Automation
Today, automation technology offers a key technology in many application areas . Thus, in the past, innovations allowed for significant improvements in productivity, security, and energy efficiency in many consumer industries. This is certainly also to be expected for the future, whereby one should take into consideration that a certain degree of maturity can be seen in the industry, and that companies have to adapt to this accordingly:
- Growth rates in the overall automation technology will always adjust to growth rates of their consumer industries. In this respect, some technology segments, such as sensor technology, will certainly show above-average growth.
- Significant regional shifts – growth impulses must increasingly be expected to come from markets like China, India, and Eastern Europe; the highest absolute growth, however, lies in the established markets.
- Distinction of (already very heterogeneous) customer requirements: Increasingly, we will see a trend away from products and towards systems, on the one hand, but also to lower cost products and solutions on the other hand. The structures in the automation architecture are changing and are leading to a shift in values. The struggle for the installed base and market share per segment will become fiercer.
- Global competition is getting more intense – Apart from established western technology and premium providers, more and more lower cost providers are entering the market. In China, this aspect is already noticeable, and it represents a challenge for western companies, as China can serve as a platform for global future strategies for many companies.
- A consequence of these aspects is a tendency for consolidation that has been recognizable for some years. This trend will surely intensify, whereby the players’ strategic logics might differ.
Automation providers must adequately respond to these developments, and adjust their business models accordingly. Core elements in this area are:
- Client selection in a global context: What market segments are attractive and reachable in a sustained way? Which customer requirements can be met? How can differentiation from competitors be successfully achieved? How to address this aspect in the context of global markets and more distinguished customer requirements? What are suitable sales structures and distribution channels? How can they be controlled accordingly?
- Value proposition and product portfolio: What systems, products, and technologies are needed in the target segments? What are the implications for the R&D roadmap? What are the implications for the branding of products (high-end versus lower-end product line)?
- Profit model and strategic control: With what profit model should sustainable cash flows be generated in the face of constantly changing customer requirements and technological possibilities (standards, openness)? How can strategic control be achieved?
- (Global) Production network and value creation: What steps are to be covered in the value chain (core processes and competencies) from a strategic and financial point of view? What must the future production network look like and what can an effective interplay look like? How can the – mostly required – localization of products and the underlying value creation and sourcing structures be effected?
- Organization system: Which organizational adjustments are needed to control the globalized business accordingly? How must the topic Talent Management be designed in this context?
Oliver Wyman has in-depth knowledge of the automation sector and comprehensive experience in the above-mentioned strategic and operational issues. We utilize a worldwide network of experts in Europe and Asia, in the Middle East, and in North America. In addition, our teams make use of the knowledge of other Practice Groups in the consumer industries of the automation industry, such as the automotive, manufacturing, and process industries.
Contacts
Wolfgang Weger
Partner
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