Industry 5.0: why manufacturers need accurate cost data

It’s fair to say that the idea of ‘the new normal’ has become somewhat of a buzzword for business. Even in the industrial realm – a space often criticised for its lack of forward-thinking – this phrase is already redundant. Instead, to remain competitive and thrive in a new digital era, manufacturers should already be preparing for the next normal – and the subsequent arrival of Industry 5.0.

As with every step change, the majority will need to invest in new strategy, tools, personnel, and capabilities to meet the next normal’s needs. But what if you’re channelling those investments in the wrong places, or at the wrong times? To fall behind when two simultaneous transformations are occurring would be a disaster.

And that’s why manufacturers need accurate cost data. The c-suite must gain a transparent view of spend vs business value generated in order to stay in the ring. An integrated, high-performance and flexible financial management solution can create a holistic overview of your current capabilities, enabling manufacturers to maintain an end-to-end view across their entire technology ecosystem and steer business in the right direction by effectively freeing up liquidity. This will, in turn, empower them to invest in the Industry 5.0 future that awaits.

Survival of the fittest

Keeping ahead of the industry curve is hardly a novel idea, of course. McKinsey perhaps put it most aptly, with its assertion that ‘stay[ing] competitive in this business and economic environment requires new strategies and practices’. But the landscape in which this is occurring has changed drastically in the space of just 12 months.

What initially was a period of reactivity, desperation and even camaraderie within sectors is now a more potent game of ‘survival of the fittest’ than we had even prior to the pandemic. Digital investment and enhancement is no longer the ship-steadying exercise it was last year. Businesses have readjusted, caught up with digitisation programmes that they probably should have been exploring even without COVID, and have perhaps even come out the other side with a stronger and more progressive strategy.

The tenets of 5.0 tenets: sustainability and servitisation

However, looking forward to that ‘next normal’, the pressure on digital investment ramps up again. And it’s here where the fittest will prevail. Manufacturing’s victors will no longer be dictated by who adopts and integrates Industry 4.0’s leading players – IoT, AI, robotics: future champions will be those adhering to Industry 5.0’s requirements. And here, operators will need a more personal, broad and ethical approach.

Servitisation is a strong first port of call, highlighted by 78% of UK manufacturers developing a form of service-based business model to enable stronger value-add services to a more powerful consumer contingent than ever before.

Toeing this line further, sustainability is perhaps the clearest transitionary sign between 4.0 and 5.0. And it’s not just a case of being green, as we’ve traditionally seen through manufacturing’s lean attempts. It means human sustainability in terms of employment and resourcing, as well as financial sustainability in terms of value chain attractiveness, prospective longevity, profitability, and forward planning.

Financial management: the next step for success

It is clear digital investment is no longer the ship-steadying exercise it was last year. Thriving in the next normal will require strategic decision making that can only be achieved through cost visibility and effective cost management. The opportunities for manufacturers that can drive value from these investments are endless.

For further information on how an effective financial management solution could help you leverage the benefits of an Industry 5.0 future, by taking a holistic view of your business, take a look at our latest manufacturing webinar:

Learn how to manage the cost of IT spend in manufacturing!

You can also have a look at the Serviceware Financial solution or contact us here.

 

Ronnie Wilson

Written by Ronnie Wilson

Serviceware’s Group Executive Vice President, Ronnie Wilson, has over 30 years of international experience in the IT sector, including 11 years as CEO at a FTSE 100 company, taking it through the 2008 financial crisis to a sale in 2009. Now, during these difficult and uncertain times, he has written a series of blog posts that draw on his wealth of experience particularly through challenging economic environments and crises. He talks about relevant situations faced in senior leadership roles and explains challenging C-suite scenarios and how they can be managed during an economic recovery.


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