As an industry, manufacturing is "hot." Regions are creating manufacturing initiatives, countries are creating policies to lure manufacturing back and prepare the next generation of talent, maker fairs show entrepreneurs and small-scale artisans how they too can design and manufacture their own products.

What manufacturers sell goes well beyond the 100-year-old recipe and the mechanical drawings, and new technologies are changing the economies of scale so that large- and small-scale value chains can be successful.

Worldwide manufacturers will spend an estimated $323 billion on external IT expenditures, according to Pivot Table: Worldwide Manufacturing IT Spending Guide, Version 2, 2013–2018 (IDC Manufacturing Insights #MI255786, April 2015). All of this change means that IT is increasingly an integral part of manufacturing’s success and we’re on our way to a digital transformation.

Our predictions span topics that are relevant across the entire company, in the plant operations, engineering and R&D, supply chain planning and execution, and service delivery. Key themes relate to customer engagement and customer service, supply chain modernization to support evolving market requirements and manufacturers’ “need for speed,” the fundamental nature of innovation in processes, products, and services, and the fact is it isn’t enough just to have technology — companies must work to create value from their investments and have the right talent. And most importantly, the rapid adoption of new technologies and innovation accelerators is changing business models.

Our 2016 predictions are:

1: The Impact of Customer Centricity: By the End of 2017, Those
Manufacturers That Have Leveraged Customer-Centricity Investments Will
Gain Market Share Growth in the Range of 2–3 Percentage Points

2: Global Standards for Global Manufacturers: In 2016, 90% of
Manufacturers Will Impose Their Global Standards on All Operations,
Including Outsourced Operations and Suppliers, to Decrease Risk and
Increase Market Opportunities

3: Value Realization: By the End of 2016, 65% of Manufacturers Will Have
Metrics in Place to Evaluate and Drive Pervasive Changes in the Workplace
with Their New Technology Investments

4: Building on IoT enabled Products and Processes: By 2019, 75% of
Manufacturing Value Chains Will Undergo an Operating Model Transformation
with Digitally Connected Processes That Improve Responsiveness and
Productivity by 15%

5: Redefining Modern Supply Chain Logistics: By 2019, 50% of
Manufacturers Will Have Modernized Their Logistics Network to Leverage 3D
Printing, Robotics, and Cognitive Computing to Support Innovative
Postponement Strategies

6: The Decline of Short Term Forecasting: By the End of 2019,
Enterprisewide Improvements in Resiliency and Visibility Will Render Short-
Term Forecasting Moot for 50% of All Consumer Products Manufacturers and
25% of All Others

7: Enterprise Quality via the Product Innovation Platform: By 2018,
60% of Top 100 Global Manufacturers Will Be Using a Product Innovation
Platform Approach to Drive Enterprise Quality Throughout the Product and
Service Life Cycles

8: The Digital Twin: By 2017, 40% of Large Manufacturers Will Use Virtual
Simulation to Model Their Products, Manufacturing Processes, and Service
Delivery to Optimize Product and Service Innovation

9: Smart Manufacturing with Cloud, Mobile, and Big Data and
By the End of 2017, 50% of Manufacturers Will Exploit the
Synergy of Cloud, Mobility, and Advanced Analytics to Facilitate Innovative,
Integrated Ways of Working on the Shop Floor

10: IT Transformation for Digitally Executed Manufacturing: In 2016,
20% of Manufacturers Will Begin to Break Down Organizational Silos,
Reshape IT Portfolios, and Import New IT Talent in the Plant for Digitally
Executed Manufacturing

IDC Manufacturing Insights believes that new technologies and enhancements are necessary to achieve the digital transformation required for the next generation of manufacturing. Manufacturers must review their current application portfolio; modernize processes in the back office and the plant, and in all aspects of the value chain upstream and downstream; and upgrade their decision-making capabilities.

Consider the following to ensure you maximize the value from current and future technology investments:

  • Help your IT talent learn new technologies and better understand the needs of their business customers.
  • Ensure that IT and line of business are collaborating as true partners in the selection and implementation of new technology.
  • Consider how your investments in IT and operational technologies can lead to business transformation, not just incremental improvements.
  • Look to your employees and customers for innovative ideas for the use of new technology and best practices in terms of implementation and use.
  • Work with partners to accelerate your IT capabilities and serve the line of business. As you embed more technology in how you operate, external resources and expertise can help you move quickly and effectively.

2016 promises to be an exciting year for those manufacturers that can move forward on their digital transformation journey.

About Kimberly Knickle
As a research vice president, Kimberly Knickle is responsible for research and analysis of business and IT issues for manufacturers. She leads the IT Priorities & Strategies program, which focuses on hot topics that are changing the way manufacturers buy and use IT, such as big data and analytics, cloud, IoT, mobility, social, and sustainability. The program also includes research based on IDC survey data related to manufacturers’ IT investment priorities and plans. Knickle also manages the Product Innovation, Service Innovation, and Connected Products research.

Prior to joining IDC in 2006, Ms. Knickle served as an independent consultant specializing in business and information technology (IT) strategy and held senior positions at industry analyst firms including AMR Research, Hurwitz Group, Inc., and Charles River Strategies. Ms. Knickle contributes regularly to the IDC Manufacturing Insights Community (https://idc-community.com/manufacturing) and tweets (@kimknickle) about business issues relevant to manufacturers.


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