The path of innovation in the industrial sector | NTT DATA

Thu, 20 October 2022

The path of innovation in the industrial sector

To speak industrial sector is to speak of a fundamental engine for any modern economy. To confirm this, one need only look into two truly revealing figures: the sector employs more than 33 million people in the European Union and the turnover generated in this territory exceeds 2 trillion euros per year by far.

Today's industry faces significant challenges, but also a great amount of opportunities and growth levers in an increasingly globalised environment.

Business trends in the industrial sector

1. Optimising the supply chain: Tensions in transport, logistics and energy sources are giving way to solutions that allow for differentiation and increased competitiveness. Those industries that immerse in big data, machine learning and the business applications needed to make decisions affecting their supply chain have a clear advantage in today's changing environment.

2. Synchronising production and sales: A synchronisation that not only increases the efficiency of production itself, but also favours the improvement of existing products and the creation of new items that meet customer demand. Likewise, production control, traceability, quality control, stock management, optimisation of distribution channels, etc., require a perfect synchronisation that is made possible only by means of the capabilities offered by the new business solutions available in the cloud.

3. Gaining commercial advantages: The globalisation of the industrial sector is leading to the consolidation of large conglomerates of companies throughout the world; with production capacity increase, on-line transaction relevance, new market attainment and customer loyalty improvement, among others, as important features of it.

There are two important aspects to take into account when it comes to reaching such objectives, namely innovation in the sales model and modern business solutions that allow for the execution of industrial and sales plans.

4. Competing from talent: Talent shortage is a challenge that many industrial organisations are turning into an opportunity by using reskilling techniques that allow them to retain company talent while motivating employees to develop quality professional careers.

The industrial sector has additionally instrumented mechanisms to improve attractiveness of the workplace, offering more high-tech and modern environments that entice prospective workers to join them there.

5. Exploiting sustainability as an opportunity: The industrial environment is the undisputed focus of increasingly demanding sustainability legislation. In addition, customers demand sustainable products in a manner that the need for a reduction of emissions and eco-sustainable production is unavoidable. Reduced amount of waste and lower carbon footprint manufacturing can be achieved by taking the path of innovation, putting technology at the centre and complying with the standards set by both regulators and customers.

6. Implementation of two novel concepts:

  • Servitisation: The inclusion of services as differentiating additions to the products offered by the industry. This transformation makes it possible to both extend customer experience in time as well as increasing recurring revenues for the organization.
  • Platformisation: The trend that allows for a definite move from value chains to value networks.

7. Consolidation: Integrations and acquisitions in different sectors will continue to take place. In this context, the ability to efficiently integrate talent, brand, product, processes, etc., while maintaining control and taking advantage of synergies, will be critical.

The power of innovation in industry

The reflection and analysis of what has been done so far provides the basis for re-imagining the future of all industrial organisations and their status improvement in the short, medium and long terms. Beyond doubts, now is the time for the industrial sector to become the source of the economic and social transformation of the planet.

The focus has to be placed on factors that depend exclusively on the strategic decisions of industrial organisations, with paramount importance conferred to the intensity of commitment to innovation, modernisation and transformation; which may, in turn, become the gateway to a true re-foundation in the way business are conceived for many industries today, as stated in the "Cloud Business Applications: a guide to business transformation" eBook recently published by NTT DATA.

Some of the most relevant direct benefits of an organization’s commitment to innovation are:

  • Increase in customers, turnover and profits
  • Improving competitive capacity
  • Streamlining the supply and distribution chains
  • Attracting talent to a modern environment
  • Creation of products and services that do not yet exist
  • Increased speed of response to change
  • Cost reduction
  • Raise of company value
  • Regulatory compliance in areas such as sustainability
  • Enhancement of brand image

But where’s the starting place? There are several lines of innovation that are akin to the industrial sector and can serve as levers of change for the present and future:

  • Digital twins (creation of a digital replica of manufacturing processes)
  • Industrial automation and robotisation
  • Machine learning
  • Internet of things (IoT)
  • Smart selling: Analytics and data-driven decisions
  • Omni-channel and personalised demand generation
  • Ubiquity, mobility, team collaboration
  • Modernisation of the supply chain
  • Cloud computing
  • 3D printing
  • Eco-innovation

Is the industry transforming?

Definitely, yes. The process of transformation, of innovation even, is long and does not really have an end: it is rather a constant journey. As such, organizations are in a pledge to develop new projects that allow them to attain all the above-mentioned benefits.

As an example of implementation of this course of action, a project carried out by NTT DATA and Microsoft for one of Europe's largest food companies can be pointed out. This recently deployed transformation project optimised and synchronised the organizations’ production framework as well as the ordering and delivery to point-of-sale model.

In order to achieve this, the project focused on ensuring adequate supply while maintaining point-of-sale stock levels, thus reducing the amount of expiry returns as well as avoiding loss of sales because of out-of-stock conditions. The company also implemented a system that facilitates promotions, price changes, product launches, etc., in a synchronous, immediate and simple way, for thousands of points of sale comprising their existing network.

The technology used to develop this project is based on Microsoft Dynamics 365, which provides the necessary agility to implement solutions to business needs as well as allowing for interaction with previously existing company systems and platforms.

This project resulted in the transformation to a much more efficient order management system, improved knowledge of point-of-sale behaviour, reduced cost of operations for sales call centre staff, and a substantial improvement in the effectiveness of marketing campaigns.

The path is in the draft

Faced with a world in constant evolution, transformation, innovation in every area of the organisation is the only successful response. The changes required in companies are a constant path that is being drawn day by day, learning from the treads generated in the past but focused in the challenges and opportunities that lie ahead. And all of that performed while maintaining excellence in the services provided on a daily basis, adhering to the "transforming while performing" philosophy, and always pursuing customer satisfaction: the greatest measure of success.