Manufacturing a Future-Proofed Organization

The manufacturing industry has made tremendous progress in moving its infrastructure, applications, and analytics to the cloud. However, the industry is only average in terms of its current state of analytics and above average in the current state of digitalization when it comes to digital and business transformation. This indicates that the industry must look to increase analytics spending and build a clear roadmap for creating a future-proofed transformation strategy.

To catch up with its biggest potential disruptor, the tech industry, manufacturers must continue to accelerate their analytics capabilities. Our data shows that future encroachment by the tech industry has potential to disrupt the value propositions of the industry as these companies are among the highest investors in analytics.

>Digital Transformation in a Highly Competitive Market

Top Concerns for CEOs in the Manufacturing Industry

While transformation through analytics will help the manufacturing industry mitigate the risks of encroachment by tech, CEOs will first need to address these top 5 concerns to keep momentum moving forward.

Regulatory and Compliance Issues

Regulatory and Compliance Issues

For manufacturing CEOs operating in multiple countries and jurisdictions, it is increasingly important to be compliant across international markets. If CEOs fail to ensure their organization is meeting compliance requirements, it can be held accountable for compliance breaches, often resulting in a hefty fine. Compliance must be woven into business operations at every level to ensure regulatory requirements are meeting the guidelines set forth by the FDA, EPA, SEC, and others.

Mergers and Acquisitions

Mergers and Acquisitions

The manufacturing industry is reassessing their strategies and are looking to mergers and acquisition to realign their portfolios in order to create value. While the prospects of mergers and acquisitions may seem exciting to provide faster returns and expansion into new sectors, CEOs will have to remain disciplined to ensure the deal works out in their favor.

Talent Acquisition

Talent Acquisition

Companies are breaking from traditional learning methods as they explore innovative approaches to address the increasing talent and skill gaps. While automation is helping to fill many roles in the manufacturing industry, CEOs will need to adopt new education models if they are to recruit and upskill a more technology-savvy workforce.

Changing Business Models

Changing Business Models

Evolving customer experience and new entrants have intensified competition in the manufacturing sector as they threaten to disrupt existing business models. CEOs will need to adopt a data-driven culture to create new product and service offerings and improve customer relationships by reinventing their direct-to-consumer models.

New Supply Chains

New Supply Chains

The pandemic has presented significant challenges for manufacturing supply chains globally. Staff shortages, increased product demands, and skyrocketing commodity prices have led many organizations to seek out autonomizing their operations to increase supply chain resiliency. CEOs will have to seek out investments in supply chain technologies like AI and robotic process automation — while retraining and reskilling employees — if they are to meet up with consumer demand.

Pace of Digitalization in the Manufacturing Industry

The manufacturing industry is moving at average speed in all aspects of digital transformation. High Tech, in addition to leveraging the speed of cloud in provisioning, has dramatically altered its new product development cycles through Agile, CICD, and DevOps. This gives tech a disproportionate acceleration in launching new products and services. It also influences the customer-focused and the disruptive nature of these companies.

While the manufacturing industry is realizing product/service launch acceleration as benefits from the initial cloud infrastructure investments, the industry must continue to increase their infrastructure investments to reduce related costs at an enterprise level.

CIOs in the manufacturing industry must aggressively accelerate their spending on digital technologies, especially cloud and analytics to lower costs, better understand customers, products/services, and loss/damage patterns by segment and geography.

CIOs strategies should revolve around forecasting demand, improving product development through customer-generated inputs, supply chain improvement, stock keeping, and customer awareness. Collaborating with partners like suppliers, transporters, digital media, and sales partners are equally important to provide customers the connected experience they require.

The Most Successful Digital Transformations Are Powered by Analytics Capabilities

Our benchmarking services are powered by over 1.5 million data points in addition to our primary research and data collection capabilities. With access to leaders across more than 40,000 companies in various size segments, industries, and geographic locations, we can quickly gather additional data to address how your business is performing against the competition.

A graph showing which industries are investing the most in digitalization.

Source: Trasers

Data analyzed in this report comes from 4,000+ responses. For the manufacturing industry, data from 505 companies have been used.

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Disruptive Technologies in the Manufacturing Industry

With manufacturers trying to keep pace with consumer demand for high-quality products, companies must adopt data-driven technologies. This includes leveraging artificial intelligence (AI), augmented and virtual reality (AR and VR), 3D printing, and industrial internet of things (IIoT).

The areas of progress in conjunction with foundations of these technologies will improve production process through tracking and automation, while focusing on increasing throughput as well as output. Keep in mind, their use only scales when a strong technology foundation is laid — otherwise, new technology investments will be limited to specific initiatives.

Only 7% of Companies Are Delivering on Their Transformational Initiatives

Our research has shown that 30% of companies will fail to survive this decade due to an inability to evolve digitally. To address this negative trend, we have developed the Digital Enterprise Evolution Model™ (DEEM).

Digital Enterprise Evolution Model™

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DEEM allows our clients to recognize digital evolution patterns, implement benchmarking and prioritization strategies, and initiate application management protocols to satisfy stakeholder and market requirements.

Lack of Investment in IIoT in the Manufacturing Industry

Industrial internet of things (IIOT) is still not a priority for the manufacturing industry. Only 8% of the organizations in the manufacturing industry do not consider cloud for IIoT applications as a priority, and only 19% of the organizations are in the business case/justification stage.

With a stronger demand for customization, increasing customer expectations, and the growing complexity of the international supply chain — manufacturers need to take a serious look at IIoT to find more innovative ways to remain competitive.

IIoT can help manufacturers to maximize their business value through cost reduction, shorter time-to-market, production uptime, improved safety, and enhanced customization of manufacturing operations. By leveraging IIoT data, manufacturers can improve demand forecasting, gain a better understanding of the supply chain processes, and enhance the overall customer experience.

Human Capital Management (HCM) Among Manufacturing Companies

Manufacturing leaders plan significant future investments in advanced analytics for procurement service management and human capital. While most digital transformations across these two groups are reactions to competitive or customer-driven actions, predictive analytics will determine how, when, and to what extent to transform in the future.

By adopting cloud-based human capital management platforms to deliver analytics, manufacturers will not only be able to improve the employee experience but also leverage operational metrics to help stakeholders better understand employee contributions.

This will help manufacturers realize the urgency of upskilling and addressing the skill gap of their workforce. Additionally, leaders will recognize the requirement to transform employee learning functions and build new capabilities to attract, onboard, and retain employees.

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