Manufacturing Integration, Data Analysis & Information Visibility Take Center Stage Dr. Christopher Holmes Head, International.
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1 Manufacturing Integration, Data Analysis & Information Visibility Take Center Stage Dr. Christopher Holmes Head, International. IDC Manufacturing Insights
2 Agenda The Four Forces of IT Essential Guidance APeJ Mfg Trends Technology Trends Where are we today? IDC Manufacturing Insights Page 2
3 IDC Manufacturing Insights Business Process Business Process Information Technology The Dynamic Enterprise IDC Manufacturing Insights, provides fact based research benchmarks, best practices, and business cases for using information technology to improve manufacturing processes Harvesting value from IT by creating business efficiencies IDC Manufacturing Insights Page 3
4 WHERE ARE WE TODAY? IDC Manufacturing Insights Page 4
5 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 % 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 4Q11 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 4Q11 Index, base year 1Q06 = 100 Index, base year 1Q06 = 100 Performance of WW Manufacturing WW Manufacturing, quarterly revenue trends, 1Q06-4Q11 WW Manufacturing, inventory trends, 1Q06-4Q WW Manufacturing, median quarterly net profit margin trends, 1Q06-4Q11 Revenue is growing Inventories are high but now reducing Profitability is the concern Source: IDC Manufacturing Insights, GPI Data IDC Manufacturing Insights Page 5
6 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 % Performance of AP, EMEA &US Manufacturing 8 AP, EMEA &US Manufacturing, median quarterly net profit margin trends, 1Q06-4Q AP Profits are the challenge AP EMEA US Source: IDC Manufacturing Insights, GPI Data IDC Manufacturing Insights Page 6
7 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 April 12 May 12 June 12 July 12 PMI of China Manufacturing Purchasing manager index of China manufacturing by HSBC and CFLP HSBC CFLP Source: Markit, China Federation of Logistics & Purchasing (CFLP) & HSBC IDC Manufacturing Insights Page 7
8 Asian Manufacturing today Market volatility Eurozone Debt Crisis Local vs Export sales Profit Challenge Supply Chain Risk Rising Costs IDC Manufacturing Insights Page 8
9 Coping with Volatility Responsive mfg? Local focused to export? New products / new services? Export to local focused? IDC Manufacturing Insights Page 9
10 APEJ MANUFACTURING TRENDS IDC Manufacturing Insights Page 10
11 APeJ Manufacturing Trends Please rate the Top 3 OVERALL Business Drivers for your company in next 12 to 18 months? Top 1 Reduce Cost of Operations Increase Revenue / Market Share / Attract New Customers Improve Productivity & Efficiency Increase Capacity (New facility / Outsourcing) Focus on productivity gain and capacity expansion. Geographic Expansion Introduce New Products and Services faster Grow Revenue from Existing Customers N=469, 2012 N=455, 2011 N=518, 2010 Source: IDC Mfg Insights, Biz and It Priorities Survey, Mar 2012 IDC Manufacturing Insights Page % 10% 20% 30% 40%
12 Top Business Drivers in APeJ Mfg Reduce Cost of Operations China 53% ASEAN 34% India 29% ANZ 30% Korea 38% Increase revenue / market share / attract new Customers N=ANZ=63, India=126, ASEAN=89 Greater China=120 South Korea=71 Source: IDC Mfg Insights, Biz and It Priorities Survey, March 2012 IDC Manufacturing Insights Page 12
13 Avoid the Productivity Vise Improve Manufacturing Utilization Discount selling Increase production Inventories increase IDC Manufacturing Insights Page 13
14 Greater China Manufacturing Objectives Please RANK Top 3 Strategic objectives of your company s 2012 strategy. Top 1? Improve Manufacturing Operations Improve Customer/Demand Chain Management Process focus now in status quo Improve Supply Chain Management Improve Product Lifecycle Management N=120, 2012 N=120, 2011 N=142, 2010 Source: IDC Mfg Insights, Biz and It Priorities Survey, Mar 2012 IDC Manufacturing Insights Page 14 0% 20% 40% 60%
15 Greater China Manufacturing Objectives Please RANK Top 3 Strategic objectives of your company s 2012 strategy. Top 1? Improve Manufacturing Operations Improve Customer/Demand Chain Management Improve Supply Chain Management Improve Product Lifecycle Management ASEAN India Greater China N: Greater China=120, India=126, ASEAN=89, Source: IDC Mfg Insights, Biz and It Priorities Survey, Mar 2012 IDC Manufacturing Insights Page 15 0% 20% 40% 60%
16 Greater China Manufacturing Initiatives From a business operations perspective, please rate the Top 3 among the following key Operational Initiatives in TOP 1? Improve Quality of Products Reduce Manufacturing and Supply Chain Costs Reduce New Product Introduction Time Streamline Operational Workflows & Processes Reduce Delivery Lead Time Improve Customer Service / After-sales Support Improve Demand Planning / Forecasting Implement Regulatory and/or Environmental Compliance From making the product right, to making the right product N=120, 2012 N=120, 2011 Source: IDC Mfg Insights, Biz and It Priorities Survey, Mar 2012 IDC Manufacturing Insights Page 16 0% 20% 40% 60%
17 Impact Operational Initiatives for 2012 Fulfilment Execution System (FES) Closed-loop management of inbound material, production capacity, and order fulfilment The technology component for FES investment will have to reconcile what is frequently a mash of applications across silos of process domains Real Time S&OP Fulfillment Execution Systems Instrumented Processes Mfg Intelligence Maintenance Excellence Energy Management Mobility on the shopfloor Continuous Improvement Effort Strategic IDC Manufacturing Insights Page 17
18 THE FOUR FORCES OF IT IDC Manufacturing Insights Page 18
19 The Four Forces and Manufacturing SOCIAL BUSINESS CLOUD BIG DATA / ANALYTICS MOBILITY IDC Manufacturing Insights Page 19
20 Greater China Technology Projects for 2012 What are the key New Technology projects in 2012? Server consolidation and standardization Application consolidation and standardization Business Intelligence / Analytics Wireless/mobile solutions Service Oriented Architecture Cloud Computing Unified Communication RFID Digital Factory / Industrial Ethernet for Shopfloor Virtual Reality Social Business (Web 2.0 / 3.0 for internal / external collaboration) N=120, 2012 Source: IDC Mfg Insights, Biz and It Priorities Survey, Mar 2012 IDC Manufacturing Insights Page 20 0% 10% 20% 30% 40% 50% 60% 70% 11
21 Integrated Business Intelligence Portfolio Scenario Value Financial Reporting (ROA, EVA ) Product Supply Production Sales After Market Allocate Resources Mitigate Risk Optimize Outcomes Situational Assure Compliance Master Data Management Demand Supply Product IDC Manufacturing Insights Page 21
22 Greater China IT Priorities for 2012 From a IT Operations perspective, please rate the Top 3 among the following key Priorities in 2012? Improve Information Access, Visibility, Analytics & Reporting Primary Improve security Business / IT alignment Faster development / deployment of applications Communication / Collaboration Top1 Top2 Top3 0% 20% 40% 60% 80% N=120, 2012 Source: IDC Mfg Insights, Biz and It Priorities Survey, Mar 2012 IDC Manufacturing Insights Page 22
23 Mobility and Manufacturing Senior Management Operations Quality / Compliance Supply Chain KPI monitoring Instant approvals Schedule visibility Real time maintenance schedules Capture EH&S information Record inspection data Supply chain monitoring Exception management Access to latest repair manuals IDC Manufacturing Insights Page 23
24 Social Business Internal Open Innovation External New Biz Models Requirements Capture Employee Social Network Customer Product Innovation Brand Protection Operations Early Warning System / Warranty Mgmt Give people the platform, and see how people will use it! IDC Manufacturing Insights Page 24
25 Cloud in Manufacturing What are the TOP 3 reasons that lead you to consider cloud computing technologies? Top 1 Easy / Fast deployment to end users IT Staff reduction Sharing systems / information with partners easier Pay only What you use Quick IT / Business Processes Improve Service Levels / Business Agility N=56, APeJ Manufacturing Source: IDC International Cloud Survey, Jan 2012 IDC Manufacturing Insights Page 25
26 Concerns in the Cloud What are the TOP3 concerns surrounding the adoption and use of cloud services? Top 1 Security Portability between Providers On-Demand will cost more Hard to integrate with internal systems N=56, APeJ Manufacturing Source: IDC International Cloud Survey, Jan 2012 IDC Manufacturing Insights Page 26
27 Value Chain Definitions Technology oriented value chain (TOVC) Engineering Oriented Value chain (EOVC) Brand oriented value chain (BOVC) Asset oriented value chain (AOVC) Manufacturers of complex products, including engineerto-order products Industrial Machinery, Automotive Manufacturers of branded consumer products with highly variable demand Apparel (clothing & footwear), household furnishings, textiles, luggage, kitchen wear, white goods, musical instruments, and food production Manufacturers of products driven by the cycles of key underlying technology manufacturers of base materials produced at assetintensive facilities Consumer electronics; electrical components (other than semiconductors); contract manufacturing services; computers, computer-related equipment, and telecommunications; and semiconductors Chemicals/petroleum refining, primary metals, pulp/paper, rubber and plastic, stone, clay, glass, or concrete, tobacco, textiles, pharmaceuticals and biotechnology IDC Manufacturing Insights Page 27
28 Four Forces by Value Chain What are the key New Technology projects in 2012? Four Forces Big Data/ Analytic Mobility Cloud Social Business Engineering Technology Brand Asset 27% 23% 48% 30% 44% 59% 71% 54% 27% 33% 30% 33% 38% 54% 51% 10% 13% 27% 20% 31% 42% 40% 38% 10% 0% 7% 7% 47% 22% 23% 29% 22% N: Greater China=120, APeJ =484 Source: IDC Mfg Insights, Biz and It Priorities Survey, Mar 2012 IDC Manufacturing Insights Page 28
29 The Co-Existance of the 4 Forces 1 2 Big Data / Analytics Instrumented processes Real time S&Op Visible information Mobility Visible information Instant reporting Productivity & Efficiency 4 4 Forces in APeJ Mfg Social Business Internal / External Collaboration Social commerce Co Innovation Cloud IT Cost Saving(?) Fast Deployment Collaboration 3 IDC Manufacturing Insights Page 29
30 ESSENTIAL GUIDANCE IDC Manufacturing Insights Page 30
31 The Four Forces and Integrated Manufacturing SOCIAL BUSINESS Innovation hub / social business Integrated Business Intelligence CLOUD BIG DATA / ANALYTICS Responsive Processes Instrumented Processes MOBILITY IDC Manufacturing Insights Page 31
32 What does this mean for APeJ 2012 /13? Manufacturing productivity will be driven by visible intelligence Integration across the enterprise is now essential to compete effectively Chinese manufactures are lagging the region in the adoption of newer technologies IDC Manufacturing Insights Page 32
33 For further information Dr Chris Holmes Head International, IDC Manufacturing Insights Join me & your peers in the conversations in our IDC Manufacturing Insights Community Please contact your account rep if you want a copy of the slides IDC Manufacturing Insights Page 33
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