Legacy Information Technology (IT) often makes a digitized supply chain difficult or impossible. It also hurts manufacturers’ abilities to adopt new technologies.

Information technology (IT) spending will grow from $2.46 trillion in 2015 to more than $2.8 trillion in 2019, with the United States and Canada comprising the largest share of global IT spending. Discrete manufacturing and process manufacturing will be among the top industry spenders.[i]

Looking at the state of technology within U.S. manufacturers, it’s no wonder.

For many functions — asset management, human resources, supply-chain management, customer service/support — a majority of manufacturers have ineffective IT applications and systems (see infographic).[ii] Sadly, smaller manufacturers are in even worse shape. For example, only 25% of SMEs have effective IT applications and systems for logistics/distribution; 23% for supply-chain management; and 18% for asset management.[iii]

This is a looming crisis among SMEs. Hobbled by antiquated IT systems, they’ll be challenged to retain market share or growth because:

  • Poor-quality operations information leads to production errors, delays, and environmental, health, and safety (EHS) issues.
  • Enterprise functions fail to act in a synchronized, collaborative manner, leading to delays and waste.
  • Customer and supplier businesses are bottlenecked, unable to share critical data and information (demand forecasts, production schedules, product specifications, design drawings, etc.).

Legacy IT often makes a digitized supply chain difficult or impossible. It also hurts manufacturers’ abilities to adopt new technologies, such as 3D printing/additive manufacturing or the Internet of Things (IoT). Only 10% of manufacturers have a network infrastructure capable of IoT machine-to-machine communications; barely 13% have network infrastructure currently capable of IoT machines-to-enterprise communications.[iv] Many manufacturers report “network overhaul required.”

For SMEs, the statistics are even worse.[v]

You may not be able to replace your IT overnight, but you can start planning — and investing —today. Identify where legacy IT creates risk in your organization — to worker safety, data security, customer satisfaction — and prioritize where to spend first. Adoption of cloud-based IT solutions, whether alone or alongside legacy on-site systems, can help.

Is your company ready to compete in an era of digitization?

 

[i] “Worldwide IT Spending Will Reach $2.8 Trillion in 2019 with the Strongest Growth Coming from the Healthcare Industry, According to IDC,” IDC, Feb. 4, 2016.
[ii] MPI Manufacturing Study.
[iii] MPI Manufacturing Study; manufacturers with less than $25 million corporate revenues.
[iv] MPI Internet of Things Study
[v] MPI Internet of Things Study, manufacturers with $100 million or less revenues

 

© The MPI Group 2017