Manufacturing companies make major gains in agility

The pandemic jump-started critically needed investments

Manufacturing companies improved business agility during COVID, but there is more work to be done.

Manufacturing companies scrambled in 2020 as supply chains broke down, store shelves emptied, and demand soared for critical medical equipment and supplies.

Few companies were equipped with digital systems and processes to help them adapt quickly—only 20% had agile supply-chain and manufacturing systems. But by the end of the year, the sector strengthened overall business agility by 68%, according to a new survey by ServiceNow and ESI ThoughtLab. In addition to manufacturing, the survey covered four other major industries: financial services, healthcare, public sector, and telecommunications.

Manufacturers have become much more agile—and have improved the ability to rapidly adapt strategies, processes, and technologies more than the other surveyed industry. But manufacturing still lags behind all but the public sector. Other insights into the manufacturing sector from the survey include:

The pandemic caused massive disruptions in supply chains. In response, companies created more agile procurement systems and increased the agility of their core manufacturing systems; the share of those that did more than doubled, from 20% to 48%.

Manufacturers also made meaningful progress in improving agile digital systems. The share of companies with agile IT support systems increased during the pandemic from 20% to 43%, and the share of agile IT platforms at those companies jumped from 10% to 28%. The share of companies with agile digitization strategies more than tripled, but only to a modest 10%, far short of what they need to compete in a digital-first economy.

Lower overall investments among manufacturers meant lower returns from agility, compared with those in other sectors. Still, 25% of companies saw strong returns by adding new services, such as subscription-based business models. The same share reported gains from new performance frameworks. Looking ahead, 91% of manufacturers expect strong returns from investing in cloud technology and 70% from IoT.

Many manufacturers want to develop “smart” factories, but the industry made little progress making employee experiences and workplace management more agile during the pandemic.

For manufacturing to match the levels of agility other industries have demonstrated, companies will have to overcome what executives said was the biggest obstacle: the lack of clear vision of how agility benefits a company or a plan for implementing it.

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