The manufacturing industry is falling behind in ICT investment

Manufacturing might hit a wall when it discovers the cost of implementing new technologies says Arthur Goldstuck.

On 28 August, Syspro and World Wide Worx released The Mobile Corporation Study, which investigates how mobile technologies have transformed various industries. 

The study specifically highlights how manufacturing differs from the rest of the enterprises market. 

The study looked at corporates’ biggest ICT expenditures in the last 12 months. The single biggest category was enterprise resource planning (ERP software) at 34 percent. Hardware and “other” came after that. 
 
“What our survey found was that ‘other’ represents the extent of niche investments, but also a wide range of investments in ICT. It tends to indicate the unfocused approach to ICT if your biggest expenditure is not one of the major categories of ICT. That’s fine if it’s one or two companies which focus on specialist needs, but when you see that across an entire industry, you get the picture of unfocused spending on ICT,” World Wide Worx founder Arthur Goldstuck said.

When looking at the expenditure from the manufacturing industry’s perspective versus the other industries, the survey found that manufacturing is a little bit behind the rest of the industries in terms of ERP, hardware and machinery, and customer relationship management. 

“You would expect manufacturing to be more focused or more intensely invested in hardware specifically, but the cue lies in the others, and that again, is where you see the unfocused nature of unfocused spending in the manufacturing spending,” Arthur said. 

The study also looked at the most important factor in selecting a technology. The most important factor used to be quality, then availability and then price. Now, pricing is rising to first place. 

“This is an indication of how the economy has become a tough operating environment where cost becomes a critical factor. Cost control is becoming one of the key strategies in the enterprise market,” Arthur said 

For every single factor in selecting a technology, manufacturing fell behind other industries. According to Arthur, this shows that “they are trying to keep the lights on rather than looking for a true competitive advantage.” 

The high-tech capabilities factor stood out the most with the biggest gap between manufacturing and other industries. “Again, it emphasises the extent to which the manufacturing sector has fallen behind the high tech curb,” Arthur said. “They’re not focused on being technologically advanced. It is still an industry that is sticking to what it knows as opposed to what is coming next.” 

Arthur believes that is the flaw in the government vision of the fourth industrial revolution because manufacturing is at the heart of the vision for 4IR, but he says it’s clear that manufacturing is not on board with regards to this revolution. 

In terms of essential software in companies, manufacturing is well ahead of other industries in ERP software and CRM software. When it comes to accounting software, business intelligence and analytics software and procurement and supplier management software, manufacturing fell behind. 

“In manufacturing you really do need to understand what is happening in the business. So they might regard ERP as more important, but they’re not yet integrating it effectively into business intelligence,” Arthur said. 

When asked which technology companies will use in the next 24 months to remain competitive, manufacturing was ahead in AR/VR, AI and machine learning, robotics and blockchain. They fell behind in IoT. 

“You expect IoT to be used extensively in the manufacturing sector and the various processes, but the reason it because IoT is still a vehicle-based technology in South Africa, so its the manufacturing sector that hasn’t quite honed the full benefits of using IoT to monitor the production line, for example,” says Arthur.  

“So there’s an interesting conundrum here because, if you look at budgeting priorities, the manufacturing sector is behind, but when you look at the intentions of using emerging technologies, it tends to be higher,” Arthur said. “So what we’re probably going to see in the next 12 to 24 months is the sector hitting a wall when they discover the cost of implementing these technologies because of the lack of skills.” 

The entire study shows that the manufacturing sector needs to embrace the emerging technologies in order to meet the demands that are going to be made by the government and general customer base to catch up to the 4IR.