22 April, 2019

When the focus on digital transformation becomes blurred

21 March, 2019

As Brexit uncertainty continues it is understandable that many manufacturers are finding it difficult to put in place a clear strategy as to what to make and in what quantities over a certain timeline, what levels of stock to keep and what supply chain models to adhere to over the short to medium term. Many are also naturally concerned about ongoing relations with existing customers and suppliers across Europe. Of course, the backbone of most manufacturer’s ability to deliver reliable products and services to customers is its plant & machinery and its ability to keep up to speed with current technology trends.


However, a decline in business optimism caused by economic uncertainty and Brexit confusion would appear to be holding back many manufacturers from investing in vital technology improvements; something that could have a major impact on future growth potential across the sector.

The CBI’s most recent Quarterly Industrial Trends Survey suggests that despite a significant increase in the IHS Markit PMI (rising to a six-month high of 54.2 in December 2018), business optimism in the quarter to January has fallen sharply, with export prospects dropping at the fastest rate since the financial crisis. However, the CBI points out that this is mainly due to manufacturers stockpiling materials to prevent potential supply chain disruptions caused by Brexit.

With spending on buildings, plant & machinery, training and innovation all expected to be lower in the year ahead, Tom Crotty, group director of INEOS and chair of the CBI Manufacturing Council said uncertainty has sadly become the norm and believes this is holding back growth and investment in the manufacturing sector. “It is vital the Government finds a positive solution to the current Brexit deadlock so firms can continue to compete both at home and abroad,” he added.

Despite the current political malaise, Jason Chester, director of global channel programs at InfinityQS, stressed that it is imperative manufacturers understand the importance of investing in digital transformation across the shop floor. While manufacturing business leaders are curtailing investment as a result of political confusion and economic uncertainty, Chester said this is perhaps the worst thing they can do currently. “Digital transformation delivers significant operational improvements which can provide valuable insulation against future risks by creating an operating environment that is lean, efficient and agile,” he said. “Manufacturers that invest in the right technologies can ensure that a competitive edge is maintained, and this will be essential to thrive in a challenging and uncertain economic climate. It also allows them to replace manual processes with a more automated approach, further reducing risks of low-cost labour and talent shortages.”

Chester added that increased agility and flexibility within the production environment will greatly help manufacturers to mitigate future market risks by creating the foundations to respond to events that cannot be foreseen during times of uncertainty. “Manufacturers and business leaders need to devise an investment strategy that will safeguard their business through this turbulent period,” he said. “Investment in digital transformation initiatives should not be put on hold but prioritised and accelerated to build an infrastructure that can sustain and navigate future instability. While market and economic conditions are outside a manufacturers control, investing to mitigate potential risks is absolutely under their direct control.”

One thing’s for sure – digital transformation will continue to evolve and become increasingly critical within the world of manufacturing. It is easy to see how an uncertain political and economic climate can impact companies’ business and technology strategies. Nevertheless, the ones left behind are often those who don’t have the longer-term vision.

Ed Holden

Editor




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