The benefits of a more connected and intelligent enterprise
It’s been almost ten years since Industry 4.0 launched. But many manufacturers are still struggling to make the vision of digitized manufacturing a reality. That hasn’t stopped them trying, however. Most of the companies surveyed as part of our research are past the proof-of-concept stage with their digitization efforts. Without the right focus and investments, these manufacturers will never realize their goal of digital maturity.
Digital maturity varies widely by industry. The most mature capabilities are found where digital or data-driven solutions are critical to performance. Or they are found where there’s significant potential for productivity increases. Digital maturity lags in industries where there’s little potential for productivity gains. This is usually because operations are already lean. Likewise, maturity will lag if digital for operations isn’t as high a priority as other concerns.
But our assessment identified a small group of companies that are getting it right. They make up 17 percent of our survey panel of 600. And they have highly mature digital operations capabilities. These drive significant value (as measured by revenue and productivity). The companies, which we dubbed Value Makers, have invested extensively in digital platforms and infrastructure. And they have paid special attention to those that leverage advanced digital capabilities. Consequently, Value Makers have enjoyed a substantial, positive impact on their operating income.
Digital transformation is a big financial commitment. And it isn’t as straightforward as some companies would hope. Value Makers achieve success by embracing digital operations transformation at scale. This requires significant attention to three key enablers. These are Skills, Leadership and Governance. All three are essential for ensuring digital readiness.
End-to-end Digital Operations Transformation is the reinvention of companies through advanced digital technologies to drive new levels of efficiencies, customer experiences, and sustainability.
Progress toward the vision of Industry 4.0 remains slow in most companies. This comes despite nearly a full decade having passed since its launch. Only the Value Makers have forged ambitiously ahead. They’re in pole position to lead their respective industries for years to come. Value Makers are winning the race for digital operations. Other manufacturers still struggle to implement even rather fundamental capabilities. But Value Makers have moved beyond this stage.
The gap between Value Makers and traditional manufacturers is constantly growing. Without immediate and significant action and investment, many manufacturers may never be able to catch up.
As part of our research, we surveyed 600 companies globally. Our goal was to evaluate the status of the digital transformation of end-to-end manufacturing operations. We found that the average digital maturity of manufacturers’ end-to-end operations overall is only 39 percent. This on a scale where 100 percent indicates all capabilities are deployed and rolled out. Most surveyed companies are past the proof-of-concept stage. They are now in actual pilots with partial scaling up.
Our assessment also identified a small group of manufacturers. This group has separated from the rest of the pack. We call these companies value makers. They represent a cross-section of industries. And they illustrate a deep commitment to digital technologies and solutions. This is combined with significant investment. They also have an unwavering focus on key enablers. Ultimately, the actions they take create substantial and sustainable value.
Their experiences offer other manufacturers guidance on what it takes to accelerate their digital transformation. They show how companies can reap the benefits of a more connected and intelligent enterprise.