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The Convergence of Manufacturing and Technology

Several mid-market R&D led businesses are hence becoming great targets and being acquired by larger manufacturers. Technology-based M&A deals are driven by the desire to have connected factories with automation defining every process, thus leading to the convergence of manufacturing and technology.

Digital needs are fast rivaling traditional reasons for M&A. Manufacturing companies recognize the vital need to advance their technological strengths and are resorting to inorganic deals to build capabilities quickly enough to ensure they remain relevant and competitive.

Several mid-market R&D led businesses are hence becoming great targets and being acquired by larger manufacturers. Technology-based M&A deals are driven by the desire to have connected factories with automation defining every process, thus leading to the convergence of manufacturing and technology.

Manufacturers are harping on digitization for the various benefits that they can foresee, such as making operations self-sufficient, optimizing manufacturing conditions, monitoring supply chains, and ramping up security.  Digitally ‘smart manufacturers’ can significantly boost efficiency, productivity, and safety.

The Fourth Industrial Revolution, characterized by a range of new technologies, is impacting all aspects of our life and work. Many manufacturers have already adopted or have the desire to adopt an Industry 4.0 strategy, as also observed in the TMT sector. This revolution has led to the implementation of several technologies such as Cloud Computing, Internet of Things, Artificial Intelligence, Machine Learning, and Robotics into their holistic business plan and is impacting how they conduct business.

Manufacturers are utilizing advanced innovation to transform their organizations and are digitizing essential functions. Advanced analytics is being used to help improve planning and forecasting, and now has a crucial role in facility and plant condition monitoring. Blockchain has the outsize potential to help manufacturers reduce cost, raise trust, and gain greater visibility into supply chains. Together, advanced analytics and blockchain are proving to be very powerful for manufacturers. Similarly, manufacturers continue to leverage other innovations too like the Internet of Things.

Making digital acquisitions successful

Technological disruption poses both a threat and an opportunity for the manufacturing sector. A digital deal demands a fundamentally different approach, from sourcing to integration. Moreover, it is the integration of technology across the broader organization that eventually helps in deciding the success rate of the M&A. But many companies often fail to extract value from their M&A due to loopholes in the deal execution or integration strategy. Without a strategy, pilot projects that looked interesting may become challenging to expand, lest transform the organization. It is essential manufacturers develop the right strategy at the right time to be able to respond quickly to a changing business landscape.

Digital transformation is a strategic shift and can be a daunting task. Digital leaders can harness the true potential of technology by setting a holistic vision for digital innovation after a thorough analysis of every process within the organization. Moreover, it is imperative to ensure the new technology integrates well with the organization’s culture and skillsets.

It’s one thing to acquire technology, but quite another to harness it to transform the organization.

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