【Smart Manufacturing 2.0 series】

As COVID-19 necessitates greater agility and speed, leaders should consider engaging in smart manufacturing ecosystems to accelerate digital transformation and drive results in the next normal.

In a recent CEO poll, 85% of leaders agreed or strongly agreed that investments in smart factories will rise by June 2021. And, while economists predict that overall business investments could be low for the next three cycles, respondents in the study indicated they are directing a greater share of their factory investments toward smart manufacturing initiatives.
 

The “perfect storm” speeding up ecosystem adoption

It is difficult for manufacturers to maintain the pace of rapid digital transformation on their own and ecosystems allow for greater capacity and flexibility in adapting to the new world at scale. The win-win is that the success of these many-to-many relationships can be shared by all participants.

We have identified four primary ecosystems that support smart manufacturing initiatives: production, supply chain, customer, and talent.

In the production ecosystems area, we have identified a set of use cases for smart manufacturing—the “Great 8”—that manufacturers are more likely to adopt, and both the 2019 and the 2020 study highlight the adoption levels.

The benefits of smart manufacturing ecosystem participation

Ecosystems can help facilitate a more rapid digital transformation, providing near-term growth and strategic long-term benefits to companies. And these ecosystems could even have a direct impact on financial performance.

Many manufacturers measure the value their ecosystem partners provide is by using productivity- or efficiency-related metrics. However, the top two benefits surveyed manufacturers report overall from having an ecosystem of partners and alliances for smart manufacturing production are “increasing the pace of new products/services delivery” and “increased revenue from products/ services.” Last on the list is “reducing operational costs through greater efficiencies.”

As manufacturers advance toward their broader digital transformation specifically through smart manufacturing initiatives, ecosystems can make a significant difference in the speed and scale of their efforts. In particular, when manufacturers engage their network partners to solve for specific business challenges or opportunities, they can make better progress.

Manufacturing respondents who lead with an ecosystem approach to smart manufacturing are more than twice as likely to find value through the additional connections or capabilities their partners bring.

Characteristics of a mature ecosystem approach

As most manufacturers are still largely working toward fully realized ecosystems for smart manufacturing, survey respondents have a somewhat nuanced view of where they currently sit along their ecosystem journey. Deloitte has identified five characteristics of a typical fully mature ecosystem approach. These are: connected everything, holistic decision-making, accelerated time to value, "always on" agility and turnkey solutions.

Challenges and risks can complicate ecosystem development

Creating an ecosystem for smart manufacturing initiatives isn’t easy. There are many factors below that could hinder manufacturing organizations’ efforts to connect with a broader network to advance their key smart manufacturing initiatives.

• Ecosystem coordination can be complex. Deloitte suggested that consider choosing a “convener” from your ecosystem partners to help coordinate the efforts across multiple vendors. Align this convener with your executive team or the smart factory champion that is driving the smart manufacturing strategy to ensure coordination and align both scope and timelines.
• Data protection and cybersecurity are top of mind. Deloitte suggested that because of the increased risk that many manufacturers are facing in the digital realm, it should be considered critical that companies develop and implement a cybersecurity plan for any activities that involve connecting plant assets (machines and people) beyond the physical building.
• Intellectual property theft is a top concern. Interviewed executives stressed the importance of performing due diligence on potential partners and consulting legal advisors to ensure any agreements protect the IP that will be shared among partners.
• Skills and capabilities vary across factory footprint. Deloitte suggested that create a corporate-level strategy for smart manufacturing initiatives that includes standardized approaches to key capabilities and identify “vetted” ecosystem partners across regions that can be ready to help at a pace commensurate with each location.

The ecosystem approach works, but it’s not easy to adopt. It generally requires a deliberate effort that involves executive commitment to smart manufacturing, an organizing strategy, intentional partners chosen to enable or provide specific benefits, and ongoing cultivation of the relationships and their shared objectives.