Innovation can be measured in one extreme as “radical/disruptive/new to the business” and on the other extreme as “incremental improvements.” Both have always been business imperatives.
Leveraging digital technology across process, products and services can deliver improved cost efficiency, safety and enhanced productivity. The Cisco Digital Manufacturing Infographic (search on that name to see the Infographic) displays three proof points that that manufacturers engaged in continuous improvement will find hard to ignore:
• FANUC saved $40 million by reducing downtime
• Sub Zero cut new product introduction cycle time by 20%; and,
• Stanley Black & Decker reduced labeling error rates by 16%.
Laggards in this area not only miss the incremental improvement potential, but fundamentally risk losing competitive position to progressive entrants and advanced business models. There is a startling prediction referenced in the Infographic that drives that last point home. “Digital disruption will displace nearly 40% of top incumbents across industries over the next three to five years”.
Rado Kotorov, vice president of product marketing for Information Builders, in a recent blog post clearly addressed a manufacturer’s growth prospects in a world enabled by the IIoT and digital technologies.
“Digitization means more data. And when more data is harnessed correctly it is converted into more knowledge, more opportunities and more revenues.” While there are many outcomes fueled by innovation, more opportunities and more revenues are likely to rank pretty high on any initiative-taker’s list.
KPMG found, in surveying 386 senior manufacturing executives globally, that manufacturers rate investing in breakthrough technologies as a “must do,” with more than 66% of respondents confirming they are focused on long-term innovation strategies. Increased investment in new manufacturing technologies and R&D are clearly indicated as support initiatives in that quest.
Another highlight from The 2015 KPMG Global Manufacturing Outlook (GMO) survey is that 44% of respondents across the globe say they will allocate more than 20% of their total technology spend on systems to improve the pace and value of innovation (engineering, manufacturing and supply chain) in the next year.
U.S. respondents are even more bullish, with 62% saying they will allocate more than 20% of the technology spend to drive innovation.
Collaboration is key
The survey found that manufacturers are increasingly collaborating with suppliers, customers and third-party research organizations. A full 81% of global respondents (78% in the U.S.) say that they are adopting collaborative business models with suppliers and customers to improve the value of their innovation investments—up from 68% in KPMG’s 2014 survey.
In the last 12 months, I’ve enjoyed my interaction and discussions with many technology adopters in manufacturing as well as their technology providers. At our inaugural Smart Industry 2015 conference, I witnessed productive discussions between those seeking to assess and adopt digital initiatives, and the technology providers that were sharing use-cases, case studies, and best practices in addressing the opportunities and risks.
Our 2016 event (September 26-28 at The Drake Hotel in Chicago) will continue to foster that opportunity, undoubtedly with more insight and knowledge to be shared and higher ground to be gained.
It’s hard to put a value on 12 months of experience in this latest wave of technological change. But at the Smart Industry 2016 conference, we’ll see just how far it’s possible to come in a year. We hope that you join us.
Tony D’Avino, Publisher