In association withIn partnership with

2019 © Daisy Corporate Services Trading Limited (CRN: 02888250)

daisyManufacturing

report 2019

2

The rapidly-advancing technologies driving Industry 4.0 are bringing about social and economic change rapidly in an environment of unparalleled global connectivity and demographic change.

It’s a time of great opportunity, but also risk.1

“

”

1 “The Fourth Industrial Revolution is Here – Are You Ready?”, Deloitte Industry 4.0 report press release, quote Punit Renjen, Deloitte Global CEO, January 2018

CONTENTS

Introduction 2

Question 1What do you see as the biggest challenges/risks facing your business over the next 36 months

5

Question 2Do you have a joined-up business and IT strategy?

4

Question 3Do you currently have a Smart Factory strategy?

6

Question 4It has been shown that creating a connected workforce via a unified communications (UC) strategy can help boost productivity. Which are the most vital areas in your business?

7

Question 5Are you looking at opportunities to integrate your Internet of Things (IoT) strategy with your unified communications (UC) strategy?

8

Question 6Industry 4.0 or the Fourth Industrial Revolution (4IR) is the merging of digital technologies and industrial production, to create a Smart Factory. Of the four aspects below, which is the area you are focussing most attention on?

9

Question 7For your business to achieve a continual improvement in output and efficiencies, what are the most crucial investments you need to make?

9

Question 8What is your IT spend?

10

Conclusion 12

About Daisy Corporate Services 13

3

INTRODUCTIONNick Peters, Editorial Director of The Manufacturer

As I travel the UK meeting manufacturers of all sizes and types, I am struck by two impressions that are so starkly different as to be almost contradictory.

The first is that UK manufacturing is bubbling with enterprise, innovation and passion. The history books will surely show that the last 30 or so years of decline were simply a blip in an otherwise stellar national story.

The second is that there is a strong streak of reticence among manufacturers. Many of these bold, innovative companies seem paralysed by the prospect of embracing what has rather unfortunately been dubbed the Fourth Industrial Revolution. I say unfortunately because it has been presented as something fundamental that will force manufacturers to implement root and branch change. Many fear such a prospect, and rightly so. They may have fine-tuned a Lean production system that they believe will now be disrupted by data-driven automation and decision-making, and that it will take time and money they can ill afford to get back on track.

The truth is, it doesn’t need to be – indeed, it shouldn’t be – like that. If we approach the issue another way and ask manufacturers: “If I offered you new technologies and systems that will deliver cost-savings, productivity and improved margins, would you listen to me?”, then surely it is a much simpler process. The fact is, new digital technologies are not scary and disruptive. They can be introduced gradually, as a business evolution, not revolution.

This is why Daisy’s report is so interesting and timely. The underpinning feature of industrial digitalisation is communication, machines speaking to machines, with software then collating the messages and channelling them into the company’s decision-making structures. Daisy is in the communications business, so it makes complete sense to establish whether companies’ communications strategies are unified – as in their production messaging being streamed into their corporate telecoms systems, thus enabling access by supply chain partners, customers and field service agents, for example – or kept separate from each other. The report shows that a majority of companies believe the latter, and that data messaging is significantly more important to internal consumers of information than external.

I would regard that as unfortunate. If we return to the question I posed earlier, it should not be a difficult concept to grasp. The more efficiently data is communicated to the people who need it, the more efficiently companies will perform.

Having said this is unfortunate, I believe we should not be too concerned. UK manufacturing is in the relatively early days of the digital conversation (yes, other countries are ahead of us so we do need to talk more quickly!) and in common with other IT functions that are regarded as “back office”, unified communications has had to take a back seat to more production-focused applications of Industry 4.0 technologies. That will change. Companies who look at their operations in the 360º round know there is little point speeding up information flow in one sector if there isn’t a system in place to make that information available to all the people to whom it is of value.

That is why Daisy’s report makes such an important contribution to the debate. As more and more manufacturers begin to understand that digital technologies are not a challenge but a huge opportunity to create a brighter and more profitable future for themselves, their workforces and their customers, then these barriers to understanding will fall away.

Finally, I would like to thank Daisy for inviting The Manufacturer to be a partner in producing this report. We take great pride in leading the conversation around the future of manufacturing in the UK and we are honoured that a distinguished company as Daisy has joined us in making that conversation richer and ultimately more productive.

Nick Peters Editorial Director, The Manufacturer

This report summarises the experiences of a cross section of the UK manufacturing sector. In total, 65 UK organisations – spanning from smaller manufacturers (employing less than 500 employees) to larger organisations (employing 500 staff or more) – share their key priorities and concerns and provide insight into their plans for the next 36 months.

4

Both recruitment and finance are perceived by the majority as being a low or very low priority in the next 36 months. This suggests that should the need to invest in the right technology or the right people arise, then technology would take precedence.

Manufacturers of all sizes place an ongoing emphasis on productivity so it is not surprising to see this as a key focus across the board.

The responses of larger businesses (500+ employees) are broadly in line with the overall sector, with more than 60% of that audience stating new technology and productivity are of either a high or very high priority, while 73% say that exporting was of a low or very low priority.

QUESTION 1:What do you see as the biggest challenges/risks facing your business over the next 36 months?

The results of this question highlight the ongoing concerns of the manufacturing sector around the adoption of new technology, and continuing uncertainty surrounding Brexit and the future relationship with the European Union (EU). There is a correlation between some of the participating larger manufacturers having EU-based manufacturing capacity or indeed their core manufacturing capability being wholly within the EU, with local UK resources already in place.

Finance New technology Brexit uncertainty Recruitment Productivity

Figure 1

What do you see as the biggest challenges/risks facing your business over the next 36 months?

Highest priority Lowest priority

Figure 1.1

Large manufacturers’new technology priorities

Figure 1.2

Large manufacturers’exporting priorities

Highest priority Lowest priority

6%7%

7%20%

40%

20%

13%

7%

7%

33%

40%

5

QUESTION 2:Do you have a joined-up business and IT strategy?

In the Daisy Digital Transformation Survey conducted in 2017, it was revealed that 63% of UK businesses had a formal digital transformation strategy. While this provided a much broader overview of the UK industry in general, it provides a good context within which to both compare and contextualise the findings of this next question.

26% of manufacturers stating that they had no collective business and IT strategy or, concerningly, don’t know where to start is significantly more than 14% of UK businesses that said they didn’t have any strategy at all and aren’t doing any digital transformation work. In this respect, it seems as though the manufacturing sector may be technologically advanced, but there is significant disconnect in some organisations between the uses of technology in alignment with core businesses objectives.

Figure 2

Do you have a business and IT strategy?

Yes, this is an embedded partof our business planning process

Yes, we have started work on one

No, we are not sure how or where to start

31%

43%

26%

When we dig into the data, we see that those who either have an IT strategy underway or have one embedded in their business planning are predominantly larger manufacturers. The gap in this critical, strategic thinking – the 26% who said they are not sure or don’t know how or where to start – would therefore seem to lie with those manufacturers with less than 500 employees.

According to the Office of National Statistics2 the UK has 121,175 manufacturers with less than 250 employees which would lead to some 31,000 small to medium-sized manufacturers not knowing how to begin linking their business goals and IT strategy together.

6

QUESTION 3:Do you currently have a Smart Factory strategy?

The Manufacturer defined the concept of a Smart Factory as “the computerisation of manufacturing, involving systems that communicate with each other, monitor physical processes and make decisions.”3 This level of interaction between people, systems and processes, goes beyond the concept of automation and turns the factory into an organism where data is its lifeblood.

Figure 3

Do you have a Smart Factory strategy?

Yes, it’s currently being formulated

Yes, we have an ongoing Smart Factory strategy

No, but we plan to have one in the next 3-5 years

No, we are unlikely to have one anytime

20%

21%

43%

16%

This question reveals that not only did 16% of the total respondents not have a Smart Factory strategy, but were also unlikely to have one. This was not just among small to medium manufacturers, as 6.7% of large manufacturers also stated that this concept of a Smart Factory was currently outside of their scope of thought. That being said, in the larger manufacturing space as a whole, more than half of those surveyed did have an ongoing Smart Factory strategy.

7

1Statistical bulletin: UK business; activity, size and location: 2018, Becky Shaw, 3rd October 20182The Manufacturer – “Will 2017 be the year of the smart factory?” Published 30th December 2016

QUESTION 4:It has been shown that creating a connected workforce via a unified communications (UC) strategy can help boost productivity. Which are the most vital areas in your business?

With the continuing focus for manufacturers surrounding productivity, it is unsurprising that the priority in creating connected organisations is still on connecting machines to plant, and in turn, plant to the back office.

Much less of a concern appears to be connecting field service management teams and customers to either machines or to manufacturers’ back office functions.

While the graph above shows the priorities of all respondents, the priorities of larger manufacturers remains consistent with those across the sector and it is interesting to note that, despite the obvious focus on machine-to-plant and plant-to-back-office, 26% of large manufacturers felt that their highest priority was connecting back office functions to customers. This automation of insight to customers, and the way that this can lead to a more collaborative experience overall, can improve the customer experience.

Highest priority Lowest priority

Figure 4

Which are the most vital areas in your business?

Machine tocustomer

Your field servicemanagement

team

Back-office tocustomer

Back-office tosupply chain

Plant toback-office

Machines toplant

8

QUESTION 5:Are you looking at opportunities to integrate your Internet of Things (IoT) strategy with your unified communications (UC) strategy?

As a supplementary question to question 4, the findings here were no less informative. Overall, the majority of respondents – around 75% – indicated that they were not intending to incorporate their IoT strategy into their UC strategy.

One of two possible conclusions could be drawn from this; either the respondents wished to keep these two plans separate or that one, other or both of these strategies were not formalised in their organisation.

Significantly, amongst the large manufacturers, the percentage increases dramatically to 43%; they make up over 56% of all respondents who positively responded that they are investigating the merging of their IoT and UC strategies.

Figure 5

Are you looking at opportunities to integrate your Internet of Things (IoT) strategy with your unified communications (UC) strategy?

No

Yes

25%

75%

9

QUESTION 6:Industry 4.0 or the Fourth Industrial Revolution (4IR) is the merging of digital technologies and industrial production, to create a Smart Factory. Of the four aspects below, which is the area you are focussing most attention on?

The predominant focus of manufacturers in this area is automation – with 43% of those surveyed stating that was their key focus.

The fact that communications infrastructure comes in second is thought-provoking, given that previous questions showed most manufacturers were maintaining a separate UC strategy. This in turn supports the notion that aside from automation, manufacturers are seeing communications technologies as a strategic aim.

Figure 6

Of the four aspects below which is the area you are focusing most attention on?

43%

29%

14%

14%Automation

Communication infrastructure

Internet of Things (IoT)

Big data

4IR

10

QUESTION 7:For your business to achieve a continual improvement in output and efficiencies, what are the most crucial investments you need to make?

Again underlying the importance that manufacturers of all sizes place on their communications infrastructure, more manufacturers considered investment in this area to be more important than investment in new machinery. It is unsurprising that employee motivation and training remains the key emphasis overall, but interestingly, it is a higher priority among large manufacturers .

Amongst these large manufacturers, (those with more than 500 employees), 46% stated that employee motivation was their number one priority in terms of investment, with a further 40% stating unified communications (UC) infrastructure as their primary focus. It could be argued that these two areas interrelate and this is why these large, often multi-location and multi-national entities, place such a prominence around future investment in these areas.

Figure 7

For your business to achieve a continual improvement in output and efficiencies, what are the most crucial investments you need to make?

43%

20%

23%

14%Employee motivation and training

New machinery

Unified communications infrastructure

End to end review of cycle timeframes

11

QUESTION 8:What is your IT spend?

To better understand the way in which manufacturers emphasise the investment in IT within their organisation, we asked this simple question. The majority (56%), of respondents spent less that £250k on IT investment. Yet thought-provokingly, the next highest number of respondents, (16%), reported that their organisation spend in excess of £2M on IT each year.

As you might expect, this elevated level of IT spend is biased towards the larger manufacturers with 69% of respondents declaring that their organisation spends in excess of £1M on IT each year.

At the opposite end of the scale, 8% of large manufacturers spend less than £250k which, given the previous responses in terms of priorities; the aspirations that manufacturers have surrounding Industry 4.0; key investment in their organisation and the way they deploy and utilise technology – seems problematic.

Under £250k

£250k-£500k

£500k-£1m

£1m-£2m

£2m+

56%

9%

7%

16%

12%

Figure 8

What is your IT spend? Figure 8.1

What is your IT spend (large manufacturers)?

Under £250k

£500k-£1m

£1m-£2m

£2m+

8%

54%

23%

15%

12

CONCLUSIONBusinesses thrive on communication, it helps get things done faster, smarter and more efficiently. It wouldn’t be an understatement to say that communication is a key driver of competitive advantage.

The advancement of digital enterprise technologies has fundamentally changed the way businesses communicate, both internally and externally. From the humble email to smart mobile devices, cloud platforms and next generation apps, never have manufacturers’ customers, suppliers and employees been so connected. Yet, at the same time, these ever-growing, multi-platform networks comprised of old and new technologies can become unwieldly and difficult to manage, restricting the very agility and collaboration they were once revered for.

Recognising this, forward-thinking organisations have moved to unify their IT, cloud and communication systems.

What are unified communications?To become a true digital business, an organisation needs to adopt an ‘always on’ infrastructure, supported by an agile workforce which is always fully connected and protected.

Rather than a single product or collection of disparate products, unified communications provide a consistent user interface and user experience across multiple devices and media types.

In this way, unified communications enable seamless information sharing, knowledge gathering, collaboration and productivity.

13

MAN-RE-0719

2019 © Daisy Corporate Services Trading Limited (CRN: 02888250). All rights reserved.

Learn more at www.dcs.tech

Contact us today to see how Daisy Unified Communications solutions, powered by Mitel, can benefit your business.

0344 863 3000 enquiry.dcs@dcs.tech

About Daisy Corporate Services

Daisy Corporate Services is the UK’s #1 independent provider of secure IT, communications and cloud technology. We offer a breadth of solutions from the most trusted brands and technologies on the market. By bridging the gap between old and new technology, we make businesses smarter by transforming customer engagement, managing costs and making people more efficient.

Daisy, in partnership with Mitel, work with over 250 forward-thinking manufacturers to help them future-proof their IT, their cloud and communications systems, including Bakkavor, Fellowes, Swizzels Matlow, Comma Oil & Chemicals, Jackson Lifts, Truck-lite, GB Agencies, Kronospan, Senvion and more. We develop for them a collaboration infrastructure, increasing their connectivity and providing ROI and business case assistance. We enable manufacturers to achieve this transformation through flexible tailor-made investment options and competitive finance arrangements.