North American Manufacturers Go Digital to Navigate Changes
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Insights
The emphasis on smart manufacturing, supply chain improvements and aftermarket services as detailed in the ISG Provider Lens report reflects a strategic pivot for industrial companies in North America. The integration of digital twins, automation and IT/OT/ET collaboration points to a significant investment in Industry 4.0 technologies, which is expected to enhance operational efficiency and create competitive advantages. The report suggests that companies are proactively addressing inflation and supply chain vulnerabilities by leveraging technology to improve productivity, reduce costs and build resilience.
From a market analysis perspective, the shift towards these advanced technologies is likely to drive demand for specialized IT services and increase the market share of companies that can provide comprehensive solutions across the manufacturing value chain. This trend may also influence stock valuations of companies within the technology and industrial sectors, as investors may look favorably upon firms that demonstrate robust adaptation to these emerging paradigms.
The report's findings on supply chain diversification, including in-house manufacturing and nearshoring to Latin America, highlight a strategic response to the recent supply chain disruptions. This approach not only mitigates risks associated with geopolitical conflicts but also responds to the challenges posed by the COVID-19 pandemic. By diversifying supply chains, companies are aiming to reduce dependencies on single sources and geographic areas, thereby enhancing their ability to maintain steady production despite external shocks.
The integration of digital twins into supply chain management is particularly noteworthy, as it allows for simulation and optimization of manufacturing processes and supply chains, potentially leading to reduced lead times and improved inventory management. For stakeholders, this could mean more resilient operations and possibly improved margins due to increased efficiency.
The report's insights into the growing adoption of digital twins and the management challenges associated with them underscore the importance of technological innovation in manufacturing. Digital twins serve as a bridge between physical and virtual worlds, enabling companies to test and optimize designs and processes before physical implementation. This capability is crucial for agile product development and can significantly shorten product development cycles.
Furthermore, the emergence of service-based business models like subscription, pay-per-use and as-a-service offerings represent a transformative shift in how manufacturers approach revenue generation. This shift is facilitated by advancements in data analytics and connectivity, allowing for ongoing product monitoring and support. The implications for business include not only diversified revenue streams but also enhanced customer engagement and retention.
Automation, digital twins, supply chain diversification help companies thrive despite ongoing disruptions, ISG Provider Lens™ report says
The 2023 ISG Provider Lens™ Manufacturing Industry Services and Solutions report for
“The plants of the future will be connected, digitally enabled factories that revolutionize the whole manufacturing ecosystem,” said Bob Krohn, ISG partner, Manufacturing. “Companies will profoundly benefit from access to more data, extracted from more parts of the value chain and delivered faster than ever.”
North American firms are leading adopters of smart manufacturing, a set of innovations that enable shop floor digitalization, automation and asset management, and of new data-driven capabilities such as real-time demand forecasting, the report says. Companies are adding so much automation to systems that cooperation between IT and operational technology (OT) teams now includes engineering technology (ET) roles, making IT/OT/ET collaboration an essential strategy.
Digital twins — virtual recreations of processes and products — are becoming an increasingly important tool in both discrete and process manufacturing, ISG says. They enable companies to create better designs, optimize manufacturing processes and supply chains and accelerate engineering. Manufacturers and providers are now solving a growing digital-twin management challenge by closely integrating the simulations with product lifecycle management software.
As supply chains recover from disruptions caused by the COVID-19 pandemic, manufacturers now have better access to semiconductors and other components that had became scarce, the report says. However, geopolitical conflicts and other events are still affecting some supplies, leading some North American manufacturers to diversify their supply chains through in-house manufacturing and nearshoring to
In the face of growing manufacturing challenges, many firms are also diversifying their revenue streams by introducing service-based business models, such as subscription, pay-per-use and as-a-service, ISG says. Data and connectivity now enable companies to better monitor and support products after sale, opening up new revenue streams.
“Aftermarket services provide data that helps manufacturers understand how their products perform and are used by customers,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “This feeds back into product improvement and new product development.”
The report also explores other trends affecting North American manufacturers, including aging workforces and efforts to minimize the environmental impact of used products.
For more insights into manufacturers’ challenges and advice for addressing them, including how to partner with a provider to strengthen manufacturing resilience, see the ISG Provider Lens™ Focal Points briefing here.
The 2023 ISG Provider Lens™ Manufacturing Industry Services and Solutions report for
The report names Accenture, Capgemini, Cognizant, HCLTech, IBM Consulting, Infosys, TCS and Wipro as Leaders in all four quadrants. It names LTTS, NTT Data, PwC and Tech Mahindra as Leaders in two quadrants each. Akkodis, Harman DTS and LTIMindtree are named as Leaders in one quadrant each.
In addition, Akkodis, Genpact, Harman DTS and LTIMindtree are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.
The 2023 ISG Provider Lens™ Manufacturing Industry Services and Solutions report for
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across
A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in
View source version on businesswire.com: https://www.businesswire.com/news/home/20240116713224/en/
Will Thoretz, ISG
+1 203 517 3119
will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG
+1 978-518-4520
isg@matternow.com
Source: Information Services Group, Inc.
FAQ
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