Five ways manufacturers can balance efficiency and resilience to lead in a new digital era

In 2020, CGI leaders met face to face with 1,447 business and technology executives for in-depth discussions on their priorities, spending and investment plans. In manufacturing, we had conversations with 175 executives across 13 countries. These conversations took place before and after the pandemic declaration, providing unique insights into evolving priorities. We summarize the findings from these discussions on our Manufacturing CGI Client Global Insights page.

The COVID-19 pandemic is compelling manufacturers to decide between continuing to focus on short-term measures to drive efficiency and reduce costs, or building resilience to better adapt to change. The answer is not choosing between one or the other, but finding the right balance between the two. In this blog, I offer recommendations to help manufacturers achieve this balance.

1. Establish an agile operating model to increase adaptability and speed

Few manufacturing executives say their business model is highly agile for digitization. To become more agile, manufacturers can use the lessons learned during the pandemic to reassess business risks. As a first step, manufactures can identify the most affected product or service groups and evaluate the agility of their production processes to uncover potential improvement areas. Next, rethink business planning to adopt shorter planning cycles and devise a range of actions for each product group to minimize future disruptions. Moving to agile business models also requires harmonizing and further digitizing manufacturing processes and systems across sites to enable production flexibility. It also requires cultural change. Projects based on traditional methodologies that take years to deliver functionality are no longer acceptable. Adopting agility at scale will be key to enhance productivity and competitiveness.   

2. Create a more agile and resilient technology supply chain

The pandemic not only disrupted physical supply chains, it also disrupted their technology counterparts. It turned out to be a formidable test of the resilience of manufacturers’ IT systems, highlighting the need to improve the flexibility and elasticity of their existing technology landscape to adapt and respond swiftly to production impacts on the shop floor. Reengineering technology supply chains will be key for manufacturers to build resilience and provide agility and elasticity by managing products and services in more cost-effective ways and adjusting to demand in real time. For instance, adopting secure platform-oriented solutions can help to scale and improve flexibility of the existing technology landscape. In addition, smart managed services can help achieve cost savings, free up resources, and improve business agility. Moreover, greater adoption of automation, such as using RPA and AI-based decision support in daily processes will enable faster reaction times.

3. Become a data-driven company and use data insights to drive value

Data and predictive analytics remains manufacturers’ top planned innovation investment within three years. In addition, executives cite digitization for data integration as the second most impactful industry trend, underscoring the need to extract greater value from data. Unfortunately, data often exists in silos across multiple systems within the enterprise. Unlocking the true value of data requires a holistic data approach that includes using the right tools and processes to validate, verify and process data. Harnessing data will provide powerful insights into the end-to-end production flow across the ecosystem of partners, and is a critical component of an automated agile production supply chain. In addition, building successful data-sharing ecosystems with partners could lay the foundation for completely new disruptive business models. Combining these insights with deep industry expertise can help to support business optimizations or yield new business opportunities.

4. Unlock greater value from collaboration to become truly agile

The need to collaborate across silos has come into sharp focus as manufacturers responded to the immediate impacts of the pandemic. Having an overview of the end-to-end supply chain, pinpointing disruptions and finding potential workarounds and solutions became crucial. However, integrated transparency across the supply chain between suppliers, logistics providers and manufacturers—critical to rapidly responding to market changes—was missing.

Collaboration calls for more than just breaking down internal organizational silos. It is about “owning” and being responsible for the entire ecosystem that includes suppliers, logistics, business partners and customers. Extending digital strategies to an external ecosystem is a prerequisite to achieving this. Furthermore, making better use of data will accelerate collaboration. Transparency and the exchange of relevant real-time information with the required speed and flexibility between manufacturers and first-tier suppliers offers value. However, integration with multi-tier suppliers will be key to establishing a truly digital supply chain from end-to-end.

5. Develop an omni-channel strategy to get closer to your customers

The top trend as well as the top business and IT priorities revolve around meeting customer expectations, demonstrating strong alignment between business and IT to become more customer-centric. The pandemic changed how customers and businesses make purchasing decisions (e.g., buying services instead of products), revealing an urgent need for manufacturers to reconsider how they sell their products and services to keep up. Establishing relationships with end consumers can especially be challenging for manufacturers that cannot sell directly to consumers due to their product portfolios. One way to address this is to set up services for communities of end consumers or around the brand that includes B2B customers as well as potential end consumers. As well, using different ways of selling (omni-channel) can help to better serve customers and drive business value. A relentless focus on meeting market demands and pursuing innovation and digitization will drive new partnerships, offerings and customer experiences.

Mastering business agility to succeed in the “new normal”

Manufacturers must balance their shorter-term needs to reduce costs, while at the same time manage the fundamental changes taking place in the way they operate and interact with customers. While this is not a new need, it will be the “new normal,” and achieving it calls for mastering business agility. 

Fortunately, manufacturers have the necessary enablers in the form of digital tools to optimize their operations, enhance customer interactions, and leverage their wider ecosystem of partners and suppliers. Revisiting processes, applications and systems can also be a major step forward to identify opportunities for cost reduction, while preparing for better flexibility, agility and collaboration.

CGI works with manufacturers around the world helping them rebound and reinvent through and beyond the pandemic. Contact me to learn more about the CGI Client Global Insights and how we can work together to seize the opportunities of technology to drive the new future of manufacturing.