In our highly connected business environment, stakeholders expect top-tier data and performance in the form of digital transformation. In fact, digital transformation is so pivotal and impactful that it holds the number-two spot on ASCM’s top 10 trends for 2023.
ABI Research recently took a deeper look at digital transformation trends across three key industries: automotive, oil and gas, and fast-moving consumer goods (FMCG). Following is a brief overview of how these industries are taking part in this essential trend.
Driving agility in automotive
Electric vehicle (EV) sales almost doubled in 2021, in many cases as a result of public policy and government incentives. For example, many European countries have banned internal combustion engine (ICE) vehicle sales after 2030. Between now and then, the market shares of electric and ICE vehicles remain hard to predict. Consumers will weigh fuel prices, government incentives, available EV charging, and vehicle range and affordability when deciding when to become an EV buyer. As a result, most original equipment manufacturers will offer consumers a choice of powertrains and will flex production to match demand on a market-by-market basis.
The Mercedes Factory 56 plant in Sindelfingen, Germany, is the pinnacle of what a smart automotive factory looks like. On the software side, the automaker integrates its roughly 30 passenger car plants around the globe via the Microsoft Cloud-based Mercedes MO360 Data Platform. This enables Mercedes supply chain managers to identify bottlenecks and proactively balance manufacturing workloads. Onsite, hundreds of automated guided vehicles (AGVs) deliver parts to a combination of ICE and electric vehicles produced on the same production line. Technicians outfitted with tablets and connected tools integrate with frontline operations, including the AGVs.
Fueling security and output in oil and gas
The oil and gas industry is under tremendous pressure to evolve to meet changing market requirements. Operational monitoring, carbon accounting and simulation solutions that analyze production flows within and across plant networks must be a part of the equation for every company in this industry. Producers use digital technologies to monitor their operations to ensure they get the maximum yield from each location.
Managing safety and environmental impacts is paramount, as underscored by the Deepwater Horizon oil spill in the Gulf of Mexico in 2010 and the 15 deaths because of an explosion at a gas plant in the city of Yima, China, in 2019. To keep workers safe, avoid leaks and increase yields, oil and gas companies invest in technologies to analyze and monitor their operations, such as wellheads and drills, and deploy sensors to report on the condition of pipes and pipelines.
The cyberattack on the Colonial Pipeline was another major wake-up call and has been a catalyst for investment in security in utilities. According to recent digital factory data, digitalization investment in the oil and gas industry is growing at a compound annual growth rate of 5.8% between 2022 and 2030 and will reach a total of $15.4 billion by the end of the decade.
Speeding transparency in FMCG
FMCG manufacturers are focused on helping companies improve supply chain visibility to meet their environmental, social and governance goals. With raw materials and ingredients being scarce, FMCG manufacturers are looking to specialized software that can provide accurate demand forecasts and availability for a competitive edge. These solutions enable manufacturers to pinpoint how much of which sources they need and when they need them.
For sustainability, FMCG manufacturers seek out technologies that allow them to reduce resource use, such as water, energy and waste. This may include conceptualizing new packaging designs that can carry to the production line smoothly and producing goods closer to where they are used and consumed.
Transforming for a better tomorrow
Digital transformation has the potential to move these, and countless other, industries to the next level. More operations information from sensors can help identify inefficiencies and safety hazards. This can lead to data-driven improvements that in turn boost productivity and even save lives. Other technologies, such as robotics and AGVs, add more flexibility to production lines, making companies more agile and ready to change production plans as demand fluctuates. Software can help simplify a variety of supply chain activities from procurement to distribution and steps in between.
Investments in such technologies today will build the improved, high-performing supply chains of tomorrow. The companies that focus on digital transformation now will be poised to be leaders as markets continue to evolve.
ASCM’s new Supply Chain Technology Certificate will prepare you to implement the latest digital transformation technologies in your supply chain. Discover how technological know-how can help you significantly reduce costs, boost performance and achieve a more sustainable supply chain. Organizations can learn about boosting performance at our transformation solutions page.
Ryan Martin is director of industrial and manufacturing research at ABI Research. For more information, download the free “4 Key Industries Embracing Industry 4.0” whitepaper, and view more research on the ABI Research website.