Navigating the future
The manufacturing industry in the UK has suffered greatly in recent years, from broader issues stemming from lack of investment and declining confidence to specific geopolitical and world events causing lost revenues in stockpiling, closedowns, and workforces to grind to a halt. A key issue for many manufacturing companies is that data has not been central enough to their key decision-making. Implementing the correct strategy to navigate issues which could impact the lifeblood of manufacturing became much more difficult and misinformed when business leaders were not privy to the full picture of the stress tests on their businesses. A focus on digital transformation provides for full visibility of the organisation, allowing manufacturing leaders to pay more attention to the future and set in stone the correct strategy for any potential looming dark clouds.
Negative external influences
The stop-start nature of Brexit was tortuous for many UK manufacturers, putting them under unforeseen financial pressure. The false starts of the UK leaving the EU provided manufacturers with significant costs in terms of stockpiling and closedowns. The financial strain of both Brexit and the current lockdown is something that will be felt for some time as, understandably, many manufacturers keep a nervous eye on the uncertain times that lie ahead and the unknown further financial implications. The lockdown has sent a shockwave across many industries, causing a drop in the demand for goods and services, the destruction of supply chains, and workforces to be ground to a halt. These two most notable events, combined with a whole host of others over recent years, suggest the manufacturing industry will have to be ready for an unknown future.
Successful manufacturers realise they can no longer simply react to negative external factors and must now be forward-thinking with their approach. According to research from Deloitte on the future of the finance function, 63 per cent of CFOs from manufacturing organisations believe their role will shift to focus on analysis, prediction and decision support. Manufacturers don’t have a crystal ball to predict the future but can use data to minimise the impact of negative incidents that may occur. Business leaders can stress test each part of their business against potential negative influences or specific scenarios through the use of predictive analytical technology and crisis scenario simulation, where data can be manipulated in real-time to test how specific parts of the business will react to adversity and how their business as a whole will perform. The use of data in this way enables business leaders to identify potential weak links in the manufacturing supply chain and make appropriate changes. Business planning with data at the heart gives leaders confidence that they are taking the business in the right direction, as decision-making is made robust by the ability to stress test each decision.
A digital transformation will not only allow manufacturers to have the correct procedures in place to negate many of the issues a turbulent future can pose, but also provides great benefits for their present performance. From data analysis to strategic planning, manufacturers understand the importance of allowing digital transformation into their company’s processes, and the consequent positive knock on effect on customer relationships and sales.
The Annual Manufacturing Report 2020 reveals 86 per cent of manufacturers say they are ready to invest in new digital technologies 23to boost their competitive position. Big data at the fingertips of bosses provides readily available insights into all areas of the business in real-time and not hidden on a spreadsheet for future reference. Data greatly enhances performance management, allowing for accurate analysis of profitability whilst also improving budgeting and forecasting. Efficiency is also drastically improved in a business where performance is reviewed constantly and data directly informs decision-making.
Digital insights into the customer relationship enable manufacturers to improve customer experiences through value-added services. As well as improving current customer relationships, digital transformation offers the opportunity to expand the customer base, with 81 per cent of manufacturers believing that digital technology will enable them to open new markets and find new customers [Annual Manufacturing Report 2020].
There is a consensus among UK manufacturers that the government should incentivise investment in technology due to the huge benefits that the uptake of digital tools has on the growth of firms and the subsequent boost to the industry, and economy, that the UK vitally requires. The Annual Manufacturing Report 2020 shows 92 per cent of respondents say the government needs to incentivise long term investment in digital technologies, and the supply of patient capital, if the UK is to remain competitive. Particular attention needs to be paid to smaller manufacturers that make up the majority of the UK manufacturing industry. These firms recognise the importance of digital transformation but may have their own limitations regarding price and process.
Well-informed decision-making and the ability to confidently future proof are huge benefits provided by integrating data. There is a large amount of benefits that digital transformation grants to many areas of manufacturing, from supply chain optimisation to financial consolidation. The UK’s success as a manufacturing nation will not just be decided by the willingness of the adoption of digital transformation but will be informed by how the various players, such as government, solutions providers, advisory services and manufacturers themselves, iron out the barriers that still remain.
Gavin Fallon is General Manager for UK, Nordics and South Africa at Board International. Board is the #1 decision-making platform. Founded in 1994, Board enables people to have a transformative impact on their business, helping them to intuitively play and create with data in a flexible, all-in-one decision-making platform. By unifying Business Intelligence, Corporate Performance Management, and Predictive Analytics, the Board platform allows companies to produce a single, accurate, and complete view of business information, gain actionable insights, and achieve full control of performance across the entire organisation.
Gavin Fallon LinkedIn: https://www.linkedin.com/in/gavinfallon/