As manufacturers look to recover post-recession, accepting that IT complexity is here to stay and managing it accordingly will be essential to success.
According to a recent survey of global CEOs conducted by IBM, the number one issue for executives in 2011 is complexity. No surprise there, you might think; dealing with increasingly complex, integrated and multifaceted supply chains, systems and operating processes has been a concern to C-suites everywhere for a number of years now, and manufacturing is certainly no exception.
However, what is different about the findings from this latest survey is that the language has changed: rather than talking in terms of reducing complexity, CEOs are now talking about how to transform it into an opportunity to gain a competitive edge. And as such, 'capitalising on complexity' has been earmarked by research firm IDC as one of the key manufacturing trends for 2011.
Bob Parker, Group VP of Research for IDC Manufacturing Insights, believes this shift in mindset will be critical in separating the winners and losers over the next few years. "Within the industry there is a recognition that complexity is a fact of life," he explains. "Our big prediction for 2011 is that manufacturers will launch initiatives to better deal with complexity for competitive advantage."
Managing complex supply chains is just one example of where companies can benefit. "In recent years we've seen progression from low-cost country sourcing to what we call profitable proximity getting the supply close to the demand," says Parker. "And while that has worked out well for manufacturers in terms of cost, it has also created complexity in how they manage their supply chains; dealing with the incredible amount of volatility in the materials market has also added to this. Bringing supply chain complexity under control is one key area manufacturers will look to gain an edge."
Continuing the theme of complexity, improved product lifecycle management is another area where IDC predicts manufacturers will look to capitalise. "Think about the nature of the products we buy today, the electronics and software that goes into them," continues Parker. "Your automobile alone has as many as 1200 computers in it. So design and product lifecycle management will be another key area in terms of managing complexity for competitive advantage in 2011."
Such an approach will be key for manufacturers looking to recover in a still volatile post-recession environment. Many companies have taken the opportunity afforded by the downturn to get to grips with complexity, cleaning up portfolios and reducing the variance of products. But while this has had limited success, there is a growing realisation that, to stay competitive, the capability to embrace and manage complexity must be enhanced.
"The consensus among manufacturing executives is that recovery is under way, but a considerable amount of uncertainty exists regarding the degree and speed of that recovery," concludes Parker. "Manufacturing companies are creating competitive advantage by better managing complexity while better responding to volatility and this is generally very good news for IT markets, since IT is where we go to deal with that type of thing."
Managing complex manufacturing and IT environments is an issue that will be top of the agenda at the Next Generation Manufacturing Europe Summit 2011, which takes place from 20-22 September in Vienna, Austria. This closed-door summit, hosted by GDS International and featuring insight from Bob Parker's IDC Manufacturing Insights team, will bring together some of the leading voices in the European manufacturing sector, including Brian Chesterman, Global Head of Supply Chain Management at BP; Gerald Weber, EVP Operations at Airbus; and Ton Guerts, Chief Procurement Officer at AkzoNobel.
Along with how to implement the right technology decisions for managing complexity, other key topics for discussion include streamlining the supply chain, smart manufacturing, operational excellence, the business case for green manufacturing, and improving collaboration between IT, process automation vendors and customers.
Next Generation Manufacturing Europe Summit 2011 is an exclusive C-level event reserved for 100 participants that includes expert workshops, facilitated roundtables, peer-to-peer networks and co-ordinated meetings.