rethink to reinvent

What manufacturing organizations can do to build resilience in an increasingly uncertain world

The pandemic has been a great disruptor, remolding the business environment in every sector. As we progress into 2023, we are witnessing fresh dynamics in the market at an unforeseen velocity and is painting a new picture on how the world is shaping up—one that is much different from what we would have expected a couple of years earlier. Last year, we witnessed new geopolitical challenges unfolding within Europe that showed how heavily dependent we are on other markets for natural resources and raw materials. The manufacturing sector has been no exception and is experiencing the aftershocks of these uncertainties.

At Capgemini, we have identified key trends that will shape the future of manufacturing and suggest what businesses can do to stay resilient in today’s volatile and uncertain environment.

The future of the industry is intelligent: The era of intelligent products and services will significantly shape how businesses operate, and early adopters will generate significant competitor advantage and business value through interconnected data-driven products and processes. Traditionally, manufacturers focused their strategy on products as objects. Today however, Intelligent Industry has added a new dimension by shifting the focus towards a more customer-centric approach that provides tailored services to end-customers. Organizations that deploy business models based on lifecycle services will grow faster and be more resilient in rapidly changing markets. Organizations must discover the power of data to envision new products and services, improve supply chains, create new customer experiences, deliver new sources of value, and achieve new outcomes with intelligent industry.

Supply chain transformation to lower dependencies: The current geopolitical situation has exposed the disadvantages of overreliance on other markets. Most supply chains were negatively impacted from the lack of semi-conductors during the peak of the pandemic, and shortage of natural resources due to geopolitical challenges within Europe. To de-risk the vulnerability of global models and generate a real competitive advantage, manufacturers will need to reassess and optimize their supply chains to diminish reliance on other markets and associated risks. A supply chain that is focusing today on data-driven networks and advanced digital transformation capabilities to streamline logistics and prioritize resilience will successfully survive tomorrow. Some measures that supply chain managers should consider are diversifying their suppliers, exploring different transport partners (and processes), and sourcing alternative raw materials (or alternative sources). They should aim to redesign their supply chains and be as compact and localized as possible to minimize cost and carbon footprint. 

Automation as a catalyst to become future proof: In order to overcome the current challenges, organizations should invest in bringing production processes closer to home and relocating factories to closer neighborhoods. To address forthcoming human resource limitations such as lack of access to low-cost labor countries or skill and talent, organizations should consider automating operations and productions. This will require strong integration between IT (Information Technology) and OT (Operations Technology) within target architectures to make connected processes and products autonomous., This fundamental investment will open new data-driven opportunities bringing costs down and making the unit efficient and safe in the long run.

Sustainability at the heart of business transformation: Regardless of the maturity stage, most organizations are now transitioning towards zero-waste production and are becoming carbon conscious as it has a direct correlation with better profitability. Therefore, organizations need to focus on product design that will increase lifespan and build a zero-waste supply chain. Organizations that recycle, refurbish, or remanufacture their products to increase the average lifespan have already seen the benefits of reducing waste, bringing down costs, and, most importantly, lowering their carbon footprint. Ways to extend products’ lifespan include design for easy disaggregation, repairability, and reusability; hardening products’ reliability and endurance, ensuring maintenance is in place, and, once the product lifespan is over, efficiently decommissioning it. Apart from making supply chains compact, organizations need to identify areas of energy wastage, unnecessary carbon emissions, and heat expenditure and take steps to lower them. In the Netherlands we are already seeing a positive shift towards hydrogen-based plants. Manufacturers who already have a transformation plan in place or are in the process of designing one to migrate from traditional gas-based energy sources to hydrogen-based sources, will be a step ahead in the path to future readiness.

Co-creation and data-sharing to retain competitive advantage: With compliance having a key role in stimulating organizations’ sustainability goals, we see a lot of players across the industry working together. To ensure compliance towards their sustainability goals and effective assessment of their carbon footprint, organizations will need to have access to all data that can be made available to them, and as a result work with all partners across their supply chain, share respective data, and beyond. More importantly, working together and co-creating plans of action will be critical in creating value for organizations.

The industry is continuously evolving. Disruption, game changers, and re-inventions are constant part of this evolution, and it is important for organizations to reinvent themselves through an outside-in perspective, specifically from their customers’ point of view. Ways to build effective autonomous operations lie in a sound and good architecture, integration of OT and IT, and the skill to use digital twins effectively. Another key factor lies in smart data management, in terms of quality as well as quantity. Organizations need to inspire confidence and trust amongst their partners in the supply chain to bring their products to the market in a cost-effective and sustainable way. To face these fundamental changes and future-proof themselves, businesses will have to rethink their product design, rebuild their operations, and create supply chains based on effective data management and sustainability and reuse by design.

Author: Diederik Vieleers, VP, Head of Complex Manufacturing and Technology