Digital transformation is a top priority for many manufacturers. But replacing old and creaky legacy systems with new cloud-based and commerce-enabled applications and overcoming internal problems to transform the enterprise are easier said than done, says new research from applications integration provider Cleo.
The research, based on a survey of 200 manufacturing companies, finds that nearly universally manufacturers rank the digital transformation process as a top priority. Yet key challenges remain.
Among them are supply chain disruptions from badly integrated backend and frontend computer systems. For example, 90% of manufacturing companies report losing business due to integration issues, with 42% saying they are losing $500,000 or more in revenue per year, 18% over $1 million, according to the Cleo survey.
Disruptions in the supply chain of procuring the needed materials and services to keep production lines humming and delivering products to customers are also big obstacles. The survey finds that 93% of manufacturers say supply chain and integration issues delay bringing new customers and partners into the production and delivery process.
“Business partner onboarding, a revenue-critical activity which nearly two-thirds (62%) felt should take seven days or less. “Numerous challenges during onboarding were reported by more than 9 out of 10 companies, including handling unstructured data types, poor application programming interfaces (APIs), lack of common EDI standards, and more,” the Cleo survey notes. “Another challenge is a huge range of applications that need integrating on the back-end to support the supply chain, with over 70% of participants indicating they have at least ten important integration initiatives.”
To speed up the pace of digital transformation, manufacturers plan on implementing a slew of new technologies—including launching or expanding ecommerce and participation in B2B marketplaces, according to the survey.
Specifically, 61% of manufacturers plan on implementing better systems integration followed by improved automating processes (59%), engaging in B2B marketplaces (53%), developing better distribution capabilities (52%), use application programming interfaces (APIs) in addition to electronic data interchange (EDI), selling through a B2C ecommerce site (47%), and eliminate data silos through data integration (46%).
“Not every manufacturing company has the same approach to digital transformation, but on average about half agree on what the essential elements should be,” the report says.
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