The Surprising Truth Small And Midsize Industrial Manufacturers Must Face

David Parrish

Part 1 of the “Digitally Transforming Industries” series

Looking back on my career, one thing is clear about the industrial machinery and components (IM&C) industry: The challenges and risks experienced in the supply chain, production floor, and operations are all the same for small, midsize, and large businesses. Yet the impact of every decision, problem, gain, or loss is magnified immensely for small and midsize companies because of their size and ecosystem footprint.

IM&C manufacturers have long relied on digital technology to increase efficiency and reduce costs.

Based what I’ve seen during my 25-year experience in the industry, the industry in general has done a great job of achieving this strategy with significant levels of efficiency. And although there’s always room to do better, most firms realize that the cost of moving from 98% efficiency improvement to 99% requires a similar investment in time and money that was used to achieve the first 98%.

This high level of optimization does not mean that IM&C small and midsize businesses (SMBs) are not looking for new ways to leverage digital technology. IDC recently released an industry brief, sponsored by SAP, titled, “Manufacturing: Small and Midsize Industrial Machinery and Components Manufacturers Are Using Technology to Make a Difference” revealing that a large percentage (77.8%) of IM&C SMBs view advanced technology as a competitive differentiator. These firms agreed that technology is helping them upgrade and automate business processes that inform and guide operations to ensure in-the-moment response to customer demand, resource volatility, and potential disruptions along the value chain.

Evolving the digital mindset changes the game

Whenever a business operates in a small and midsize environment, the smallest change can make a big impact, for the better or worse. Any investment – technology or otherwise – must produce improvements as quickly as possible that provide a jump-off point for sustainable growth and endless opportunities for expansion.

Take Fumajet, for example. The company’s MOTOFOG technology installed on motorcycles offers government and nongovernment agencies, along with private farmers, a high-efficiency and low-cost alternative for controlling pests in hard-to-reach urban and rural geographies. With its workforce of just 17 employees, Fumajet serves customers in Brazil, Angola, the Dominican Republic, and Equatorial Guinea. Like many IM&C firms, manual, disparate systems threatened the company’s ability to plan ahead and set the stage for meteoric growth.

After examining its IT infrastructure and business needs, Fumajet replaced its slow bureaucratic systems with faster, more productive processes to boost information transparency, provide solid business projections, and communicate quickly and easily. Not only are internal stakeholders raving about the new system, but analysts can make important business decisions based on reliable data. And above all, the company is experiencing higher productivity and exponential growth. 

It’s time for IM&C SMBs to rethink their digital attitudes

Taking advantage of the latest digital innovation opportunities is not a natural choice for most firms. However, with so many technologies available, it can be difficult to tell which ones will deliver competitive advantages and yield an ROI that recoups the initial investment. On the other hand, doing nothing can be even more disastrous.

Competing in this ever-evolving landscape of globalization, startups, and digitally empowered consumers requires small and midsize IM&C firms to evaluate how their business is performing, what customers want, where the industry is heading, and which digital technology can drive future success. 

To learn how your business can better prepare for the digital economy, check out IDC’s recent industry brief, “Manufacturing: Small and Midsize Industrial Machinery and Components Manufacturers Are Using Technology to Make a Difference” (August 2016). Be sure to check every Wednesday for new installments to our blog series “Digitally Transforming Industries” to explore the challenges growing small and midsize companies face in a variety of industries.

David Parrish

About David Parrish

David Parrish is the senior global director of Industrial Machinery & Components Solutions Marketing for SAP. Before joining SAP, he held various product and industry marketing positions with J.D. Edwards, PeopleSoft, and QAD going back to 1999.