The Manufacturing Industry has embraced a “lean philosophy” as a result of the economy and modernization efforts. IT is essential to fulfilling this function as operational efficiency becomes a primary objective for manufacturers. The economic downturn also caused many manufactures to drastically reduce inventory levels as demand levels decreased. Group VP of Research for IDC, Bob Parker, thinks that this has caused a permanent change in manufacturing business models resulting in “the intelligent economy” as manufacturers become more adept at rapidly adjusting to market conditions. He predicts that IT investments will support these initiatives.

Gartner predicts that investing in operational technologies will be far more beneficial than “traditional IT and ERP” with a “10-time better return on their investment by year-end 2011.” The support for this prediction lies in the great efficiencies manufacturers can achieve by placing OT at the center for this strategy because they “almost always add value, promote lean practices, and can have a transformative impact on the business.” The ultimate reason is that many of the existing IT and ERP systems have met full functionality and will produce greater efficiencies thanare already in place. Therefore, Gartner asserts that merely investing in additional IT and ERP systems will not tangibly add enough value to warrant the cost of their implementation unlike OT systems. Gartner recommends that manufacturers need to tailor all their IT investments to support “operational needs in a value-adding way or in ways that drastically reduce cost to provide the required, but non-value-adding, services.”

In Worldwide Manufacturing 2010 Top 10 Predictions, IDC Manufacturing Insights agrees that manufacturers must become more “intelligent” in order to succeed. Manufacturing Insights predicts that manufacturing worldwide will grow in 2010 with IT spending increases across virtually all sectors as manufactures begin to more successfully incorporate technology into their business strategies.

Someof the other manufacturing predictions by IDC include:

• Transforming business models to accommodate the needs of increasingly demanding customers
• Implementing variable cost structures that can better make technology a focal point for business strategies
• Changing supply chain structures to incorporate a "variable-cost-driven value network"
  • This change will be supported by “dynamic optimization” for capability investment
• Better alignment of innovation with strategy
• Manufacturers will better use Enterprise PLM Applications
• Manufacturers will become more metric-focused by using complete business intelligence to make decisions instead of sustainability reporting