Home Business News How manufacturers in London and the South East can harness the benefits of digitalisation

How manufacturers in London and the South East can harness the benefits of digitalisation

by LLB staff reporter
1st Oct 20 12:01 pm

Research from Siemens Financial Services (SFS) estimates the potential value digitalisation offers manufacturers in London and the South East.

Entitled the Digitalisation Productivity Bonus: Manufacturing in London and the South East, the report estimates that manufacturers in this region stand to gain £4.8 billion from digital transformation and the resulting improvements in manufacturing productivity. This equates to around 6% of total revenue for manufacturers in the region. These efficiencies, although not estimated here, can also be realised throughout the supply chain. As the UK faces a period of sustained significant economic crisis, this greater productivity and agility will help manufacturers in the region cope with the market disruptions.

Digital technology (also known as Industry 4.0) is enabling manufacturers to improve performance through increased manufacturing productivity, improved planning and forecasting, enhanced competitive capabilities and greater financial sustainability.

Although manufacturing only accounts for a small proportion of London and the South East’s output,it is the second largest regional manufacturing economy in the UK. In 2018, the South East and London accounted for just under a quarter (24.9%) of all UK manufactured exports, the largest of any UK region.

Although the exact building blocks of productivity differ between industries and regions, increasing that productivity – to either produce the same number of products for less or more products for the same – has a clear and calculable positive effect on costs and margins. This positive effect has been labelled the Digitalisation Productivity Bonus.

The paper draws on a statistical model, developed by SFS, which estimates the Digitalisation Productivity Bonus in the London and the South East of England to demonstrate the potential gain from Industry 4.0 for manufacturers in the region – even through the current economic difficulties. The average ‘Bonus’ percentage range was applied to the total annual revenue of the manufacturing sector in London and the South East (revenue data derived from official third party sources).

To overcome the obstacle of investing in Industry 4.0 technology, specialist financiers have developed a set of smart financing tools that enable the transition to new-generation digital technology in a way that is affordable, sustainable and is designed to alleviate the manufacturer’s cash flow and working capital pressures. Aligning payments to commercial outcomes is particularly important during an economic period where all expenditure has to deliver an exceptionally clear and tangible link to business benefits.

The paper explores these specialist financing methods, including machinery & technology financing, retrofit finance, software finance, outcomes finance, digital enterprise finance and working capital solutions.

“The manufacturing sector in London and the South East is important for the whole UK economy,” comments Neli Ivanova, Sales Manager, Industrial Equipment at Siemens Financial Services in the UK. “Nevertheless, it is still a challenge for companies to justify making the initial investment in new technologies. Smart finance is key to overcoming that hurdle and propelling the manufacturing sector forward.”

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