Traditional industries move to transform

Many traditional industries were already engaged in the digital transformation curve when COVID-19 hit. Like all sectors of business, the pandemic has dealt them a heavy blow. The burning question now is: How can technology help them gain operational leverage and gain back the momentum?

Construction and other traditional industries such as shipbuilding, oil, mining, steel, and machinery manufacturing have all been impacted by the pandemic – some more than others. Like many industries, they will now need to fast track their digital transformation to make themselves more resilient and put themselves in a stronger position to operate in the new normal.

In traditional industries, barriers for entry have been high. Innovation takes significant capital outlay. The consensus among some in these industry sectors has been: “if there are no disruptive factors on the immediate horizon, why accelerate change?” The fallout from the pandemic, however, is putting change on top of the agenda. Complex supply chains have shown themselves to be fragile in a crisis.

During the pandemic, heavy industries have been finding themselves facing constantly changing supply issues locally and internationally. In one case, Orange Business supported to arrange for 15,000 staff to work from home for one manufacturer to keep operations open and sustain capacity and production. This involved a complex cloud workaround to ensure the supply chain from the factory to the outlet wasn’t broken.

As operations resume, companies will need to redesign their supply chains and optimize them for the new operational realities they face. This may mean finding alternative component suppliers, for example. This importance of a robust digital strategy for smart insight will be paramount.

Pivoting towards faster transformation

Traditionally, supply chains have been linear in form, made up of key stages including design, planning, sourcing, manufacturing and delivery. As Deloitte points out in its report on the rise of the digital supply chain network, supply chains are fast transforming into "a dynamic, interconnect system that can readily incorporate ecosystem partners and evolve to a more optimal state over time." In other words, digital supply chains are now critical to the business, as the pandemic has highlighted.

Traditional industries are all too aware they will need to transform supply chains. Digital technology provides an opportunity to lower costs and significantly improve efficiencies. AI and advanced analytics can provide rapid insights for smart decision making. These will be essential in offering the agility and flexibility required to do business in the new normal.

At the same time, technology is moving so fast, and innovative companies have been eyeing up these traditional markets for disruption. This trend will continue. 3D printing, for example, will shake up the construction industry, producing homes quickly and cheaply. 3D printed smart home supplier Passivdom claims it can build a house in around eight hours. It doesn’t stop there. Dutch start-up MX3D is set to create a steel 3D printed bridge across a canal in Amsterdam. It will use robotic arm printers to heat, cut and weld the metal operated by intelligent software. The company believes this will become standard practice on building sites in the future.

Disruption isn’t a new phenomenon – it has been going on for hundreds of years. Take the arrival of the car, for example, which disrupted the livelihoods of coach makers, leather workers, wheelwrights and horse farms. Some went by the wayside, others diversified into the leisure carriage industry.

As the landscape in the new normal moves to digital, leaders in traditional industries will need to anticipate disruptive forces. They, too, will need to change and in some cases diversify. This isn’t just about technology, however. It is also about a change in mindset. It is about opening up new digital markets, engaging new customers, innovating, and creating new sources of revenue.

Embracing change

There is no escaping the fact: digital technologies are altering the way projects are created, managed and delivered in every industry. Building Information Modeling (BIM) has already been adopted by pathfinders in construction, enabling multiple players to collaborate on, design and construct buildings. This has allowed companies to map out the whole lifecycle of the build, reduce risks and improve efficiencies. All of which have a huge impact on the bottom line.

In shipbuilding, digital twins and IoT, for example, are being adopted for predictive maintenance and monitoring roles, respectively. The Dobroflot Group of Companies, for example, is using an IoT fuel monitoring solution from Orange Business. The solution helps save up to 10% of fuel costs and prevent unauthorized fuel usage. In the mining and construction industries, digital tracking of assets is enabling cloud-based data analysis of asset usage, enabling managers to forecast future demand for equipment and avoid workflow bottlenecks. Or take a chemicals company that has an innovative approach to IoT, fitting sensors to ingredients and using smart forklift trucks to reduce errors and waste.

Where margins are tight, anywhere time can be shaved off is a bonus. Construction solution provider Hilti, for example, has developed an app that simplifies tool repair services on site. The user simply scans the Near Field Communication (NFC) tag on the tool with their smartphone and taps the display to book a repair or talk to an expert.

Digitization will not wait

Traditional industries can turn the crisis around and use it as an opportunity to re-think their digital priorities and how to best use technologies to innovate. There are innovative technologies out there that traditional industries can tap into to improve safety and increase productivity, for example. These industries must, however, have a clearly thought out strategy for transforming. If they don’t, their transformations will most probably not be sustainable.

Inadequate planning is the very reason McKinsey’s 2019 Global Survey notes an alarmingly low success rate for enterprise transformation. Transformation is about working out which processes will benefit the best from digitization.

As time moves on, heavy industries will have to scale up to production to catch up on large numbers of orders frozen during the lockdown and, at the same time, satisfy new business. Digitized supply chains and manufacturing ecosystems will provide the key to building agile operations that can meet these orders on schedule.

We are continually striving to focus on customer priorities and further develop cooperation across our transversal business units to anticipate current transformational needs. Partner ecosystems will have an increasingly critical role in providing global services for Orange Business customers. You will find some of our customer stories here.

Hélène Auriol Potier
Hélène Auriol Potier

Hélène Auriol Potier is the Executive Vice President International for Orange Business. Her leadership experience extends across various digital transformational fields enriched by her career in the IT and telecommunications industry in positions in the United States, Europe, Africa and Asia during her tenure at Microsoft and Dell. Hélène sits on the Board of Directors of Safran SA and ODDO BHF. She is an avid supporter of women building careers in STEM fields and takes a personal interest in coaching women interested in digital technologies and achieving the right life-work balance.