Building a More Resilient Future for Manufacturing: Digitization’s Role in Sustainability, Efficiency & Risk Management

Summary

Today’s shortage economy is fueling change across industries. For manufacturers, this transformation is being driven by a need to strengthen supply chains–causing midsize manufacturers to evaluate their processes for measuring, managing, and improving business, especially through digitalization.
 
According to a recent SAP Insights study, 90% of manufacturing leaders see a positive relationship between their performance and their organization’s transformation, pointing to an evolving trend–manufacturers recognize the need for innovation in order to sustain the long-term health of their business. To ignite a revitalization across business processes, manufacturers are focusing in three key areas:

• Increasing sustainable products and services
• Implementing sustainable processes
• Expanding risk management beyond the traditional threats of the past.

Driving revenue with sustainable innovation

As manufacturers examine their organizational priorities for the next year, revenue growth remains the top priority. What’s shifting, however, is the strategy surrounding the creation and introduction of new products and services. Sustainability has emerged as the ticket to rising revenue, with leadership increasingly recognizing the importance of leaning into sustainability, both weaving it into internal processes and extending it across the business model.
 
Sustainability has become critical to ensuring competitive differentiation among midsized manufacturers, with 84% of consumers claiming sustainability is an important consideration when making a purchasing decision. As a result, one-third of manufacturing leaders are now prioritizing it in their products and services to improve revenue rates. The bottom line? Customer expectations have grown beyond receiving a desired product into ensuring they receive reliable experiences and outcomes from their purchases. Sustainability is here to stay as a critical component in growing revenue, efficiency and innovation–and manufacturers will either adapt or struggle to compete.
 

Leveraging automation for sustainable operations

Keeping sustainability top of mind is one thing, and successfully implementing sustainable processes is another. To seamlessly weave sustainability across the supply chain, manufacturers must consider new methods in optimizing their processes and resources. To do so, automation has risen to the forefront of priorities. Through automation, organizations are capable of valuable data insights that fuel increased efficiency and productivity at a level never before achieved.
 
According to SAP Insights, almost half (44%) of manufacturing leaders are considering process automation to improve efficiency, raising investment in digital tools that enable companies to reshape their warehouses and streamline how goods are sorted and shipped–ultimately strengthening their supply chains. This clear mindset shift toward innovation is transforming the industry and leading to significant digital adoption. Nearly 73% of the top technologies regarded as the most important for future improvements have been associated with digitalization. Through these advanced capabilities, manufacturers can build their flexibility and overall growth.
 

Re-evaluating risk management

The future of manufacturing is promising, with manufacturers implementing sustainable practices and automating for optimized efficiency. However, one final consideration can make or break a manufacturers’ level of resiliency–risk management. In today’s evolving landscape, risk management can no longer focus solely on overcoming competitors or new industry entrants. Threats are larger and more devastating than ever before. SAP Insights data shows that manufacturers’ focus is turning to threats surrounding supply chain fragility (49%), cyber-attacks (43%), and reducing reliance on scarce resources (41%) in order to reduce risk. Without shifting risk management processes to cover these growing challenges, organizations’ risk management efforts will provide little strategic value, drastically impacting their capabilities to prepare and respond with flexibility.
 
The time has come to re-evaluate manufacturing processes to suit modern day challenges. To compete and prepare for evolving risks, manufacturing leaders must innovate in ways that set a strong foundation for long-term business health. This has required a rethinking of approaches surrounding sustainability, sources of efficiency, and risk management. A transformed future of manufacturing is quickly approaching, and with heightened investment in solutions and technologies, manufacturers are setting the stage for a more competitive future.