Priorities for Adopting an Exponential IT Mindset in the Non-Durable Goods Manufacturing Industry

Adopting Exponential IT is critical for business growth and sustainability.

Analyst perspective

Enable value creation through Exponential IT.

In an era where the digital and physical realms are increasingly intertwined, the adoption of advanced, exponential technologies is no longer a luxury but a necessity for survival and competitive success.

The manufacturing sector stands at a crossroads. Industry 5.0 has begun to usher in a profound paradigm shift that challenges traditional manufacturing philosophies. The integration of technologies like artificial intelligence, the internet of things, and advanced robotics enables a level of precision, efficiency, and customization previously unimaginable.

The role of IT in this transformation is nothing short of critical. Advanced IT maturity will be essential to integrating new technologies into existing manufacturing ecosystems as well as enabling seamless connectivity, data integrity, and system security.

Lingering supply chain issues, geopolitical tensions, labor shortages, and increased costs from inflation have non-durable goods manufacturers worried about performance and productivity. The price of goods is increasing, and volume gains are stagnating. This is not sustainable for the industry. CIOs are beginning to take center stage in navigating these complexities effectively and steering their organizations toward a future that is more efficient, sustainable, and profitable. This is why it is crucial for CIOs to understand the working priorities that underpin the use of Exponential IT and use these concepts to their advantage.

Shreyas Shukla

Principal Research Director, Manufacturing Practice
Info-Tech Research Group

Executive summary

Info-Tech Insight

The non-durable goods manufacturing industry is facing unique challenges, from technological adoption and workforce adaptation to ethical considerations and sustainability goals. Understanding the barriers and embracing the opportunities presented by exponential technologies will allow manufacturers to optimize their operations and drive innovation, competitiveness, and sustainable growth.

Info-Tech Research Group: EXPONENTIAL IT

What is Exponential IT?

Exponential IT is a framework defined by Info-Tech Research Group.

The technology curve has recently bent exponentially.

Generative AI has been the catalyst for this sudden shift, but there are more and more new technologies emerging (e.g. quantum computing, 5G), putting significant pressure on all organizations.

Speed is now imperative. All IT leaders and organizations are at risk of falling behind if they do not adopt new technologies fast enough.

Our framework instructs all IT leaders on how to transform their organization and elevate their value-creation capabilities, to close the gap between the exponential progression of technological change and the linear progression of IT’s ability to successfully manage that change.

This research allows IT leaders to understand the industry-specific priorities for Exponential IT and begin an effective Exponential IT transformation, resulting in value creation.

Your Exponential IT Journey

To keep pace with the exponential technology curve, adopt an Exponential IT mindset and practices. Assess your organization’s readiness and embark on a transformation journey. This report will provide greater insights to help you build your Exponential IT Roadmap.

To access all Exponential IT research, visit the Exponential IT Research Center

Go to this link

Adopt an Exponential IT Mindset

Info-Tech resources:
Exponential IT Research Center , Research Center Overview , and Keynote

Explore the Art of the Possible

Info-Tech resources:
Exponential IT research blueprints for nine IT domains

Gauge Your Organizational Readiness

Repeat Annually

Info-Tech resource:
Exponential IT Readiness Diagnostic

Build an Exponential IT Roadmap

Repeat Annually

Info-Tech resource:
Develop an Exponential IT Roadmap blueprint

Embark on Your Exponential IT Journey

Info-Tech resources:
Ongoing and tactical domain-level research and insights

The pace of technological change will continue to increase exponentially in Manufacturing

IT must solve the problem of rapidly and exponentially increasing expectations.

Organizations are adopting exponential technologies at an accelerated rate due to the rapidly changing landscape. Traditional linear IT is no longer viable to sustain IT’s place as the leading technology provider for their organization.

Failure to launch will leave you far behind. The chasm between the organization’s desire to harness technology and IT’s ability to deliver it will continue to widen.

The challenges with traditional linear IT:

• Slow to adapt to more modern service delivery models
• Processes and decision-making that can’t accelerate to meet demand
• Transactional arms-length relationships with organization units and vendors
• Insufficient funding and focus on technology innovation
• Locked into a siloed and hierarchical operating model

The Case for Exponential IT

IT needs to fundamentally transform the way it is operating in the following ways:

• Build an Adaptive Delivery Model: Enable flexible and efficient delivery of products and services.
• Optimize & Autonomize Operations: Maximize efficiency while mitigating risks through intelligent automation and data-driven decision-making.
• Broker Strategic Relationships: Strengthen and build both external and internal relationships to better align IT capabilities to organizational goals.
• Embrace Digital Innovation: Evaluate and adopt solutions that drive consumer value, enterprise growth, and innovation.
• Cultivate Workforce Flexibility: Dismantle traditional jobs and hierarchies, normalize new collaborative ways of working, and adopt a federated and hybrid IT operating model.

The non-durable goods manufacturing industry is struggling with adoption of exponential technologies

Outdated Talent Strategy

• Manufacturers are struggling to improve talent attraction and retention. This is a challenge for 75% of manufacturing executives (NAM, 2023).
• Experienced workers are retiring faster than they can be replaced. Over 33% of the manufacturing workforce was over 55 years of age in 2022 (Deloitte Insights2Action, 2023).
• A large proportion of the current workforce will need to be reskilled to work with emerging technologies. 45% of manufacturers are planning to use Gen AI, and 36% are already using Gen AI (APQC, 2024).

Supply Chain Disruptions

• Manufacturers are yet to see a return to prepandemic supply chain normalcy. Average lead time for production materials is still 37% longer than before the pandemic (“Manufacturing Industry Outlook” Deloitte Insights, 2024).
• Manufacturers continue to be impacted by an inflationary operating environment. Over 95% of retail sales value growth in the US and Europe came from inflation-related price increases (Bain & Company, 2024).

Technology Maturity & Data Silos

• Manufacturers realize that investing in advanced tech is the only path to resilience and new growth opportunities. 55% of manufacturers expect to spend more on advanced technologies in the next 12 months (APQC, 2024).
• Manufacturers that made early investments in advanced digital technologies are seeing several performance advantages. Manufacturers with digital transformation as a top priority performed 15% better than competitors (Bain & Company, 2024).
• Manufacturers are looking to better use data to improve their planning processes. 72% of manufacturing executives consider advanced analytics to be more important now than they were three years ago (WEF, 2021).

Evolving Regulations & Consumer Preferences

• Regulators are incentivizing and consumers are prioritizing sustainability and product decarbonization. Less than 30% of manufacturers are prepared to meet their Scope 1–3 decarbonization commitments (Bain & Company, 2024).

89%

of manufacturers plan to modernize their business-critical systems.

“Industrial Equipment Manufacturers” Avanade Research, 2019.

87%

of manufacturers have innovation in smart manufacturing as a top area of focus.

APQC, 2024.

86%

of manufacturers believe that smart technologies will make them more competitive.

"Manufacturing Industry Outlook” Deloitte Insights, 2024.

43%

of manufacturers are already using AI/ML in some form in their organization.

“Manufacturers’ Outlook Survey” NAM, 2023.

Imperatives for Exponential IT adoption and resiliency in non-durable goods manufacturing

Market expectations and obstacles

1. Digital, human-centric manufacturing

   • Establish digital training programs, incentivize reskilling, and deploy digital tools for productivity. Prepare for IT/OT convergence.
   • Enable safe human-machine interactions through the deployment of remote monitoring, safety sensing systems, and collaborative robotics.
   • Define clear, transparent, and digitally trackable performance criteria through OKRs and SMART metrics.

2. Advanced, purpose-built software

   • Invest in end-to-end supply chain visibility and automated risk assessment systems.
   • Deploy advanced S&OP software for integrated business planning, accurate demand planning, and agile scheduling.
   • Ensure close integration between top-floor & shop-floor applications and use AI for optimized production and manufacturing agility.

3. Connectivity, automation & data-driven decisions

   • Use connected machines, devices, and systems that communicate with each other to streamline operations.
   • Enhance agility by producing customized products efficiently, thus adapting quickly to changing market demands.
   • Optimize processes, enhance decision-making, encourage innovation, and enable predictive maintenance using extensive data collection and analysis.

4. Sustainability, circularity & compliance

   • Establish clear, transparent, and quantifiable sustainability goals. Reengineer processes to be more resource efficient and circular.
   • Monitor resource and energy consumption. Analyze sourcing activities and procurement strategies.
   • Invest in sustainability management and compliance systems to help track, analyze and report accurate ESG metrics.

Info-Tech Insight

The integration of exponential technologies results in a more connected, collaborative, data-driven, and resilient manufacturing environment. The use of AI, advanced software, and autonomous robots is helping manufacturers accelerate value realization, enhance resiliency, and improve the talent experience.

Business opportunities are developed from industry disruptions