"Either write something worth reading or do something worth writing." Benjamin Franklin
The Covid19 Pandemic had a tremendous adverse impact on the economies, businesses, individuals and livelihood of several millions and billions of people, but at the same time while looking at it from hindsight, it has also brought in something which has been due and hoped for, from a long time, “Adaptability”. The Pandemic has made us (individuals as well as businesses) more adaptable and agile. While speaking about being adaptable, the manufacturing industry which is one of the core industries that has been realigning itself whether it be by choice or by opportunity or by force can be deciphered situationally.
At Parentheses, while we are interacting with several of the SME Manufacturing company directors and leadership team members, we notice that the technology adoption is majorly driven by exploring opportunities to innovate and enhance the efficiencies and productivity, lowering the costs, and enhancing the value chain performance. This has widely become inevitable during the pressing demand of the current situation. The manufacturing industry has always favoured incremental adoption over radical adoption of new technology or disruptive change. This is because there have been multiple success stories of manufacturing companies responding to market demand by adopting technology. Many times, a product conceptualization is driven by an opportunity to adopt an existing technology. The same tendency can be seen at the macro level as well, where many successful technologies are adopted in the manufacturing sector because there exists an opportunity to do so.
The changing paradigms can be understood from the fact that around 43% of the IOT use cases across its wide applicability base comes from the manufacturing industry alone. Having said this, until now the adoption of these technologies like Industrial IOT, in the SME segment especially has not been inevitable. These were mainly initiated by large and strong brands who took a measured approach before implementing these technologies, and as a result of that, now during the pressing times, some of these enterprises are reaping the benefits of the Technological edge, as they understood that many of their manufacturing processes are well suited for such kind of transformation.
While interacting with several SME’s we understood that the primary premise of the problem lies with the behavioural aspects rather than the aspirational or willingness ones. Many of the SME manufacturing leaders are forcefully driven into a Bounded rationality mindset, which simply means – “Human preferences are determined by changes in outcomes, relative to a certain reference level” as stated by Esther-Mirjam. Where in the limitations to make decisions include the difficulty of the problem requiring a decision, the cognitive capability of the mind, and the time available to make the decision. The bounded rationality mindset is also majorly been contributed (in some of the cases) by some clueless set of consultants and some failed IOT solutions which only catered to a topical issue.
The "rationality as optimisation", which views decision-making as a fully rational process of finding an optimal choice given the information available do contribute towards the inefficiencies that go hidden in the data and hence remain to be uncatered. Making an inference on given limited information while accessing prior to decision-making for complex problems, has been resulted in several failures of digitalization initiatives while realising the SMART MANUFACTURING dream.
Post Civod-19 while a large part of the SME Manufacturing industry is under the illusion that we are Money Poor, but we insist on thinking again. Yes, we agree the turnover is affected, we agree Workforce productivity and Process efficiency is in problem, we understand the demand is uncertain where lowering the cost of production is a priority, however, this will be a phase, lasting for a limited time. Once the demand comes back, the manpower resumes and the demand-supply wheel starts revolving, we will shift to becoming a Time Poor which is a far greater reason to worry.
Here are the 3 reasons why the delay in the adoption of technology affect you as an owner of the SME Manufacturing Unit:
1. Competitive advantage is with early adopters only:
The industry has always been biased towards early adopters. This means that it is easier for a company to build a competitive advantage if they adopt new technology early on. The faster you adopt, the better your chances are.
2. Market (Your clients & OEM’s) is more interested to invest in reliable and tech-savvy manufacturers:
Earlier adopters of new technology are perceived to be more reliable and trusted sources. They are better at cost reduction, they have better control over their processes, they produce better quality outputs and has higher efficiencies. This is an asset for the manufacturer, especially when they are developing new markets or finding a foothold in the existing shaky market.
3. Technology is the only predictor which can help avoid surprises on the shop floor:
Speak to any CFO, they will tell you that their job is to keep the business going and to make sure that there are no unexpected surprises on the floor. They will even go as far as buying machinery and equipment in advance so that they can have something when the need arrives. So why should they think in terms of adopting new technology? They are more likely to invest in something that is proven and tells them what to expect.
Things you must introspect & prioritise the following as an owner of an SME Manufacturing enterprise:
Money poor or Time poor let’s solve this dichotomy together! And let’s achieve the state “Being Time Rich will make you Money Rich”