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Manufacturing trend predictions for 2018 and beyond

23 February 2018

Sean Riley, global industry director for manufacturing and transportation at Software AG, offers his predictions on key manufacturing trends for the coming years.

As manufacturers are now aggressively pursuing digital transformation to allow them to compete and win in their marketplace.

In 2018, manufacturers will ramp up this transformation in order to embrace new technologies that have the potential to change the industrial landscape. I predict the following five key trends.  

Enabling the future: Digital platforms will become a central focus and a key enabler of new customer experiences and value chain efficiencies. Integrating digital platforms into the underlying systems of record will continue to be a focus, as will security. They will, however, start to be used in earnest to unlock new value. These digital platforms will be used by both the enterprise value chain and the extended supply chain and will be critical hubs for the incorporation of key emerging technologies, such as 3D printing, blockchain and IoT-enabled products.  

Easy ways to pay: IT and value chain execution efficiency will be used to fund transformation. The initial financial outlays for digital transformation may seem steep; but the costs associated with not transforming are detrimental to your business. Chief Information Officer’s (CIO’s) will begin to work with both existing CEO’s and newly appointed CDOs (Chief Digital Officers) to ensure value chain processes are aligned to strategy - and that applications directly support these requirements.   

This will not completely fund the costs of digital transformation; but it will release 10% to 20% of IT application costs and allow a similar figure of enterprise resources to be redirected to the new digital groups from other areas of the business.  

Legacy is not bad: Legacy applications will be a necessary part of digital transformation. Not all legacies are bad. Valuable processes, business logic, data stores, and digital histories exist within legacy systems.

Manufacturers will realise this in spades in 2018 as they look to replace aging applications with agile or nimble apps. Methodologies like microservices and DevOps (a software engineering culture and practice that aims at unifying software development and software operation) will combine with bi-modal IT efforts in order to speed up digital transformation.

IIoT gets smart: Smart manufacturing will drive manufacturers to new heights. The industrial internet of things (IIoT) has made it possible for manufacturers to smarten up and almost every manufacturer has now introduced smart manufacturing concepts and technologies to a plant or even a single production zone. However, most manufacturers have not yet fully scaled smart technologies globally. 

In 2018, enterprises will expand their smart manufacturing practices and will move from small or single plant deployments to these practices becoming standard global practices. While predictive maintenance and energy management are typically the first initiatives pursued, industry will see a greater focus on more complicated initiatives, such as in-line predictive production quality, that require complex algorithms and generate even greater benefits.  

These AI-oriented implementations add new ‘smarts’ to processes and offer benefits like faster cycle times, improved quality, zero downtime operations, lights-out manufacturing and labour cost savings.  

The price is not right, yet: Connected products and services won’t be used to drive outcome-based pricing for most manufacturing segments... yet.

While medical devices and pharmaceutical companies may be moving to an outcome-based pricing model (whether they want to or not), purchasers of industrial equipment will still need to make capital expenditures for new equipment; they cannot yet rely on operating expenditures to fund new equipment acquisitions. 

While the outcomes-based subscription model concept continues to be contemplated and is predicted to be an outcome of connected products, the company that is typically used as a model -GE, has not yet seen its market share grow or its stock price increase. This will cause most companies to continue to examine the feasibility, but not implement the practice in the near term.

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