European Manufacturers Building Smarter, More Sustainable Factories
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The integration of smart technologies such as AI and digital twins into the European manufacturing sector signals a transformative shift towards Industry 4.0. This evolution is expected to enhance operational efficiency and sustainability, which could lead to a competitive advantage for early adopters and potentially increase their market share. The emphasis on sustainability aligns with global regulatory trends and consumer preferences, potentially improving brand perception and customer loyalty.
From an investment perspective, the report's identification of key players as 'Leaders' and 'Rising Stars' provides a valuable benchmark for stakeholders. Companies that are recognized as leaders in adopting these technologies may be well-positioned for growth, attracting investor interest. Furthermore, the diversification of supply chains as a response to vulnerabilities exposed by the COVID-19 pandemic indicates a strategic pivot that could mitigate future risks, potentially leading to more stable stock performance for these companies.
The adoption of AI and digital twins is expected to lead to cost savings and efficiency gains in the long term, which could positively impact the financial health of manufacturing companies. By streamlining processes and reducing error rates, these technologies can lower operational costs and increase output quality. Investors should monitor the capital expenditures associated with these technological investments and weigh them against the anticipated ROI. Companies that manage to effectively integrate these technologies could see improved profit margins and earnings growth.
Additionally, the creation of new aftermarket business models and revenue streams, as highlighted in the report, suggests potential for new income sources that could diversify revenue and reduce dependency on traditional manufacturing. This strategic move could enhance the valuation of companies in the eyes of investors, as they demonstrate innovation and adaptability in a changing market landscape.
With the increased reliance on connected technologies, the importance of operational technology (OT) security cannot be overstated. As European manufacturers integrate more Internet of Things (IoT) devices and digital twins, they become more vulnerable to cyber threats. A breach in OT security could lead to significant financial losses, operational downtime and damage to a company's reputation. Investors should consider a company's commitment to OT cybersecurity as a critical factor in evaluating its long-term viability and potential liability risks.
Companies that proactively seek out providers with expertise in deploying OT-cybersecurity-compliant systems demonstrate a prudent risk management approach. This foresight could be indicative of strong governance practices, which is a positive sign for stakeholders concerned with the sustainability and resilience of their investments in an increasingly digital manufacturing landscape.
Smart technologies such as AI and digital twins will play a key role in fundamentally changing the face of the European manufacturing sector, ISG Provider Lens™ report says
The 2023 ISG Provider Lens™ Manufacturing Industry Services and Solutions report for
“Service providers are helping clients in various areas of product innovation and lifecycles,” said Philipp Glatz, ISG partner and Smart Manufacturing lead for EMEA. “Some providers are also working on solutions that use digital twins to optimize supply chains and make factories more sustainable.”
There is an increasing emphasis on implementing supply chain sustainability strategies due to pressure from government agencies around the world, the ISG report says. Manufacturers and their suppliers are looking to diversify their supply chains to mitigate vulnerabilities in reliability and resiliency that were exposed by the COVID-19 pandemic, ISG says.
Digital twins are considered a key technology for facilitating the adoption of the factory-of-the-future concept because they help manufacturers to streamline processes and detect possible damage and errors faster, the ISG report says. European manufacturers can use the simulations that digital twins provide to translate their strategies from the boardroom to the shop floor, the report says. As the use of digital twins and AI increases, updating and strengthening operational technology (OT) security will steadily grow in importance, ISG says. According to the report, manufacturers will need to find the right providers to help them deploy OT-cybersecurity-compliant systems and data.
“The factory of the future is already here,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “The use of AI, IoT, digital twins and the convergence of IT and OT are poised to fundamentally redefine factory operations.”
The report also examines how enterprises are turning to service providers to help them develop new aftermarket business models and revenue streams.
The 2023 ISG Provider Lens™ Manufacturing Industry Services and Solutions report for
The report names Accenture, Capgemini, HCLTech, IBM Consulting, Infosys, TCS and Wipro as Leaders in all four quadrants, while Cognizant is named as a Leader in three quadrants. Eviden, Harman DTS and LTTS are named as Leaders in two quadrants each, while Akkodis, NTT Data and Tech Mahindra are named as Leaders in one quadrant each.
In addition, Hitachi Vantara is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants, while Akkodis and Cognizant are named as Rising Stars in one quadrant each.
The 2023 ISG Provider Lens™ Manufacturing Industry Services and Solutions report for
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across
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About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in
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