Auto Industry Leads In Digital-Transformation Investments
Other big-spending manufacturing sectors on digital transformation include electronics, whose outlays on digitization ABI projected to climb from about $95 billion this year to nearly $150 billion annually by 2030.
Khodrocar - The auto industry is leading major sectors of manufacturing that are embracing digital transformation for their own reasons and at different paces. The global automotive sector has become the biggest spender on digital transformation, ABI Research’s latest study found, forecasting that the industry will invest nearly $100 billion this year and more than $238 billion annually by 2030 in its transformation to electric vehicles from internal-combustion powertrains.
Automakers need software to design new types of vehicles and work with Tier One parts suppliers to assure performance requirements and the demands of mass customization, while the OEMS will need to transition production to the new types of vehicles without harming production volumes, ABI said.
Meanwhile, automakers are bringing some best practices to bear that have become common across manufacturing as they sink hundreds of billions of dollars into their operations in order to optimize new technologies under what’s become known as Industry 4.0. The best approaches across verticals include a crawl-walk-run strategy on digital simulations of supply chains and factory operations, a focus on helping scarce labor make the most of industrial automation, and the possibility of "reshoring” operations hand in hand with greater digital investments.
"There’s a shift in the way the market is thinking about [digital] solutions, and it really is a solutions-first approach,” Ryan Martin, industrial and manufacturing markets research director at ABI Research, told me. "You figure out the problem and the solution first, and then the technology to support that.”
Other big-spending manufacturing sectors on digital transformation include electronics, whose outlays on digitization ABI projected to climb from about $95 billion this year to nearly $150 billion annually by 2030. These companies must invest in machine learning to maintain levels of manufacturing sophistication and quality.
The oil and gas industry, while facing existential threats over the long term, must meanwhile invest in digital monitoring technologies and cybersecurity measures. Such spending will amount to about $9 billion this year, ABI Projected, and more than $14 billion a year in 2030 despite the industry’s substantial headwinds.
A fourth major sector involved in digital transformation, fast-moving consumer goods, faces pressures from unreliable and opaque supply chains, retailers reluctant to pass on price increases, and ESG-related demands. Such needs are translating to spending of about $7 billion on digital transformation this year, projected by ABI to rise to about $23 billion annually by 2030.
As manufacturers in each of these sectors act, Martin said, they can learn from practices that already have been shaping companies’ best responses to the demands and opportunities for digital transformation. They include wading into digital simulation and resisting the impulse to construct a complete factory "digital twin” before moving foward with investments; erecting "lighthouse” projects that can "demonstrate wins, drive alignment and that you can build on”; and "focusing on people” with digital-transformation investments.
"What are you doing to actually help the people who are using these solutions?” Martin said. "Are you saving them time? All savings can be quantified in terms of business value, but what about the people being supported? Champion their buy-in, and you’re going to derive benefits over time.”
Automakers need software to design new types of vehicles and work with Tier One parts suppliers to assure performance requirements and the demands of mass customization, while the OEMS will need to transition production to the new types of vehicles without harming production volumes, ABI said.
Meanwhile, automakers are bringing some best practices to bear that have become common across manufacturing as they sink hundreds of billions of dollars into their operations in order to optimize new technologies under what’s become known as Industry 4.0. The best approaches across verticals include a crawl-walk-run strategy on digital simulations of supply chains and factory operations, a focus on helping scarce labor make the most of industrial automation, and the possibility of "reshoring” operations hand in hand with greater digital investments.
"There’s a shift in the way the market is thinking about [digital] solutions, and it really is a solutions-first approach,” Ryan Martin, industrial and manufacturing markets research director at ABI Research, told me. "You figure out the problem and the solution first, and then the technology to support that.”
Other big-spending manufacturing sectors on digital transformation include electronics, whose outlays on digitization ABI projected to climb from about $95 billion this year to nearly $150 billion annually by 2030. These companies must invest in machine learning to maintain levels of manufacturing sophistication and quality.
The oil and gas industry, while facing existential threats over the long term, must meanwhile invest in digital monitoring technologies and cybersecurity measures. Such spending will amount to about $9 billion this year, ABI Projected, and more than $14 billion a year in 2030 despite the industry’s substantial headwinds.
A fourth major sector involved in digital transformation, fast-moving consumer goods, faces pressures from unreliable and opaque supply chains, retailers reluctant to pass on price increases, and ESG-related demands. Such needs are translating to spending of about $7 billion on digital transformation this year, projected by ABI to rise to about $23 billion annually by 2030.
As manufacturers in each of these sectors act, Martin said, they can learn from practices that already have been shaping companies’ best responses to the demands and opportunities for digital transformation. They include wading into digital simulation and resisting the impulse to construct a complete factory "digital twin” before moving foward with investments; erecting "lighthouse” projects that can "demonstrate wins, drive alignment and that you can build on”; and "focusing on people” with digital-transformation investments.
"What are you doing to actually help the people who are using these solutions?” Martin said. "Are you saving them time? All savings can be quantified in terms of business value, but what about the people being supported? Champion their buy-in, and you’re going to derive benefits over time.”
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