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On digital transformation journey

Danial Norjidi

Semiconductors, electronics and pharmaceuticals sectors are leading the way in the digital transformation of manufacturing, according to a new report launched on February 10 by the World Economic Forum (WEF).

As a WEF press statement explained, the Manufacturing Transformation Insights Report 2022 offers new findings emerging from a new initiative, Global Smart Industry Readiness Index (SIRI), which is set “to build the world’s largest datasets and benchmarks on the state of manufacturing globally”.

Conducted in collaboration with the Singapore Economic Development Board (EDB), the report draws on data from close to 600 manufacturing companies in 30 countries that underwent the official SIRI assessment, which the statement said, is a two-day independent review of a factory or plant.

“The report outlines the current state of industrial transformation across different sectors, and presents detailed case studies on how different stakeholders – ranging from manufacturers to industry associations and governments – are actively leveraging the SIRI programme to accelerate their digital transformation journeys.”

The statement highlighted eight key findings from the report, one of which is that semiconductors, electronics and pharmaceuticals lead the 2022 maturity rankings, with logistics making gains.

“Despite their frontrunning positions, these top three industries are not shielded from present-day challenges like the ongoing value-chain disruptions, global chip shortage and industrial decarbonisation. These developments will reshape the global manufacturing landscape and companies from these leading sectors – as long-standing pioneers of innovation and adopters of new concepts and technologies – must confront these topics proactively to redefine them into opportunities for all.”

A second key finding is that a high level of diversity exists across various industry sectors and that more tailored approaches are required to better support industry transformation.

“Governments and solution providers tend to apply ‘one-size-fits-all’ approaches in supporting manufacturers on their digitalisation journeys, such as state-level subsidies for the adoption of new automation equipment or industry-led forums that study use cases of global companies. The impact and efficacy of such blanket interventions has been limited.”

Another key finding is that the most digitally mature companies are seeking to integrate their already digitised processes and systems, while the average manufacturer is still looking to digitise existing operational processes.

“New digital and hardware technologies, coupled with integrative design principles, have opened a world of possibilities for manufacturers,” said the statement.

“Over the past two years, most manufacturers have taken first steps towards digitalisation in response to pandemic-related challenges. Companies which have started earlier are now progressing to the next level of integrating their digitised processes.”

The report also found that top companies have focussed significantly on connectivity to enable greater integration and insights.

“In today’s digital economy, connectivity is fast joining automation as a key driver of success. Top companies acknowledge the importance of connectivity. Many have already established interoperable and secure networks within their production sites, where equipment, machinery and computer-based systems can interact and exchange information with few restrictions.”

A fifth key finding is that manufacturers should put more emphasis on refreshing and broadening their strategies for digitalisation and workforce retraining.

“With the advent of digitalisation, job scopes and work arrangements are evolving rapidly. As manufacturers formalise their digitalisation strategies to upgrade their manufacturing and enterprise processes, there is a need to also re-examine the way they organise their workforce and workspaces as remote working becomes more prevalent in the digital era.”

An additional finding is that productivity-and quality-linked key performance indicators (KPIs) are key focus areas of multinational corporations (MNCs) and small and medium enterprises (SMEs), but flexibility and speed are fast-emerging areas of priority.

“Exponential demand growth, changing consumer patterns and chronic supply-chain disruptions during the pandemic have prompted some groups of companies to shift their focus to flexibility and speed-related KPIs to strengthen adaptability and resiliency,” said the statement.

“Initiatives that demonstrate such shifts include efforts by manufacturers to reorganise their supply chains based on regional geographical markets, practising dual/triple sourcing and adopting hybrid inventory management models that include elements of both ‘just-in-time’ and ‘just-in-case’ strategies.”

A seventh key finding is that data confirms SME-dominated sectors are less mature than MNC-dominated sectors. According to the report, “The archetypes of transformation map and Industry Performance Cards (IPCs) show that sectors have fundamentally different maturity profiles. To best support transformation, governments, solutions providers and developmental organisations alike must adapt their programmes to suit the current maturity level of each industry group and specific company.”

An eighth and final key finding mentioned is that MNCs and companies ahead of the maturity curve are more likely to plan for the long term. The report said that many companies now understand that digitalisation is a phenomenon they need to respond to quickly.

“While most companies are charting their transformation roadmaps, we have observed that manufacturers, depending on their size and maturity profile, tend to vary in their planning horizons. Companies that are larger or further ahead in the digitalisation journey tend to think longer-term than smaller companies, or those still early in the journey.”

“As digitalisation becomes pervasive and the ‘norm’, governments and community leaders alike must ensure they provide the right assistance for SMEs and latecomers to look beyond present-day issues and stretch their aspirations and imaginations.”

The press statement mentions that, to support the international scale-up of SIRI, a new non-governmental, not-for-profit organisation – International Centre for Industrial Transformation (INCIT) – has also been established.

As a neutral, independent entity, INCIT will work with both the public and private sector manufacturing-related organisations to catalyse and support industrial transformation across geographies and industries.