Engineering manufacturing operations fit for Industry 4.0 requires planning and processes that are increasingly intelligent by design. Jason Lo, Head of Strategy for China, Honeywell discusses how industry players can build for the future while hedging uncertainties and rethinking their business models.
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Industrials, Manufacturing and Transportation INDUSTRY INSIGHTS: MAKING MANUFACTURING SMARTER
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Facing political and economic uncertainty, industry players need to consider becoming more asset light by turning fixed costs into variable costs, such as by leasing instead of buying factory or office space, establishing original equipment manufacturer (OEM) partnerships, or outsourcing non-core activities. In times of economic volatility, an asset-light model allows the business to scale flexibly according to economic cycles and reduces risk exposures, particularly in emerging markets which are more susceptible to shocks.
AN ASSET-LIGHT MODEL WILL HELP IMT CORPORATIONS REMAIN AGILE AND REDUCE RISKS
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As spending power in Asia’s middle class continues to rise, industry players not only need to compete in the cost-competitive market segment, but should also consider the emerging premium segment, which could provide better pricing and profit margins. However, companies need to re-think their products and solutions for the discerning nouveau riche end-users who rose from rags to riches. Corporate customers who are gaining scale and maturity are increasingly considering life cycle cost. Instead of buying the cheapest available power generator, for instance, businesses are evaluating efficiency, maintenance cost, down time, and cost of operations.
LONG-TERM THINKING AND VISION WILL BE KEY TO COMBATING COST PRESSURES
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IMT businesses must consciously shift investment from traditional to digital offerings. They then need to build an innovation process with tangible steps into their product development cycles. At Honeywell, all our different businesses draw up strategic plans annually and then spend a significant portion of our revenue on R&D. Our process begins with understanding mega-trends, generating ideas based on customer feedback, and having these ideas compete for funding. Businesses must bear in mind that internal innovation requires top level commitment and often takes a lot of experimentation. They need to recognize that digital transformation is not a matter of choice but a matter of survival, and that new organizational DNA is necessary for them to upgrade to their digital selves.
EXPERIMENTATION WILL BE THE SECRET INGREDIENT TO SIGNIFICANT, LONG-TERM CHANGE
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