift point.
It won’t be easy for manufacturers to cultivate broader visions of the possibilities of digital transformation. Yet, it’s essential to ensure relevance at a time when manufacturing is being reshaped by new cultural and economic forces, unleashing a critical digital shift in the future of work.