The study surveyed 815 global manufacturing leaders and found that while they all admit their businesses cannot survive without the right technology, fewer than 10 per cent qualify as digital leaders.
A striking 65 per cent of respondents labelled themselves as ‘laggards,’ falling dangerously behind and stalled at the early stages of digital transformation with no firm plans in place.
IFS found that 82 per cent of manufacturers believe their business won’t survive more than 1-3 years without a stronger commitment to technology, suggesting that the urgency is clear. Market turbulence, supply chain disruptions, and the looming impact of climate change make digital transformation a necessity for survival, not a choice, the company said.
In contrast, digital leaders are confident they can weather future storms with over a quarter (28 per cent) believing they can last up to five years without new investments. And while a promising 39 per cent are actively developing ESG initiatives, most manufacturers (71 per cent) lack a credible ESG strategy, even though 28 per cent identify climate change as a top concern.
‘Option Paralysis’
The research blames a debilitating state of ‘option paralysis.’ When asked to prioritise technologies, more than 80 per cent of respondents listed every option as essential, underscoring the confusion that prevents decisive action.
The ‘option paralysis’ experienced by manufacturers is exacerbated by the fact that each job level is pulling in a different direction. Almost all (94 per cent) of C-suite executives believe that cloud computing is the most important technology to digital transformation efforts, however, operations personnel saw digital twins (85 per cent) and AI (84 per cent) as their priority technologies.
Those at the VP level were most likely to believe that IoT (81 per cent) is the most important technology to focus digital transformation efforts on. IFS said that this indecisiveness is widening the gap between digital leaders and laggards.
Digital leaders were found to have invested 45 per cent of their budget on digital transformation, driven by clear strategies and ROI-focused investments. Meanwhile, laggards continue to fall behind, paralysed by too many choices leading to the inability to evaluate new technologies.
A fifth of respondents said that change management (22 per cent) and IT complexity (21 per cent) are the major barriers. Without overcoming these hurdles, manufacturers are setting themselves up for failure.
Looking forward
Despite the challenges of embarking on digital transformation projects, manufacturers remain optimistic about their future prospects with the benefit of next-generation tools. When looking at supply chains, for example, almost all (98 per cent) of manufacturers are considering geographic strategies to optimise supply chain resilience, opting for closer or politically stable sourcing destinations. In this regard, digital leaders use advanced strategies, such as advanced scenario simulation, while laggards rely on stand-alone risk assessment tools.
On the topic of carbon footprints, manufacturers are particularly hopeful about the impact of ESG on their businesses. With the sentiment shifting from ESG being just a compliance-driven activity to one that can drive significant positive changes in lead time and quality while enabling new business models, like circularity.
“The manufacturing industry is at a crossroads. Many understand the urgency but remain immobilised by indecision, waiting for proven results or guidance from a trusted partner before committing to action,” Maggie Slowik, Industry Director of Manufacturing at IFS, said in a statement.
“The longer manufacturers delay, the further they fall behind. In today’s volatile market, resilience and digital maturity aren’t just advantages – they’re essential for survival.”
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