Evolution of the Industrial Manufacturing Industry and the Changing Role of IT Vendors
The core philosophy of industrial manufacturing has evolved over the past two decades. Today, shared infrastructure, management of multiple customer touch-points, explosive growth of enterprise data and its management are factors contributing to the changes in the industry.
Likewise, the expectations that industrial manufacturing players have from their system integrators have also changed. Now manufacturers demand innovative solutions with the potential to disrupt, something that allows them to provide a unique experience to their increasingly empowered customers. The relationship between manufacturers and information technology vendors has evolved from the transaction-based relationship of the 1990s, to a more "business advisory" association in recent times.
Growth Trends Shaping the Industrial Manufacturing Industry
We have identified the following key growth trends that are shaping the industry:
Focus on growth markets: Emerging economies are increasingly becoming epicenters of growth, hence, most industrial manufacturing companies (IMCs) are venturing into these markets. Though these markets offer high growth opportunities, organizations face challenges like understanding local requirements and incorporating the same into product design and price, ensuring a balanced mix of local talent, etc. To counter these, IMCs are exploring local manufacturing options and are collaborating with local players and multinational competitors in order to offer a one-stop shop to customers.
Departure from traditional business models: To ride out the downs in the business cycle, to mitigate risks arising out of the economic slowdown, and to meet changing customer expectations are key concerns for all organizations today leading them to develop new business models along with a balanced product portfolio with both short and long order cycle products. Many manufacturers are moving away from a product-centric approach to a more service-oriented one.
Differentiated Pricing: Due to eroding margins manufacturers are shifting to newer models of bundled pricing, dynamic pricing and value-based pricing, as against the traditional cost-plus pricing. As services are gaining ground in the portfolio of industrial manufacturers, the latter are actively considering lifecycle costing and performance-based approaches. In addition to adopting newer pricing models, manufacturers are also investing in newer technologies to aid in pricing and profitability management.
Product Differentiation: To remain ahead of competition and to capture market leadership, industrial manufacturers are increasingly exploring co-innovation and product platform strategies and are leveraging next generation technologies to create a gamut of differentiated products/ services.
Next Generation Technologies Influencing Growth in the Industry
IMCs are aggressively evaluating and investing in next generation technologies to stay ahead of competition. The figure illustrates some use cases depicting the influence of next generation technologies.
The Way Forward and How IT Service Providers can help
Industrial manufacturers are now looking at leading service providers to help them harness the power of next generation technology to fuel their growth. Some areas where IMCs are looking to use next generation technologies are:
- Fostering product innovation and conceptualization
- Augmenting the service portfolio by bundling products with service offerings enabled by next generation technologies
- Optimizing plant operations leading to improved operational performance and productivity on the plant floor
- Predictive maintenance on the shop floor
- Quality improvements by exploiting untapped unstructured enterprise-wide quality data to improve product quality, reduce cost, increase profits and reduce waste
- Increasing customer responsiveness
Service providers are providing support by creating industry-specific solutions, and leveraging their cross-industry experience to help industrial manufacturers with use cases and solutions in technologies like Big Data and enterprise mobility.
Read this white paper to appreciate the trends shaping the industry. Learn how service providers can assume the role of business advisors to help manufacturers to bring about disruptive innovations.