Ecosystems And Smart Manufacturing: Amplify Your Investment

As manufacturers struggled to meet demands during the COVID-19 pandemic, they became increasingly aware of how ecosystems and digital technology could help them manage disruption. Ecosystems form when a collaborative network of stakeholders—enabled by digital technology—come together in meaningful ways to solve shared challenges and meet shared objectives. With manufacturing, the ecosystem consists of players all along the value chain—from vendors to suppliers—and, by working together, they can help minimize industry-wide disruption. 

For example, during the COVID-19 pandemic, a major electronics manufacturer—that had already developed a range of smart manufacturing systems based on digital technologies—used an ecosystem approach to overcome global disruptions. This included extending their digital tools to improve supply chain visibility as well as working with local companies to help minimize disruption if suppliers overseas are impaired in some way. They are also now working with regional 5G and AI providers to develop additional applications for their digital tools among ecosystem players. All of these actions helped improve flexibility and shorten lead times.

Globally, manufacturers see the potential of ecosystems to extend the impact of smart manufacturing. A full 85% of them agree that ecosystems are growing in importance when it comes to smart manufacturing. This is, according to the report Using ecosystems to accelerate smart manufacturing: A regional analysis, a Deloitte US survey produced with the Manufacturers Alliance for Productivity and Innovation of more than 850 manufacturing executives from around the world. Another 87% of manufacturers believe these ecosystems can help them stay competitive.

Moving from concept to concrete

But this confidence in ecosystems is somewhat muted in practice. Over the past two years, the percentage of respondents that have experienced tangible benefits from participating in an ecosystem is considerably lower than the results above may have indicated—ranging from only 20% to 30%. Overall, only 16% of manufacturers globally are using an ecosystem approach to extend their use of digital technologies and smart manufacturing. In some countries, a small number of manufacturers say they aren’t even thinking of implementing these kinds of initiatives—a blind spot that could place them at a competitive disadvantage on the global stage.

If so many manufacturers believe in the importance of ecosystems—and have invested in the applications that can be used to support them—why do the tangible benefits continue to lag? Part of the reason may be due to a lack of skill at working with ecosystems on the part of companies. Globally, a third of manufacturers say they don’t have the experience to develop an ecosystem and are concerned about achieving the required level of coordination.

To overcome this reticence, manufacturers need a better understanding of what constitutes an ecosystem approach and the challenges they need to overcome to advance it. This includes:

  • Recognizing that vendor relationships that are used to support smart manufacturing are not the same as an ecosystem approach
  •  Addressing cybersecurity and the possibility of exposing intellectual property or smart manufacturing plans
  • Overcoming external factors, such as trade or tariff uncertainty or government policies (a concern of the majority of respondents in India and Mexico)
  • Building a compelling business case to raise funding (a concern of respondents in Japan and Italy) and creating buy-in from senior executives (a concern of respondents in Germany and the United Kingdom)

To build up an ecosystem approach, players need to:

  • Deliberately coordinate by sharing their business objectives
  • Develop measurable impacts and results
  •  Designate a “convener” capable of aligning the efforts of multiple vendors

Worth the effort

While challenging, the pay-off of using an ecosystem approach can be significant. During the COVID-19 pandemic, manufacturers that were already building ecosystems with other companies, vendors, organizations, or associations were able to respond more rapidly to the crisis. One US manufacturer even tapped into an existing ecosystem to add robots that kept its line running with fewer workers on the floor.

An ecosystem approach can amplify the impact of smart manufacturing initiatives, allowing players to interact in a way they couldn’t before the advent of such tools as sensors and data analytics. Manufacturers can gain greater capacity to solve common problems by co-innovating with their ecosystem collaborators —especially important during times of massive disruption. And with the post-pandemic world still an uncertainty, those who build their ecosystems are certain to be in a better position to face whatever the future brings.

To learn more about ecosystems and their impact in your country, see the Deloitte Global report, Using ecosystems to accelerate smart manufacturing: A regional analysis.

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