Indian Manufacturing Industry yet to reach its Tipping Point!

Manufacturing has emerged as one of the high growth sectors in India. India is expected to become the fifth largest manufacturing country in the world by the end of the year 2020. With a strong focus shown by the government towards enhancing the manufacturing sector of India with an ambitious goal of increasing the industry GDP from 16% to 25% by 2020, we have the opportunity to reenergize this sector, taking it to the next level of efficiency and competitiveness.

India is becoming one of the most attractive destinations for investments in the manufacturing sector, thanks to the Government of India’s various initiatives directed to flourish this sector. The programs of the Government like Make in India, initiatives like enhanced “Strategic Partnership” model, ease of doing business actions, etc. would undoubtedly enable the manufacturing sector to grow in the future.

In the last couple of years, we have seen the manufacturing sector undergo a massive change, from robotics to mass automation, to the creation of the 3D Printer, innovative technologies and approaches continually disrupting the manufacturing industry globally. And therefore, to stay competitive, manufacturers ought to be demand-oriented and adapt to dynamic new business models with the aid of real-time monitoring and smart insights to optimize production.

In today’s globalized world, Data is a matter of survival, and no leader can afford to ignore it. The manufacturing industry is no exception. With data growing at whopping 30% year on year, it is becoming the common element in all functions of manufacturing leading to ‘Data-Driven Manufacturing.’

Data-Driven Manufacturing essentially means using the ‘information’ in this data wisely to make decisions that will allow organizations to orchestrate process and business optimizations (to increase the ‘Bottom-line’), and to create new business offerings or value-add services for their customers (increase the ‘Top-line).

Organizations today have petabytes of raw data which can be gleaned with powerful and sophisticated analytics tools to gain insights that can improve not only operational performance but also create new business/market opportunities. More profoundly, the organization’s decisions no longer have to be made based on gut instinct; using big data and analytics decisions can be based on real-time situation analysis, evidence, and accurate forecasts.

Our recent study on the Indian Manufacturing industry shows that handful of organizations today are leading the data revolution by digitally transforming themselves – so-called ‘Digital Leaders’ to achieve higher efficiency and throughput, quantifiably outperforming their counterparts who are taking a wait-and-watch approach – so-called ‘Digital Laggards’ (and may even become obsolete) in this rapidly digitalizing world.

Digital Maturity of Indian Manufacturing Industry

Manufacturing companies have traditionally been slow to react to the advent of digital technologies. While 5% of the manufacturing companies have made rapid advances in deriving significant benefits from Data-Driven decision making, but the number is still small. From the recent survey,    83% of the industry lies in the ‘Digitization’ phase and is yet to reach the ‘Tipping point’ for ‘Digital Transformation’ – which only commences after the Process Digitalization stage.

Digital Journey

Based on the study, we believe that the manufacturing companies will need to adopt a systematic methodology to assess their digital advancement across the value chain and operation model. The assessment framework will directly support the discovery of opportunities of digitalization, and subsequently, aid in creating and importantly implementing actionable Digital Advancement plans to jump to the next stages of Digital Transformation journey. To assess their position in the transition & measure the ‘Digital Maturity’ of their organization, GS Lab has coined a systematic methodology for the Manufacturing Industry – Digital Advancement Score (MIDAS).

In summary, it is essential to not see Digital Transformation as a quick-fix solution within the rigorous manufacturing processes and resources, but to distinguish it as a long-term commitment to changing organizational behavior, operations of an organization to reap full benefits from the digital journey.

As we took stock of the progress that has been made over the past several years during our recent study on the manufacturing companies in Pune (Maharashtra, India), we now see that these companies are placing big bets on big data and analytics. But adapting to an era of more Data-Driven decision making has not always proven to be a simple proposition for the organization. Many companies are struggling to develop unified processes, integrate existing systems for a unified view of the organization and organizational muscle to capture real value from data in real time. Developing easy to adopt data strategies to attain real and visible business value is becoming a matter of urgency, to help improve productivity, operational excellence while improving the bottom line.