Mary Scianna, editorClick image to enlargeby Mary Scianna

 

 The global manufacturing landscape is changing at an unprecedented pace and nowhere is this more evident than in the evolution of digital technologies. This “digital transformation promises a remarkable change in the way manufacturers operate, with far-reaching effects on business and industry models,” according to the authors of the KPMG Global Manufacturing Outlook 2018 report. The survey is based on data from 300 manufacturing industry CEOs from around the world.

Some of the survey findings are predictable—manufacturing CEOs say that digital technological disruption is an opportunity and not a threat and they’re eager to implement the changes within their organizations. More surprising is that many have been slow to incorporate digital tools within their organizations and for those that have, they say they have not seen an ROI.

“It is certainly true that avoiding new investments is as risky as betting on the wrong technology. Executives in the automotive and aerospace and defense industries need only look as far as Elon Musk’s efforts with Tesla and SpaceX to see the impact disruptive companies can have on their businesses,” note the authors in the report.

Another surprise is the skepticism of CEOs towards advanced data analytics, a key component of the digital transformation. Almost half the manufacturing CEOs in the survey say they don’t plan to increase their use of predictive models or analytics and express skepticism about the ability of data analytics to forecast business trends. Indeed, one out of every two CEOs has a low regard for the accuracy of predictive analytics.

Despite that, these same CEOs regard AI as a “critical component” in digital transformation, with 41 per cent saying they perceive the biggest benefits over the next three years. And while CEOs in past surveys regarded AI as a means of reducing costs, in the 2018 survey, they see the potential of unlocking data through AI as a growth engine.

Just as the manufacturing industry is facing a shortage of skilled labour today, one of the potential problems that will arise as manufacturers embrace the digital world will be finding the talent to support companies in their digital journey, with 65 per cent of manufacturing CEOs saying robots will create more jobs than they eliminate.

The digital transformation of the manufacturing industry can seem overwhelming for many SMEs, but as the concept gains traction, they will need to adopt it.

“Successful manufacturers will be those that blend artificial and human intelligence most effectively. Elon Musk seems to have acknowledged this point when he tweeted in April 2018 that “excessive automation at Tesla was a mistake…humans are underrated.”

Like any investment, manufacturers will have to weigh the options, the benefits and the risks (i.e. cyber security) of embracing new digital technologies. What they cannot do is ignore changes that are transforming the manufacturing landscape. SMT

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