Prioritize to Thrive: M4.0 as Recession Antidote
Technology investments can help manufacturers fuel growth as economic headwinds build.
Manufacturers have long known about the benefits of investing in Industry 4.0 improvements. As economic headwinds build, business leaders face a difficult choice about how to prioritize capital investments. In many cases, costly, long-term projects will be put on the backburner in favor of quick wins that can deliver a rapid return on investment.
At the same time, challenges related to supply chain disruption, labor shortages and heightened customer expectations persist. Industry 4.0 initiatives can help address those challenges, but organizations will need to prioritize spending as economic uncertainty constrains investment.
Supporting strategic business goals can be a guiding principle for how to prioritize investments. Digital strategy is a component of business strategy, and Industry 4.0 projects need to align with broader business objectives. Rather than being a technology exercise, digital initiatives should be business enablers that are tied to enabling competitive advantages or addressing tactical needs.
As recessionary pressures squeeze manufacturers, many businesses respond by looking to optimize costs and scale back investment, but it’s critical to seek targeted efficiencies and not undercut key areas that support revenue generation, revenue protection and competitive advantage. Now is the time to adapt and make the strategic adjustments necessary to support the business and set it up for growth when market conditions improve.
On the revenue side, more automation and Industry 4.0 maturity leads to better decision making. It enables better visibility into the business and potentially spotlight cross-silo KPIs. Your processes likely extend across multiple companies and include vendors and other partners, some of which operate in the cloud and others on-premises. Digital maturity can enable cross-company KPIs to build end-to-end visibility. Better information yields better decisions that can unlock strategic value, and Industry 4.0 is the key.
Planning Beyond the Downturn
Competitive advantage hinges on the ability to access data about your business and your customers. Companies that have a higher degree of Industry 4.0 maturity will be in a stronger position for enduring recessionary pressures and workforce challenges. They can access better insights about the business and make better decisions for the short and long terms, enabling a swifter exit from any downturn and a recovery at a higher velocity. By prioritizing Industry 4.0 investments to align with strategic business priorities, manufacturers can focus available resources on the highest value activities, maximize the short-term ROI they can achieve, and enhance future readiness. M
About the authors:
Maurice Liddell is a BDO Digital Market Leader, Manufacturing, with BDO USA LLP.
Dimitrios Vilaetis is a Managing Director, Management Advisory Services, with BDO USA LLP.
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