New research reveals a stark reality – the performance gap between digital leaders and digital followers is growing.
The pandemic forced the economy into digital overdrive and those who think digital first are using technology to rapidly pivot and harness new revenue streams. These digital disruptors have emerged from various industries, adopting an infrastructure that combines a digital core (back-office functions), digital ecosystems (marketplaces) and the digital edge (physical world). In the past year, they grew 4.5 times faster than their counterparts. Traditional manufacturing simply isn’t agile enough to keep pace, but this needs to change. By 2025, 75% of organisation leaders will be leveraging digital platforms and ecosystem capabilities to adapt their value chains to new markets, industries and ecosystems. That’s just three years away.
Will you be one of them? If you manufacture anything at all, now is the time to explore how a digital-first strategy can help you get ahead and stay there.
Your supply chain can be a make-or-break issue
The pandemic was the perfect case study of how a non-digital-first infrastructure can hold manufacturers back. The situation developed rapidly, global supply chains were increasingly interrupted and traditional manufacturers struggled to overcome the shortages and delays. They couldn’t get raw materials to the factory and found it tough to keep plants operating through lockdowns and employee shortages. At the same time, consumer demand was constantly shifting, making it even harder to anticipate markets. A lack of real-time visibility made responses to problems slow and often ineffective.
Car manufacturers are a prime example of this struggle. Early in their hybrid production journey, many lacked the robust digital supply chains needed to adapt to market shortages, and production ground to a halt. Tesla, on the other hand, emerged relatively unscathed. With a strong digital foundation giving it the agility to pivot quickly, Tesla secured scarce cobalt supplies, minimising disruption to production lines. Bouncing back quickly from a two-day shut-down, it even pushed forward with innovation during this challenging time, developing plans for a cobalt-free battery.
Today, 38% of manufacturers understand they need more resilience in their supply chain if they want to reduce disruption1.
A digital supply chain is the foundation of success
The pandemic emphasised the value of being part of a digitally connected supply chain - and an even wider digital ecosystem - that could flex to change in order to protect delivery and service. It proved the case for prioritising digitally enabled partnerships that can play a full role in a digital ecosystem. It showed the importance of end-to-end visibility between suppliers, manufacturers, distributors and customers. And it highlighted how critical it is to have a mechanism for building inter-industry links.
Digital-first manufacturers thrived because they were interconnecting with 10 times as many partners. They were part of a community where everyone was ready to adapt as situations changed, and they could connect seamlessly to new parties and clouds when needed.
Look at how digital disruptors in the beer industry pulled ahead during the pandemic. With real-time visibility over their entire supply chain, digitally enabled brewers were able to make intelligent and rapid shifts to adapt to market changes and supply chain gaps. Their reactions weren’t hampered by their infrastructure. They recognised the move away from hospitality to at-home consumption and adjusted production from crates of beer destined for pubs, to cans of beer delivered to supermarkets. Digital relationships with suppliers and logistics meant they could rapidly secure raw materials and update deliveries. This guaranteed the digital disruptors seized a bigger market share, while traditional manufacturers were still manually updating their orders, deliveries and operations.
Thriving involves thinking big about data
Manufacturing disruptors have a clear strategy around data that covers availability, storage, sharing and security. They’ve moved away from the early approach to digitisation as simply lifting and shifting data to the cloud, realising centralising all data comes with significant transport costs, reduced agility and slower responses to challenges. They see that data centralisation makes upscaling operations difficult and cumbersome – and that it’s particularly limiting for manufacturers with ambitious growth plans. Operating in a truly digital-first way involves a shift to thinking more broadly and strategically about data availability, storage, sharing and security.
The right architecture makes data a more powerful resource
This strategy extends to considering where specific data should sit to best drive efficiency – in the cloud, at the edge, at a private edge, or in a multi-cloud environment. The key consideration should be creating an architecture that makes it easy to share, collaborate and innovate by moving data in a secure and consistent way.
A multi-cloud hub, for example, helps different stakeholders to share insights and coordinate their efforts – so it’s ideal for supply chain data. Whereas edge technology is a more efficient choice that can hold down costs and speed up decision making by processing tasks before sending the results to the core. Combining different data locations facilitates complex, cloud-based, multi-sector supply chains. By rethinking their architecture, leading manufacturers are creating a structure that’s easily scalable, can be reproduced globally, is able to flex up and down with demand, and provides consistency across different operations and locations.
The value of this approach can translate directly into improvements in the Overall Equipment Effectiveness (OEE) score. Connectivity and data availability play key foundation roles in driving efficiencies from predictive maintenance to equipment availability, production line quality and more. In our experience, this can raise OEE scores to between 80-90%.
Leaders protect their wider connectivity with robust security
Manufacturing disruptors are unafraid to tackle the security challenges around connectivity and data exchange, particularly around the convergence of IT and OT. They recognise that adopting these approaches widen the attack surface and leave them vulnerable to cyber attack, but fight back with robust defences and a strategy that’s secure by design. A digital ecosystem can facilitate this by opening manufacturers up to valuable sources of security expertise, while making connectivity and data sharing simple and safe.
Digitisation is a new fuel to drive sustainability
Security isn’t the only area where digital-first manufacturers are pulling ahead - they’re leading in the sustainability stakes, too. And customers are taking note; 88% would rethink purchasing from companies that aren’t ethically or environmentally sustainable2. Accelerated by increasingly strict environmental legislation, sustainability is rising rapidly up the business agenda, causing organisations to look for more effective ways to reduce their carbon footprints. Leaders increasingly go far beyond the obvious use of renewable energy. Digital manufacturers are well placed to optimise energy consumption by using the IoT to keep equipment running efficiently, cut pre-emptive maintenance and reduce the need to fly in experts.
Digitisation also makes innovation easier and more sustainable. For example, feeding data into a digital twin environment allows digitally enabled operations to develop new prototypes, and tweak existing models, without unnecessary use of resources. And digitisation unlocks new possibilities, like using 3D printers on oil rigs to produce spare parts, rather than storing vast quantities of spare parts in warehouses all around the world with delays and additional transportation carbon emissions.
Being a digital disruptor needs specific leadership
The spirit of a digital-first manufacturing approach needs to run throughout the organisation,
So it’s important the C-suite takes on broader responsibility to actively drive change – bridging silos between IT and OT to create a clear, joined-up path to digital transformation.
Defining and understanding everyone’s roles and responsibilities in the context of this digitisation journey drives the digital agenda – and makes manufacturers more resilient and much more transparent to internal stakeholders, suppliers, customers and technology partners. Strong leadership promoting digitisation across the entire business also helps to forge the right partnerships, creating effective digital ecosystems to access the expertise and functionality you need to succeed.
How the BT and Equinix partnership can help
BT and Equinix have partnered to deliver the digital-first capabilities and environments that manufacturers need to stay ahead of their competition. Jointly designed and developed from its inception, BT’s managed service, along with the Equinix partner ecosystem, seamlessly integrate cloud and digital manufacturing capabilities. It brings a vast array of cloud service providers, partners, suppliers and customers all on-net with their existing BT network. It means digital manufacturers can quickly emulate the advantages that digital leaders already possess – expanding their markets and making it easy to tap into new ecosystems and grow far-reaching digital supply chains.
Once these connections are made, manufacturers and their partners have a trusted, secure and consistent software-defined hub through which they can seamlessly connect and efficiently share data with others in the chain. All the major cloud providers are available directly on the Equinix platform - improving the efficiency of data sharing and providing access to greater data insights. It’s a ubiquitous, on-demand and high-performance ‘cloud as a service’ from over 120 locations worldwide that gives lower risk deployments, consistently, anywhere you operate.
What’s more, we’ve pre-provisioned resilient high-quality, fibre-based bandwidth from our core network into Equinix datacentres. This means multiple Gbs of private, or public internet connectivity. On-net to BT, providing your bandwidth is now a very quick and simple deployment. It becomes your doorstep to a connectivity hub at the edge of cloud.
And our Connected Cloud Edge offers a consistent architecture that’s easy to replicate, manage and scale in a format that’s familiar to organisations already exploring cloud provider capabilities. The partnership also gives access to an overlay of network functions hosted by BT and Equinix, so adding security or SD-WAN services is as easy as picking off an NFV menu, with utility pricing. If you’re not yet using interconnection, you can accelerate your cloud journey fast. It’s a solution that takes the complexity out of becoming a digital-first manufacturer and allows you to accelerate your cloud journey.
Find out more about our partnerships here.
1 Equinix, 2021, Digital transformation and ecosystem collaborations - Leveraging data and technology to drive value
2 Institute for Supply Management (ISM), 2020, Spring Semiannual Economic Forecast