COVID-19 is accelerating digital transformation in the fourth industrial revolution
A world that was already in a period of flux through the onward march of technology has seen rapid change in recent months by the emergence of Covid19. The pandemic has driven through an unprecedented time of change, disrupting whole industries, and transforming manufacturing ecosystems.
In part one of this two-part series, Jonathan Burdette, Global Industry Principal at SAP Customer Experience looks at the impact of COVID-19 on digital transformation in global manufacturing and what this means for sustainability.
So what is the Fourth Industrial Revolution anyway?
The fourth industrial revolution is characterised by the intersection of physical, digital, and biological data and technology through interlinked objects and devices. The growth of data-driven technologies (such as artificial intelligence, IoT, blockchain, and advanced computing and robotics) has empowered people and companies to make smarter decisions through increasingly sophisticated use of big data.
In traditional industries, such as B2B manufacturing, the pandemic has fast-tracked the road to digital transformation, forcing many industries to shift their businesses online as traditional paradigms and established systems fell to the wayside.
The silver lining to a worldwide shutdown is a fast-tracked pathway to the fourth industrial revolution, which can potentially lead to better outcomes for sustainability and global futures.
A catalyst for digital transformation
In this unpredictable period, it is critical for companies to be agile and be able respond faster to new challenges in a turbulent and high-risk environment. An unparalleled period of change has had a profound impact on every industry, driving a shift to new technologies, and resulting in new ways of working and production.
In many ways, pre-pandemic, B2B sales still relied heavily on traditional methods of engaging customers, with greater emphasis placed on face-to-face sales, ranging from the traditional sales meeting through to taking clients out to lunch.
As more global markets went into lockdown, B2B manufacturers were increasingly looking at ecommerce, remote ways of working, and online platforms to virtually engage their key customers.
The industry was already moving in this direction, but COVID-19 has accelerated the pace of change and forced the hand of B2B manufacturers. It has led to a greater focus on remote selling, when engaging customers in face-to-face conversations had its limitations.
In a high-risk environment, digital transformation is about going into survival mode. While digitalisation is an absolute necessity for every industry to move forward, the pandemic has provided the catalyst; manufacturers had to react quickly to the challenges of the immediate future, or risk getting left behind.
COVID-19 has highlighted the manufacturing world’s dependence on technology in an increasingly interconnected world. It has put a magnifying glass on where the gaps are, including shining a light on physical processes that could be digitised. Furthermore, in this environment, there is greater scope for manufacturers to experiment with emerging technologies and processes that could have better sustainability outcomes.
Companies in every industry must adapt to capitalise on new opportunities amid the shifting landscape. Traditional industries that have thus-far resisted change are now in the process of adopting new technologies and experimenting with emerging industrial processes.
Traditional B2B businesses that have been restricted in their processes have been forced into new ways of doing things, and as a result, are now seeing the benefits of going digital. One example of this ‘enforced trial’ is highlighted by the case of an Austrian lighting company. During the pandemic, one issue for essential businesses involved literally keeping the lights on. In warehouses, as lighting was burning out and needed to be replaced, the firm shifted from manual lighting management processes to managing the process digitally.
The company invested in an ecommerce and automation platform to track opportunities and coordinate with clients remotely. In turn, the organisation was rewarded with the benefits of garnering a vast amount of customer data.
The company profited from incorporating customer data into smarter decision-making, in terms of optimising operations, driving down costs, and boosting revenues through actionable data insights.
It’s clear that the pandemic has created a new sense of urgency for businesses to remain competitive, and increasingly manufacturers are turning their attention to digital transformation to re-energise the industry and refresh antiquated processes. Smarter business operations ultimately translate into streamlined practices. The process of optimisation through experimentation can have better outcomes for sustainability, as digitalisation lends itself well to establishing better processes and designing out waste from industrial systems.
For many business leaders, the focus is on producing inventory at a lower cost-per-transaction. Emergent processes such as 3D printing could make the crossover to widespread adoption, as these processes allow for the manufacture of B2B goods at a much lower cost.
A post-COVID world will evidently be very different from the one that has been left behind, but the outcomes might be surprising. A reverse of globalisation will see manufacturing becoming much more localised, with production aligning closely to demand. In turn, this shift to meeting short-term local demand will have positive outcomes for the environment and the future of the planet. Those businesses that can rapidly adapt to change will reap the benefits of increased efficiency, lower costs, and a boost in revenue.
In the second part of this two-part series, we’ll be looking at how COVID-19 has led to a shift in localised production, and what this means for sustainability outcomes in B2B manufacturing.
Illustration: Tiffany Beucher