The manufacturing sector in Asia/Pacific excluding Japan (APEJ) was one of the hardest industry sectors during the onset of the COVID-19 pandemic. IDC attributed this due to challenges from both supply and demand uncertainties.
The supply chain wakeup call
Supply chain challenges were highlighted dramatically for many manufacturers as the pandemic took hold in 2020.
How manufacturers responded and are responding
“The pandemic has put supply chain risk on the agenda. Risk mitigation through ecosystem partnerships and platform unifications are some of the key initiatives that organisations will need to invest in to increase their ability to flex and adapt to changing market conditions," added Sampath Kumar Venkataswamy, research manager at IDC Manufacturing Insights Asia/Pacific.
Extended collaboration enables companies to achieve higher resiliency levels in their operational processes and addresses the need for increased supply chain visibility.
The supply chain's transformation from a lean, efficient transaction-driven system, to a collaborative, agile, and customer-driven ecosystem provides competitive differentiation points in delivering effective and alternative business models.
Technology investments on the priority list in 2021
According to IDC's COVID-19 Survey waves 2020, the primary choice in terms of technology enablers is a cloud-based platform that aids in centralised decision-making routines. IDC expects total spending towards hosted applications to continue.
Another critical area of focus will be robotic process automation (RPA). This will allow organisations to automate various functionalities (e.g., order management, procurement, compliance management, payment approvals, and contract renewals) and bridging the divide between legacy systems and modern capabilities.
Several initiatives, such as direct-to-customer and manufacturing postponement, are also considered to reduce the go-to-market (GTM) time and increase product reach and operational scale.
“2021 will continue to be volatile and unclear in terms of revenue guidance though the majority of the organisations will be taking decisive steps and make investments to increase their digitalisation footprint,” said Venkataswamy.
Predictions beyond 2021
IDC is expecting spending on smart warehousing and supplier network management to reach US$21.5 billion by 2024, indicating a growing focus on both process and technology investments targeted at embedding intelligence across the overall supply chain.
These investments will bring agility and flexibility helping organisations to react and pivot their offerings and operations more effectively. Also, improve resiliency.
By 2026, 50% of A2000 companies will have used AI to develop guidance and insights for risk-based operational decision making, compared with less than 5% of A2000 companies today.
By 2023, to support autonomous operations, organisations will have increased their investments in data governance, digital engineering organisations, and digital operations technologies by 50%.
By 2026, 50% of A2000 organisations will have developed industry ecosystem digital operation centres to monitor capacity, expertise, market, and environmental conditions for 60% faster time to market.
