Manufacturing Industry's Digital Revolution 🛠️

Manufacturers have faced significant challenges due to the destabilizing impact of the pandemic, which exposed vulnerabilities throughout the value chain. However, it has also presented opportunities for implementing larger-scale changes. In Salesforce's Trends in Manufacturing report, 750 manufacturing leaders worldwide were surveyed to understand the lasting effects of the pandemic on the industry and what it takes to succeed in the coming decade. Here are some key takeaways on how manufacturing leaders are driving business agility in the post-2020 era.

Adapting to a new landscape:The pandemic had a profound impact on manufacturers, affecting customer demand, production capacity, distribution lines, and more. Among the most enduring changes were those related to customer-facing roles. As in-person interactions gave way to video calls and virtual inspections, customer-facing teams swiftly adapted. These new methods of conducting business are expected to persist, with over half of manufacturers viewing changes in customer service and sales capabilities as permanent.

Optimizing processes and adapting demand planning:The volatility of 2020 highlighted the inadequacy of traditional forecasting methods in keeping up with rapidly evolving customer needs. To address this, 81% of manufacturers believe they need new approaches and tools for accurate forecasting. Currently, 95% of manufacturers rely on manual approaches, with less than half utilizing mostly automated tools. As a result, 81% consider moving their planning process to the cloud a critical or high priority. This emphasis on enhancing process efficiencies and demand planning is also reflected in the priorities of C-suite executives.

Prioritizing operational improvements:Manufacturers recognize the importance of improving operations in an evolving landscape. The top five priorities for C-suite executives over the next two years include digitalization to enhance demand planning and optimize processes. The pandemic exposed the challenges posed by legacy tools and siloed operations, with a lack of data transparency and accessibility across the value chain being a significant obstacle. Inconsistent perceptions of operational efficiency were also evident, with operations teams feeling less equipped to respond rapidly to market changes compared to their marketing or sales counterparts.

Profiles of Future-Ready Manufacturers:To succeed amidst ongoing changes, two types of manufacturers were profiled: future-ready manufacturers and unprepared manufacturers. Future-ready manufacturers, who believe their systems and technology are prepared for the next decade, exhibited notable differences. They were nearly three times more likely to react rapidly to market disruption and 2.2 times more likely to have migrated most of their sales and operations systems to the cloud. In contrast, no unprepared manufacturers had fully embraced cloud-based sales and operations systems.

Embracing a "Services as a Revenue Center" mindset:Future-ready manufacturers demonstrated a greater inclination toward bundling product, support, software, and other services into a single revenue model, known as servitization. Compared to unprepared manufacturers, nearly 10 times as many future-ready manufacturers were expanding their servitization efforts. These manufacturers considered support services and spare parts services as integral components of their value proposition, emphasizing a "services as a revenue" mindset.

The adoption of new business models, coupled with the migration of service systems to the cloud, has positioned future-ready manufacturers ahead of their peers. To prepare for the decade ahead, manufacturers should consider these insights.