The region's manufacturers need to prioritize investments that help them differentiate themselves from the competition in the current 'survival of the fittest' climate, according to a new study.
Released Wednesday, the report by IDC's Manufacturing Insights indicated that IT spending growth by manufacturers in the region remained positive, despite revised forecasts and a gloomy outlook for the sector.
Manufacturers in the automotive and high-tech sectors appear to be the most badly hit, with a year-on-year growth of just 1.9 percent and 1.6 percent, instead of double-digit growth in earlier forecasts. The consumer package goods industry, which Manufacturing Insights believes to be slightly less affected, is expected to register 3.2 percent growth in IT spend this year.
"Amid the growing uncertainty,investments in IT and process improvements will come under increasing scrutiny," said Christopher Holmes, vice president of Asia/Pacific Manufacturing Insights. "To weather the global financial crisis, manufacturers in this region will need to strike a balance between immediate cost reduction and investments in areas that will allow them to stay competitive."
Among the top predictions for the manufacturing industry, Manufacturing Insights expects more digital factories to emerge within the region, particularly in China and India. Despite a slowdown, markets in the Asia-Pacific region are still growing, which translates into demand for new products, said Holmes. In such a climate, companies "will look beyond the current downturn and invest for the future either by investing in existing plants or building new plants".
When building new plants, these manufacturers will "adopt latest technology and latest thinking" in running the facilities, he added. The "digital factory" approach may mean simulation of the entire production process is carried out before the actual production takes place.
Product lifecycle management (PLM) is also expected to be a big area of investment for manufacturing companies in the region. According to Holmes, manufacturers will be looking to differentiate themselves from the competition by investing particularly in PLM, as it helps businesses gain greater control internally, allowing for predictable product development outcomes and effective resource management.
In addition, Manufacturing Insights expects manufacturers in the region to have higher expectations of their IT vendors in 2009. Holmes noted that vendors servicing the sector would be required to advise clients of the latest trends and processes, as well as introduce industry-specific workflows.
"For ICT vendors, it is crucial to provide additional value to manufacturing clients at this time--they will also need to have expertise within sub-industry verticals," he added. "This includes best practices, advice on implementation and suggestions for organizational changes."