EMERGING ASIAMANUFACTURING INDEX2024by Dezan Shira&AssociatesNAVIGATING ASIAS INDUSTRIAL LANDSCAPE I.
2024-07-01
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Worker Well-Being Impact Report 2023Worker well-being:good for business and good for peopleWelcome to the Ethical Supply Chain Programs inaugural Worker Well-Being Impact Report.2www.ethicalsupplychain.orgThroughout a 20-year history initially as the ICTI CARE Foundation,then ICTI Ethical Toy Program,and,since February 2024,the Ethical Supply Chain Program(ESCP)it has been our mission to help create a better,more equal world.Originally designed for the needs of the global toy industry,our groundbreaking programs are now an indispensable source of expert support for those wishing to make a positive difference whatever their sector or industry.We work across 45 countries and regions,with ambitions for further expansion,and have offices in Asia,Europe and North America.The activities delivered by our expert teams are truly life-changing.From our Supplier Certification and Risk Assessments,Social Impact and Environmental Assessments,to Capability-Building and,of course,Worker Well-Being,were proud to champion integrity and sustainability.And it gives me enormous pleasure to be able to communicate and celebrate here our collective Worker Well-Being achievements in what was a momentous 2023.In total,15,662 workers benefited directly from our activities throughout the year.I hope you enjoy reading about our impact across the three Worker Well-Being pillars:Family-Friendly Factories,Gender Equality and the Worker Helpline.Sustainable and scalable,these initiatives enable brands,retailers,licensors and vendors to deliver on their responsible sourcing and manufacturing commitments,and improve the safety and well-being of workers in their supply chains.They support resilience in the supply chain and reduce the risk of supply disruption.They also deliver business benefits to factories and their customers,from a happier workforce thats more motivated,efficient and reliable.And,most of all,they create better lives for workers.If you have any questions about anything contained in this report or would like to know more about the Ethical Supply Chain Program,please get in touch and I,or one of my colleagues,would be delighted to help.CARMEL GIBLINPresident and CEOEthical Supply Chain Program2024 Shared Value Awards finalistThe Ethical Supply Chain Program took great pride in being nominated as a finalist in the Shared Value Awards 2024,which“shed light on game-changers,bold innovators,and adventurous pioneers who dare to disrupt the status quo in a quest to create value for business,society and the planet.”Recognizing our dedication to advancing shared value principles,the judges had this to say:Ecosystem solutions like this program are critical to improving both workplace policy and quality childcare availability,which is why this program,and the myriad of partners involved in it,stands out.The Shared Value Awards are a collaboration between Shared Value Project and Shared Value Initiative Hong Kong.Table of contentsFamily-Friendly FactorySupporting Parents and CaregiversPolicyChildcareTrainingGender EqualityChampioning Female EmpowermentWorker HelplineAddressing and Resolving Worker Concerns3www.ethicalsupplychain.org04-1617-2021-232425061115182205UN Sustainable Development GoalsFuture PlansAccording to a recent recruitment survey of companies based in Guangdong province,131 companies in 21 cities have faced difficulties in recruiting&retaining staff,with one company reporting a shortage of 640 workers.Family-Friendly Factory4www.ethicalsupplychain.org2023:Our impact in numbers4594yctories participated,employing 45,592 workersof managers said workers were more motivated now their factory was family-friendlyof workers said they have more time with their children because of new childcare facilitiesof managers said worker retention had increased following participation on the programof workers cited the program as a reason to stay working at the factoryThe Family-Friendly Factory program supports workers with family and caring responsibilities,empowering factories to create their own family-friendly policies and provide facilities that promote a positive family-work balance.Supporting parents and caregivers5www.ethicalsupplychain.org1 UN Women:Facts and Figures Economic EmpowermentIt recognises that parents face multiple,inter-related challenges,the most common of which include not being able to spend sufficient time with their children,high childcare costs,and reliance on informal childcare solutions such as grandparents.Developed in conjunction with UNICEFs Family-Friendly Policies guidance and expert advice,the program is designed to improve the lives of workers and with women typically shouldering twice as much unpaid household work as men1 promote greater gender equality,while producing measurable benefits for factories and their business partners.Having successfully piloted at four factories in 2021-22,an expanded Family-Friendly Factory program in 2023 saw 15 factories participate across China,benefiting 8,189 workers,along with eight in Vietnam and one in Mexico where needs assessments were carried out.This work builds on our childcare initiative (Family-Friendly Spaces),which launched in China in 2016 to support left-behind children,whose parents had migrated domestically to major cities for work.In 2024,the Family-Friendly Factory program will continue to grow.Having benefited 21,852 children to date,our plan is to support 30,000 by the end of 2025,as well as formally recognising facilities that participate in the program.We invite factories of any size,and businesses all over the world,to get in touch to learn more about improving the lives of supply chain workers globally.This section covers the three overarching elements of a Family-Friendly Factory,one which has considered the distinct needs of its employees with family and carer responsibilities:policy,childcare and training.Policy6www.ethicalsupplychain.orgFamily-friendly policies are,as defined by UNICEF,“a set of decisions and actions that favor parents and caregivers so that they can balance their work and family life”,typically focusing on time,finances and services.UNICEF has identified the following types of policies that can create the right environment to improve the physical and mental wellbeing of workers:(i)paid parental leave;(ii)support for breastfeeding mothers;(iii)comprehensive early childhood care and development services;(iv)cash transfers;and(v)parenting and violence prevention programs.It notes that the absence of such policies undermines parents capacity to“securely bond with their babies in the first critical years of life a time,evidence tells us,when the combination of the right nourishment,a loving environment and stimulating care can strengthen a babys developing brain and give her the best start in life”2.The Family-Friendly Factory program is about encouraging suppliers to implement policies that allow parents and caregivers to balance work and personal life.We engage directly with facilities,to understand their existing workplace policies and to speak with the workers themselves,enabling us to pinpoint areas that need transforming.Senior management and frontline leaders often agree that helping workers maintain a work-life balance is important,and that companies should bear the responsibility of this.However,they may know very little about family-friendly policies and not be familiar with the process of establishing them,and associated services,in the workplace.Each Family-Friendly Factory will look slightly different,based on the requirements of the workers and their employers:from introducing flexible working hours so parents can spend more quality time with their children,to setting up breastfeeding facilities or creating childcare spaces.The focus is always on empowering managers to look after their workforce in the best way possible.Thanks to donor funding to support factories in year one,we provide the blueprint,support and training.And if amenities like breastfeeding rooms or childcare centers are needed,the factories take control and install them.With this support,factories continue to directly invest in the program themselves in subsequent years as the business benefits secured are clear.This is an investment in their future success.Implementing family-friendly policies helps factories to boost retention,productivity and loyalty,leading to a more stable,committed and efficient workforce.It also sends a clear sign that the factory is taking ownership of the well-being of its employees,their families and the community in which it operates.Data from the ESCP Factory Certification program also confirms that participating Family-Friendly factories have higher labor standards performance.2 UNICEF:Family-Friendly PoliciesThe focus is always on empowering managers to look after their workforce in the best way possible.Achievements of the Family-Friendly Factory program in China7www.ethicalsupplychain.org15 Factories8,189 Workers Benefited5 Provinces1 Factory in Fujian,7 Factories in Guangdong,5 Factories in Shanghai/Zhejiang,1 Factory in Guangxi,1 Factory in Hunan3 Factory Types7 Print&Packaging6 Plush Toys&Plastics2 Electronics8www.ethicalsupplychain.orgPaid parental leaveProviding“time off from work around the birth or adoption of a child with replacement of some or all of their usual earnings”3,paid parental leave is an important policy.It enables working parents to care for and bond with their infant,establish routines for feeding and care,and attend to their medical care needs,while also giving recovery time to mothers who have been through childbirth.Prior to joining the program,each of the 15 factories in China had an existing paid maternity leave policy,which we reviewed and enhanced.However,only eight offered paid paternity leave we increased this to all 15.Nine provided paid maternal examination leave,which rose to 14 following participation in the program.Two of the 15 factories offered paid childcare leave,and this increased to nine,while a further two had paid welfare leave policies,offered to workers who need time to care for their sick children or dependents,which increased to three.These figures relate to the 15 factories in China.2023:Our impact in numbers333workers benefited from paid parental leave policies100%of participating factories now offer paid paternity leave47%increase in factories offering paid childcare leave93%of participating factories now offer paid maternal examination leaveFlexible working arrangementsFlexible working hours and family-friendly arrangements allow parents to balance work and family life,enabling them to spend quality time caring for their children.This supports early childhood development,helping,for instance,to prevent school drop-out,while reducing parental stress,absenteeism and staff turnover.Before joining the program,four of the 15 factories in China offered flexible arrangements to workers allowing them to care for their children when they fell sick this doubled to eight following the introduction of the Family-Friendly Factory program.Five factories allowed flexible hours for desk workers,which rose by a further four factories.The number offering flexible working hours to pregnant and/or breastfeeding workers increased from 10 to 11.Three factories allowed couples who work in the same factory to work flexibly to fit their familys needs,and this rose to six.2023:Our impact in numbers1,051 workers benefited from flexible working arrangements50%increase in factories offering flexible hours to desk workers73%of factories offer flexible working to pregnant/breastfeeding workers50%increase in factories offering flexible working twice a month or quarterThese figures relate to the 15 factories in China.Below are details from the 15 factories in China that participated in our Family-Friendly Factory program throughout 2023.And on page 16,youll also find insights from the facilities in Mexico and Vietnam where we performed needs assessments ahead of implementation in 2024.3 UNICEF:Paid Parental Leave and Family-Friendly Policies9www.ethicalsupplychain.orgHelping the most vulnerable familiesIda Hyllested,Senior Adviser,Child Rights and Business,UNICEFAt UNICEF,we have long been concerned with how we work and the way conditions of employment impact on the well-being of workers,their children and families.From pilot programs in factories and plantations,we know that the most vulnerable families often grapple with the absence of affordable childcare,limited protections for mothers or opportunities to breastfeed their infants,low wages,and long working hours.This is why UNICEF calls on governments and businesses to create enabling environments for parents to give their children the best start in life,while also boosting productivity and womens empowerment.The starting point for family-friendly policies is an understanding that this is a long-term commitment that requires meaningful and ongoing engagement with workers.It also requires that management has adequate understanding of needs and potential gaps,which involves ongoing adjustments and amendments.Well-planned and implemented family-friendly policies represent a win-win-win situation:good for business,good for parents and children,and good for communities and society as a whole.Support for breastfeeding workersBreastfeeding support in the workplace is critical to maternal health and well-being,infant health and development,and gender equity in the workplace.Despite the positive effects of breastfeeding,currently only 40%of infants younger than six months old are exclusively breastfed,as UNICEF recommends.Before joining the program,all 15 factories in China had an existing breastfeeding leave policy in place;again,these were reviewed and enhanced as appropriate.Only two factories had a breastfeeding room in their facility,but this figure climbed to 11.Similarly,two facilities offered nutritional/baby supply support to their workers,and this rose to six.Posters informing workers of the breastfeeding support on offer had been visible in seven factories,with this number growing to 11.These figures relate to the 15 factories in China.2023:Our impact in numbers51 female workers benefited from breastfeeding support policies60%increase in factories providing breastfeeding rooms69%of factories have breastfeeding information posters visible27%increase in factories offering nutritional support and baby supplies10www.ethicalsupplychain.orgOther measuresNo two factories are the same,and the program encourages employers to provide policies and amenities that will have the most positive impact on their workforce.We look in more detail at childcare and training over the following pages,but some of the additional measures that factories implemented,or improved,during 2023 to improve the lives of their workers included:Family days Family housing Fitness centers/subsidies Health check-ups Health education Maternity leave gift or visit Parental training Staff shuttle bus School admission gifts School scholarships Subsidies for families Supplies for migrant workers These figures relate to the 15 factories in China.2023:Our impact in numbers5,247 workers benefited from one or more of these measures87%of factories offer parental training87%of factories offer subsidies for families in need60%of factories provide fitness centers or subsidiesWe provide a template and the expert support needed to implement a successful employer-funded childcare scheme that transforms parent-child relationships,supports the developmental needs of children,combats labor shortages,and improves employee engagement on all levels.Starting from a small-scale Family-Friendly Spaces pilot at two factories in Guangdong Province in 2016,52 childcare spaces had opened in China by the end of 2023 providing education and care for 5,338 children,and supporting 5,659 working parents.In 2023,our biggest year yet,33 factories participated,10 of which were joining the program for the first time,and 1,384 children benefited.The measurable impacts highlight how these childcare spaces bring long-lasting change and are an incredibly effective solution to what is a global problem.While the initiative was originally created to support left-behind children in China estimated at more than 66 million4 whose parents migrated domestically to major cities for work,it has evolved to meet changing challenges.More parents now bring their children to live with them full-time,but childcare continues to remain a widespread concern,so we now provide childcare for both local and migrant children.On top of this,we have recently expanded into Mexico and Vietnam,having secured funding from key partners including primary funder The LEGO Group,with implementation of activities beginning in 2024.Looking forward,theres a clear need for the program to reach across a much broader geography.Lack of access to affordable childcare is a global issue that affects every income level,but for factory workers who are often the most vulnerable it is often simply not possible.Forty per cent of those in the Global South surveyed by UNICEF,for instance,did not have any statutory entitlement for childcare services to be offered by the State or by employers.5Committed to making a life-changing difference to children of factory workers,we want to establish 100 new childcare spaces by the end of 2025.My daughter spent a month at the childcare space in the factory where I work,gradually growing closer to us.Every afternoon,she would tell us about her day.She began to understand how hard we work,and this was the first time that I experienced the closeness and pride that Ive heard others describe.The Family-Friendly Factory program helps children in really important ways,aligning perfectly with our philanthropic strategy.Its helping our supplier relationships too;our huge team in Asia has been able to really connect with the factories there,while the factories themselves are seeing a positive impact in terms of improved employee morale and better connecting workers to the products theyre creating.Our research showed that a lack of affordable,safe and accessible childcare was the number one reason why factory workers were leaving their jobs.The Ethical Supply Chain Program is now in its eighth year of supporting factories to create safe spaces for children to learn and play while their parents are at work.Childcare11www.ethicalsupplychain.org4 National Bureau of Statistics of China,UNICEF China,UNFPA China(2023),What the 2020 Census Can Tell Us About Children in China:Facts and Figures5 UNICEF Family-Friendly Policies Redesigning the Workplace of the Future:A Policy Brief(2019)Our impact in wordsTammy Smitham,Vice President-Communications&Corporate Citizenship,Spin MasterA father who works for C&C Joint Printing Co.(Shanghai)Ltd.12www.ethicalsupplychain.orgAchievements of the childcare spaces in China1,366 Children Attended12 Sponsors1,384 Workers Participated96 Staff Trained1,144 FamiliesBenifited33 FactoriesOpened Spaces6 Provinces10 New factories23 Repeating factories1 opened FFS for 8th time2 opened for 7th time7 Factory Types1 Wooden toys,20 Dolls,Electronics&Plastic toys,8 Printing Products,1 Textile,1 Playsets,1 Shoes,1 Beer.27 Factories in Guangdong1 Factory in Fujian1 Factory in Hunan1 Factory in Zhejiang1 Factory in Shanghai2 Factories in Guangxi10 Repeating62male38%Male52%Front-line workers59 received LEGO Box&Six Blocks training37 staff taught the Montessori method41%migrant childrenAged 3-1328%Left-behind children31%Local childrenBenefits to the children and working parents of childcare spaces:79%of workers said they had a closer relationship with their child97%said they were happier at work91%of workers said their child was now better at expressing themselves 94%said they had more time with their childrenBenefits to the factories:83%of managers agreed that childcare spaces improved worker retention rates86%said the program helped attract and recruit workers75%said that code of conduct compliance had improved90%said the relationship between the factory and its customers had improvedThese figures relate to the 15 factories in China.These figures relate to the 15 factories in China.2023:Our impact in numbersOur impact in wordsThe program has helped to create a positive working atmosphere by bringing employees and senior management closer together.According to feedback from our workers,the program is a real breakthrough in terms of employee welfare it caters to their real-life needs.Manager of a participating factoryFactories involved in the program report improved financial performance,as their recruitment costs are lower,especially over the summer months,and theres a marked decline in absenteeism.Anita Lo,General Manager,Ethical Supply Chain Program13www.ethicalsupplychain.org14www.ethicalsupplychain.orgOur impact in picturesThis summers program was packed full of interesting activities and excursions for the children.Some children went on a visit to the local fire station where they were able to dress up as firefighters and learn about fire safety.Many children attended a pottery class which helped to spark their creativity and express their individuality.Some flexed their green fingers,learning how to sow seeds and watching their very own plants grow!There was a family visit to a restaurant which enabled the parents and children to spend even more time together,enjoying food and drinks over their lunch break and creating precious moments and lasting memories.This years themed Care Week was full of fun activities for the children,from drawing competitions to writing messages to people in need,these all helped the participating children to develop good values and enhance their emotional intelligence and social skills.Training15www.ethicalsupplychain.orgThe Family-Friendly Factory program provides parental training to help workers develop the skills they need to confidently support their childs development.It also trains teachers and other childcare professionals.Delivered in workplaces,training enables parent workers and particularly migrant parents to master scientifically-proven communication methods,understand their childs psychological needs,and empower their child to grow healthily and happily.Workers and management can continue to access online training materials free of charge at any time.Fifteen factories in China got involved during 2023,with content covering two main strands:establishing a harmonious parent-child relationship,and how to facilitate effective and enjoyable learning for children.Our pre-training assessment demonstrated the programs critical importance:77%of participants didnt know how to parent in a way that helped their child to be more optimistic,proactive,confident and tolerant;69%said they couldnt control their emotions,and this negatively affected their relationship with their child;and 71mitted they didnt know how to ease negative emotions and help their child to de-stress.The increase in workers understanding around their parenting methods as a result of the training was almost universal.Building on these successes,we are developing additional training methods throughout 2024,aimed at benefiting a wider group of factories and employees.583workers,85education professionals,500 children benefited97%of the employee respondents gave positive reviews 30 short educational parenting skills videos were recorded and provided to all staff 94%said they knew how to build a harmonious relationship with their child and improve their familys well-being,compared with just 12fore the training2023:Our impact in numbersThe best thing learnt from the training was putting myself in other peoples shoes.We shouldnt always ask our children Did you understand what I mean?.Instead,we should ask Did I say it clearly?that way,children will think that we are equal.Thank you very much to our company for organizing this training,and thank you to our trainer for delivering fabulous parent-child topics.2023:Our impact in wordsFeedback from participant These figures relate to the 15 factories in China.16www.ethicalsupplychain.org Spotlight on MexicoIn September 2023,working with The Centre for Child Rights and Business,and El Centro,a sister organisation of Save the Children Mexico,we completed a needs assessment at a graphic design and printing company in Queretaro state,which has a workforce of 361.The assessment aimed to identify the needs and priorities of workers with a specific focus on parents,females,and young adult workers to help determine the best family-friendly workplace activities for the factory to implement.The identified needs,challenges and opportunities included:Long working hours and limited time with children:59%of parent workers said they do not spend enough time with their children due to their long working hours and 89%would send their children to a childcare center if provided by their employer Difficulties in affording costs for childcare and education:33%could not afford childcare costs,meaning children were either left alone or parents forced to leave work Parents wanting to take an active part in their childrens upbringing:98%were interested in participating in factory organised parent-child activities Breastfeeding:only 21%knew of the existing breastfeeding polices this and the absence of a breastfeeding room contributes to 58%of mothers discontinuing breastfeeding before their child is six months old Discrimination against young workers:those aged under 25 felt less prioritised by management and wanted more training opportunities Spotlight on VietnamWorking with The Centre for Child Rights and Business,we carried out needs assessments at eight factories across the North and South regions from July to August 2023.As in Mexico,the assessments aimed to identify the needs and priorities of the workforce,numbering 11,223 in total.The key findings formed the basis for our recommended activities to improve workers well-being and enhance family-friendly support to parents and female employees.The identified needs,challenges and opportunities included:Hardship in covering basic needs:56%expressed concerns about their ability to provide for their familys necessities over the following 12 months,with 50%struggling to afford childcare costs,27cing difficulties with childrens education expenses,and 24%finding it challenging to cover childrens healthcare costs Inadequate parent-child bonding:46%of parents said they spent limited time with their children and 25%said they lacked parental skills Children left unsupervised:14%reported leaving their children under the age of six unattended throughout the year while they are at work;during summer vacations,20%left children under 12 unattended Parental leave:62%needed to take time off to care for their sick children and 43%requested greater support during pregnancy,post-maternity care and breastfeeding,with none of the factories having breastfeeding rooms that were compliant with Ministry of Health regulations Lack of family-friendly policies:only one factory had a standalone family-friendly policy and none implemented activities aimed at strengthening the relationship between parent workers and their children;78%of workers would participate in parent-child activities organized by their factoryOur expanding footprintFind out more:Family-Friendly Factory programAccording to a recent recruitment survey of companies based in Guangdong province,131 companies in 21 cities have faced difficulties in recruiting&retaining staff,with one company reporting a shortage of 640 workers.Gender Equality17www.ethicalsupplychain.org2023:Our impact in numbers100,000 43%4,433of factories improved their Gender Equality Scoreimprovement in average Gender Equality scoreworkers received online trainingstaff members received in-person trainingof workers said they would not put up with discrimination and would make a complaint,compared with 58%in 2022The Gender Equality program was developed in response to the needs of manufacturing workers and sees ESCP engaging directly with factories to establish better and more equal workplaces.Championing female empowerment18www.ethicalsupplychain.orgWhen we piloted the program in China in 2022,thanks to funding from Mattel,we found a clear need for more education and support around this fundamental human right.Baseline figures from 12 participating factories showed that over a third of management believed that male employees were more valuable than female employees.Four out of 10 workers did not disagree with the statement that sexual harassment is caused by a worker wearing revealing clothing or another aspect of their appearance.And almost half of the factories did not have an established internal grievance channel for processing and dealing with issues of discrimination.Throughout 2023,we worked directly with these factories to educate and promote equality,thereby empowering female workers as well as helping businesses to incorporate the United Nations Sustainable Development Goal No.5(Achieve Gender Equality and Empower all Women and Girls)into their supply chain.The impact has been remarkable,with factories moving on average from a Beginningranking the lowest level on our Gender Equality scoring system to Very good,the second highest.Harmful attitudes and beliefs can be found across every sector and in every country.It is why ESCP and our members are committed to taking action.We applaud all the factories,brands and partners who have worked with us to make the Gender Equality program a success,and we welcome all businesses across the world to get involved in 2024.Improvements across the factories from 2022 to 20231008060402001234567Factory20222023Gender Equality Score8910111219Meeting the needs of factory management and frontline workersThe Gender Equality program takes a different shape in every factory,depending on the workplaces specific needs.Below are some of the policies,facilities and improvements introduced during 2023.Improved processes and policiesMost factories now have individual Gender Equality management systems and methods.We developed a Gender Equality Handbook*,with the help of Mattel,to support this implementation.In addition,some factories improved their hiring process documents,removing personal fields such as marital status from their job application paperwork.Breastfeeding and pregnancy supportFactories made improvements to the support provided to pregnant and breastfeeding workers.These included improving or creating breastfeeding rooms and providing access to these spaces to pregnant workers to enable them to rest when needed.Help for working parentsFlexible working hours and improved maternity and paternity leave were among new measures to support working parents.One of the companies joined the ESCP Family-Friendly Factory program in order to provide free childcare service for workers during the summer holidays.New or enhanced grievance proceduresFactories established or improved grievance procedures,safeguarding workers right to complain.Staff were also educated on the indicators of sexual violence and sexual harassment in the workplace.This is important in order to give workers and staff confidence to raise and respond to grievances.Raising awarenessInitiatives introduced to promote new Gender Equality policies and support included:displaying posters in communal areas;cascading information via morning meetings;the use of WeChat and worker learning platforms to disseminate Gender Equality material;distributing flyers;and positioning representatives around employee dormitories to answer any questions.Increasing awareness of gender equality policies in the workplace is critical to creating an environment where all workers can feel safe and respected.The Gender Equality program has improved the factorys complaint channels.Weve set up a gender management system and raised awareness of gender equality among employees.The project was voluntary,but it happened to meet the clients needs.In a recent annual customer audit,they asked if there were systematic gender equality regulations,which we already had in place thanks to this program.*The Gender Quality Handbook is suitable for deployment in workplaces all over the world.It is available in Simplified Chinese and English,and can be downloaded from the Training section of our Connect Platform now.www.ethicalsupplychain.orgOur impact in wordsClaire,Program Leader of Wynnewood Industrial(Heyuan)Co.Ltd20www.ethicalsupplychain.orgGender Equality Score methodology Acknowledging that each factory will have different existing systems and policies in place,we measure Gender Equality progress against seven key categories:1.Management Systems 2.Equal Employment Opportunities3.Career Development4.Remuneration Package5.Maternity Benefits&Protections6.Workplace Violence&Sexual Harassment Prevention7.Work-life Balance SupportThe final score is calculated and a Gender Equality ranking is awarded,from Beginning to Excellent.A breakdown of the award brackets is found below.Score Ranking:90 ExcellentThe factory is a leader in promoting Gender Equality.As well as implementing more comprehensive Gender Equality policies in comparison to other factories,it has built a full and complete system and mechanism for Gender Equality,equipped with related resources.Find out more:Gender Equality programAccording to a recent recruitment survey of companies based in Guangdong province,131 companies in 21 cities have faced difficulties in recruiting&retaining staff,with one company reporting a shortage of 640 workers.Worker Helpline21www.ethicalsupplychain.org2023:Our impact in numbers315,437 1,073 6797915,000 workers at ESCP Certified factories were able to access free,confidential counseling and advice if they needed itfactories in China and Vietnam were coveredcases were received and addressedHelpline Cards were distributed at newly registered factoriescases were escalated to our teams on the ground for further investigation and remediationThe Worker Helpline offers free,confidential counseling and guidance for those employed by factories registered under the Ethical Supply Chain Program.Addressing and resolving worker concerns22www.ethicalsupplychain.orgOperating in China for more than a decade and expanded to Vietnam in 2021,our Worker Helpline provides access to independent qualified professionals and has supported more than 22,000 individuals to date.In 2023,over 1,000 workers received help across a broad range of personal and work-related issues.Workers can call for advice on employment matters such as hours,wages,labor contracts,dismissal and resignation processes,social health insurance,pension plans,and paid leave as well as for support on relationships,homesickness,and health and hygiene issues.Crucially,the Helpline also acts as a confidential grievance mechanism,enabling employees to raise any concerns about their safety or well-being with us for further investigation,without fear of retribution.This enables the reporting of worries that may otherwise not be voiced for example,around unsafe working conditions,harassment or bullying,underage workers,documents being withheld,or being unable to leave a job voluntarily.Companies whose suppliers have access to the Helpline receive anonymized data insights into the Helpline calls from their factories,ensuring they can genuinely listen to the workers making their products,understand areas of vulnerability,and address potential risk in their supply chain.The Helpline is available to companies whose suppliers are not ESCP Certified on request.It can be deployed in any environment where companies are seeking to enhance their grievance mechanism and proactively support workers and their managers.Helpline operators encourage workers to maintain a constructive dialogue with factory management,the service promoting positive communication between factory management and workers.It also serves as an effective labor dispute mechanism,our experienced teams working directly with factories to ensure that issues are resolved to the satisfaction of workers.The ESCP Worker Helpline remediates 100%of cases received.The Helpline enables companies to meet regulatory requirements,increasingly important over recent years,given that several due diligence acts have been introduced globally,with varying requirements for transparency and complaints procedures.These include the German Supply Chain Due Diligence Act,the proposed EU Supply Chain Regulations,and the US Forced Labor Prevention Act.And,underlining its adaptability,the service was in 2023 extended to cover approximately 5,000 construction workers involved in building a new factory in Vietnam,with the sector considered high-risk in terms of the exploitation of vulnerable workers,both specifically in South East Asia and,indeed,globally.23www.ethicalsupplychain.orgMost common issues addressed by the Worker Helpline in 2023Type of grievance as a percentage of total calls related to worker issues.Find out more:Worker HelplineThe Worker Helpline provides us with data insights that enable us to enhance our training for factory management and teams,resulting in improved working environments.The Helpline helps factories to better resolve differences between managements and workers.Workers report problems to ESCP,who feed back to the factory in a timely manner.The factory investigates the problems reported by workers and makes appropriate responses to avoid risks.Worker helplines and grievance mechanisms are essential tools for improving the lives of supply chain workers.By providing a safe and confidential way for workers to report issues and concerns,these mechanisms can help to identify and address systemic issues within supply chains.We are very impressed with the impact of ESCPs Helpline and the impressive outcome of this work in addressing worker issues.Our impact in wordsAmita Lam,Director,Global Head of Governance,Risk Management&Compliance,MattelFeedback from factory managementMatt Friedman,CEO,Mekong ClubSocial security7.3%Resignation13.5ctory rules and policies6%Personal issues/others12%Working hours5.4%Wages calculation8.6%Job allocation4.5%Leave arrangement7.8%Payment delay 4.4%7.4%TerminationUN Sustainable Development GoalsOur Worker Well-Being programs directly support the achievement of the Sustainable Development Goals(SDGs),adopted by all United Nations Member States in 2015.24www.ethicalsupplychain.orgBy joining ESCP,companies make a tangible contribution to the SDGs through a commitment to conducting business responsibly and taking active measures to tackle global challenges.We support many of the SDGs and specifically directly contribute to the achievement of:ESCP is proud to be a signatory to the UN Women Empowerment Principles(WEP),which support the gender equality dimensions of the SDGs,and a member of the UN Global Compact(UNGC),which exists to advance the achievement of social goals.SDG 5Gender EqualitySDG 10Reduced InequalitiesSDG 8Decent Work and Economic GrowthSDG 17Partnerships for the Goals25www.ethicalsupplychain.org2023 saw the opening 12 months of our three-year ambition to benefit 30,000 children,and we are on track to achieve this goal through the Family-Friendly Factory program.During 2024 and beyond,we will broaden the deployment of our Gender Equality program and ensure the Worker Helpline is available where it is needed.Our programs will continue to expand to new countries and to more industry sectors,and well continue to develop them,thinking globally but acting locally.It is important,for example,that as we grow in Mexico our measures there are designed specifically for Mexican workers and their employers needs.We will not take a one-size-fits-all approach,but respond to market needs using our expertise to deploy the most appropriate and impactful plans of action.We are committed to shaping the future of work for those most in need by championing family-friendly workplaces and gender equality,and by continuing to invest to enable workers to access effective grievance mechanisms.Our objective is to inspire and support companies to create workplaces where all employees can thrive,balance their personal and work responsibilities,and have their voices heard and respected.Were determined to work hand in hand with companies to foster a culture of care,support and respect.We do this because we know that when workers are supported and respected,they are more productive,innovative and loyal.Implementing the ESCP Worker Well-Being program is a strategic investment which delivers positive returns for companies,for workers and for society as a whole.By prioritizing worker well-being today,we are building a brighter,more equitable and resilient future.ESCP is setting a new standard,but this is only made possible through collaboration with companies that share our vision leaders who enable corporate commitments to become reality.We hope you are inspired to join us.Together,we will achieve even more in the future.Copyright Ethical Supply Chain Program 2024.All rights reserved.While every effort has been made to ensure the accuracy of the information in this report,ESCP assumes no responsibility for any errors.We are more motivated than ever to meet the requirements of workers and their employers.Were also more informed than ever,equipped with data that proves the urgent need for our programs and demonstrates their benefits.Future PlansFOR GENERAL ENQUIRIESinfoethicalsupplychain.orgwww.ethicalsupplychain.orgContact usTO LEARN MORE ABOUT OUR WORKER WELL-BEING PROGRAMCARMEL GIBLINPresident and CEO,Ethical Supply Chain Programcarmel.giblinethicalsupplychain.org
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WHITE PAPERTHE NEXT INDUSTRIAL REVOLUTION IS PEOPLE-CENTRICIndustry 5.0IntroIn this white paper,we propose to discover what Industry 5.0 means to business owners today:how they can stay competitive with this new trend and how employees can benefit from it!Since the turn of the 2010s,the fourth industrial revolution,also known as Industry 4.0,has been taking place.This refers to the automation of manufacturing companies and the integration of new technologies into production lines.But as soon as this concept was integrated,we heard about a new evolution,this time focused on the idea of placing people at the heart of technology:Industry5.0.This approach goes beyond the sole objectives of efficiency and productivity.It places the worker as well as his or her well-being as central elements in the production process,and uses new technologies to ensure the overall success of companies while following the ecological transition.It complements the existing Industry 4.0 approach by specifically putting research and innovation at the service of the transition to a sustainable,human-centered and resilient European industry.(European Commission)It is now time to get on board with Industry 5.0.Jean-Philippe Raiche Partner,Strategy and Development Proaction International UTrakk Industry 5.0 Table of Contents Industry 5.0 301Industry 4.0 RecapPage 5 02Industry 5.0:The Next Phase of the Industrial RevolutionPage 605How to Move to Industry 5.0Page 1503What is Industry 5.0 and how it will radically change your business modelPage 806Managing Industry 5.0Page 16 04The Three Pillars of Industry 5.0Page 1007What Industry 5.0 can do for your businessPage 17 Industry 5.0:The human being as the pillar of the digital transformationIndustry 5.0 will radically change the way companies work over the next ten years.It will no longer be just a matter of automating and optimizing processes.Instead,it will be about making workers lives easier,more productive and more interesting.We live in an era of increasing automation,where machines take over human tasks with a minimum of manpower.However,a new industrial revolution is on the horizon,aimed at improving the lives of workers through technology rather than replacing them with robots.The next industrial revolution,Industry 5.0,will change forever the way how the manufacturing industry and many others operate.Jean-Philippe Raiche Partner,Strategy and Development,Proaction International UTrakk Industry 5.0 Industry 4.0 RecapIndustry 4.0 marked a breakthrough in manufacturing and communications,signaling an industrial revolution that began around 2014-15.This revolution brought the physical and digital worlds together and changed the way we think about production.Industry 4.0 continues to move forward,but it is not without challenges.For a revolution to take place,there must be some resistance.Otherwise,the movement cannot be sustained and will never reach its full potential.The first challenge has been to get all parties on board with the new technology.Some companies stuck to their old ways,while others wanted to embrace the change.There were also issues around data privacy and security issues(big data),as well as an over-reliance on IoT devices,which was a risk in case of malware or virus infection.Another challenge was the fear that jobs would be lost with increased automation and artificial intelligence.This meant that many people were uncomfortable with the idea of machines replacing them in their jobs,which made them more resistant to change.Despite all this,humans still have a place in the manufacturing sector of Industry 5.0,as long as you have non-automatable skills.This means that you need to learn new skills to stay ahead of technology and stay relevant in your professional market.Industry 5.0 Back to table of contents01 Industry 5.0:The Next Phase of the Industrial RevolutionThe next phase of Industry 4.0 is Industry 5.0.This will change the way we work,live,play and learn.It is a further step towards automation,AI,robotics and human-machine collaboration.The driving force behind the fourth industrial revolution has been the digitization of information,which has allowed us to access data and share it in unprecedented ways.The fifth industrial revolution is the next step in this evolution,where we will see an exponential increase connectivity between people,machines and data bringing out previously untapped value.Returning to the present,we have seen many jobs automated by robots or artificial intelligence(AI).However,rather than losing jobs,many new jobs will be created,requiring new skills.For example,in its report“The Future of Jobs Report 2020”,the World Economic Forum predicts that automation will eliminate the jobs of about 85 million workers,but will create 97 million new jobs by 2025 in 26 countries.This means that it is essential for companies to invest in the education and training of their employees to participate in the next industrial revolution.1780Industry 1.0MechanizationTHE 5 INDUSTRIAL REVOLUTIONSElectrification1870Industry 2.0Automation1970Industry 3.0Digitalization2011Industry 4.0PersonalizationHumanization2020Industry 5.0 Industry 5.0 Back to table of contentsIndustry 5.0 is not only about automation and robotics,but also about creating new jobs and ensuring that people remain at the center of the production process.The fifth industrial revolution offers companies many opportunities to improve their competitiveness,increase productivity and reduce costs while respecting the rights of individuals.The European Union calls it anthropocentric(people first)and is committed to ensuring that workers are not left behind.This approach recognizes that people are a companys greatest asset.They embody knowledge,expertise and ideas,create solutions,make them real,build things from scratch,innovate as individuals,teams or groups.Industry 5.0 7Chapitre 2 Industry 5.0:The Next Phase of the Industrial RBack to table of contentsThe impact of Industry 5.0 on companiesIndustry 5.0 is a human-centered industrial revolution.This is the next phase of the Industrial Revolution 4.0 that we have experienced over the past decade.This evolution supports human creativity and promotes mechanized efficiency,creating an ecosystem where humans and machines can collaborate more effectively to solve problems more quickly than ever before.In 2020,the COVID-19 pandemic shook the world.The resulting economic turmoil has created an environment for Industry 5.0 to take root and expand rapidly.While Industry 4.0 had already established a foundation in manufacturing,logistics and supply chain management by enabling machines to make decisions based on real-time data,Industry 5.0 is now ready to take over the world.Its targets:all business sectors,from finance to operations to customer service.to customer service.Industry 5.0 Back to table of contentsHow will Industry5.0 revolutionize the business world?Industry 5.0 aims to increase the digital transformation of businesses through the effective integration of humans and technology to work together more constructively in a safe environment.Essentially,its about supporting human creativity while driving mechanized efficiency through new tools like the Internet of Things(IoT),3D printing,cobots(collaborative robots),AI/ML,blockchain,etc.This means creating a culture that supports innovation,experimentation and creativity while leveraging automation in an ethical manner.As a result,many organizations are beginning to invest in high-performance human-machine partnerships that enable greater levels of automation levels of automation in their operations.The fifth industrial revolution is not only about technology.It is about harnessing the power of individuals and machines to create new opportunities,unlocking value,and stimulate growth.Jean-Philippe Raiche Partner,Strategy and Development,Proaction International UTrakk Industry 5.0 9Chapitre 3 The impact of Industry 5.0 on Back to table of contentsThe 3 pillars of Industry 5.0People at the heart of the new industrial revolution People are at the center of the process and decision making.They have a say in how things work,define the process by which they do their work,understand what is going on around them,and are not just a cog in a machine,but part of a larger system.Humanocentrism is the first pillar that defines Industry 5.0,a manufacturing process by which technology enables society to be more responsive to peoples needs and overall more human.This is an evolution from the industrial revolution,where the human being was just a cog in the machine.The human being was removed from the process and considered as a commodity of everyday consumption.The human element is fundamental in Industry 5.0.You can see it in the way people interact with technology.In fact,its about understanding how the human mind works before designing systems that work for people.THE 3 PILLARSOF INDUSTRY 5.0PEOPLE-CENTRICITYPeople are at the center of the process and decision-making,not mere cogs in some vast machine.SUSTAINABILITYNew skills for workers and circular processes to leave a better world for future generations.RESILIENCEBeing able to change quickly to stay ahead of the curve and adapt to changing market dynamics.INDUSTRY5.0 Industry 5.0 1004 Back to table of contentsAbility to adapt Industry 5.0 companies must quickly change their mindset to stay ahead of the curve and adapt to market changes.Thats where adaptability comes in.Its about being bounce back from failure,learn from your mistakes and move forward with a positive mindset despite setbacks.Adaptability is also about ensuring that companies have the right infrastructure in place to continue to operate at a high level even in the event of a natural disasters or other crises.The ability to stay positive in the face of adversity can be a powerful tool for companies that want to increase their chances of success in todays highly volatile economic landscape.It goes hand in hand with sustainability,as it helps companies stay aligned with their goals and objectives.The ability to adapt quickly to change is essential for Industry5.0 companies that want to remain competitive in a changing and uncertain world(new technologies,changing market needs).Jean-Philippe Raiche Partner,Strategy and Development,Proaction International UTrakk Industry 5.0 11Chapitre 4 The Three Pillars of Industry Back to table of contentsSustainability Adding new skills for workers means companies can reduce costs while continuing to provide quality products/services to customers.It also means that employees will be more likely to stay with their employer longer.This is because they feel valued by being offered new opportunities for learning and career development opportunities.Ultimately,employers who invest in continuous learning throughout their employees careers are more likely to see higher levels of engagement,productivity and profitability.Thats good for business and for society,because it leads to stronger communities that offer more opportunities for everyone.Sustainability is also about implementing circular processes that enable the reuse,recovery and recycling of natural resources,reducing waste and environmental damage(such as greenhouse gas emissions),and increasing the efficiency of our manufacturing processes.Its about making sure we leave a better world for future generations.Thats why companies must invest in the people and processes that ensure a more sustainable future.Businesses must build on the successes of the Fourth Industrial Revolution by implementing a new set of rules and policies that address the challenges and opportunities of today.The fifth industrial revolution will require companies to rethink their business model and the way they do business.Industry 5.0 12Chapitre 4 The Three Pillars of Industry Back to table of contentswCompanies also need to reconsider how they measure success in order to align with the values of society at large.We need new metrics that measure human well-being and environmental impact to create a more sustainable future.Jean-Philippe Raiche Partner,Strategy and Development,Proaction International UTrakk Industry 5.0 Back to table of contentsHaving your frontline managers coached pays off!Adopting the best management behaviors at the point of execution with KBIs(Key Behavioral Indicators)and a coaching approach means:More agile managers who know their role better,who are accountable for the companys performance and who have an easier time identifying opportunities for improvement;Improved KPIs and KFIs that enable business growth;Engaged employees who feel involved and committed to being part of the solution every day;Increased availability:when all levels of the organization play their role better,managers no longer have to compensate.Everyone does their jobs better and this leads to better performance.What are you doing to improve your managers management skills and reach the full potential of your organization?Our experts can help you coach your frontline managers to develop proactive management reflexes.2,6:1ROIBetween 10%and 40%productivity gains Industry 5.0 14Talk to our Back to table of contentsHow to Move to Industry 5.0Industry 5.0 will become a reality in the next few years.However,when it fully arrives depends on your company and your industry.The key elements of Industry 5.0 are already starting to play out today.As these trends gain traction with consumers,companies will compete more fiercely than ever by adopting advanced technologies that give their products advantage over their competitors.If youre not yet ready for Industry 5.0(or want a refresher),here are some tips to get you started:Recognize Industry 5.0 as a growing trend and be aware of its potential impact on your business.Accept the ever-growing needs of your employees and empower them to succeed,realize their potential and contribute to the success of the organization.Provide adequate training and skills development so that employees can adapt to change.Invest in the technology and infrastructure needed to become a become a digital enterprise.Create a collaborative culture focused on innovation,agility and velocity.Create an open environment that encourages employees to share ideas,collaborate and work with partners outside the organization(including customers).Keep your customers in mind by using data analysis tools to better understand their needs,preferences and behaviors.You can then deliver better products and services faster.Industry 5.0 1505 Back to table of contentsManagement in the 5.0 eraThe next generation of managers will focus on developing and empowering staff to take ownership of achieving the organizations goals,as well as creating an open culture that encourages employees to share ideas,collaborate and work with partners outside the organization(including customers).Its also about using data analytics to better understand customer needs,preferences and behaviors,so that better products and services can be delivered more quickly.Managers play a critical role in Industry 5.0 by providing the leadership and direction needed to successfully implement the new technologies and processes required to deliver value to customers.The role of managers will shift from focusing on efficiency,control and compliance to empowering employees,promoting innovation and facilitating collaboration.The shift from Industry 4.0 to Industry 5.0 is not just about technology.Its also about how we work as a team.It requires a different approach to leadership and management,one that is more focused on trust,accountability and collaboration.Need help to make the transition to Industry 5.0 with confidence?The experts at Proaction International are here to support you and guide you through the process.Industry 5.0 1606 Talk to our Back to table of contentsHow can this new industrial revolution help your business?The idea of Industry 5.0 is not limited to manufacturing.It can be applied to all areas,including services,agriculture,and retail,to create a competitive advantage for companies in all sectors.The future of Industry 5.0 will be defined by the ability of organizations to adapt to new technologies,use them to create new products and services for customers,and train their workers for the jobs of tomorrow.When it comes to the future of manufacturing,you can take several different approaches.You can focus exclusively on Industry 4.0 and its automation benefits.You can also focus on strengthening human-machine collaboration with Industry 5.0s emphasis on the human side.The most logical long-term strategy for your company might be a combination of the two.This approach incorporates the best qualities of both models:customization and improvement through machine learning capabilities,enabled by your workers ability to learn faster than ever before through new technologies likeUTrakk.Industry 5.0 has the potential to transform our way of living and to work by allowing companies to innovate more quickly than ever before.Jean-Philippe Raiche Partner,Strategy and Development,Proaction International UTrakk Industry 5.0 1707 Back to table of contentsKnowledge Center Dashboards UTrakk Assistant CoachingRituals Actions,opportunities,projects Field TourAbout UTrakkUTrakk DMeS was created by Proaction International,experts in performance management since 2004.The successes generated on 3 continents have brought our clients managerial orchestration to a new level.UTrakk DMeS continues to serve this mission.Our digital management ecosystem helps managers increase the impact they create in their role tenfold.Following the principles of Industry 5.0,it enables them to improve their business performance by leveraging both technology and people,placing the latter at the heart of the production process.Digital Management ecoSystemTake the management organization to the next level and move naturally to Industry 5.0 Industry 5.0 18Download the complete The Managers Journey UTrakk guides managers through their daily management activities day-to-day management activities to increase performance tenfold through a set of cross-platform features.START Industry 5.0 19See HThey drive performance withinfoUT|Linkedln/UTrakk DMeS|Move to Industry 5.0 and provide an unparalleled management experience For Your ManagersparBook a demo now
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The Voice of Digital Leaders in Manufacturing 2023SURVEY REPORTContentIntroduction to The Voice of Digital Leaders in Manufacturing Report 2023Chapter 1Chapter 2Chapter 3Key Takeaways17Key Takeaways37Key Takeaways533How B2B Companies Are Transforming to Become Future-Fit7Business Strategies for Future Change23Maximizing Digital Investments43COPPERBERG|VALTECH1SURVEY REPORT#VODL23 Chapter 4The Voice of Digital Leaders in Manufacturing Expert Insights57Executive Summary65About69THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 20232CONTENTIntroductionCOPPERBERG|VALTECHSURVEY REPORT2023Welcome to the second issue of our annual report,The Voice of Digital Leaders in Manufacturing,from Copperberg and Valtech.Together,we asked forward-thinking leaders from across the world to share their insights into the current state of digital transformation in B2B,and to uncover how digital innovation is changing the future of the industry.Digital transformation in manufacturing has evolved at a fast pace in recent years.The challenging market situation has increased the need for resilience and flexibility.This has led many companies to accelerate their transformation initiatives,implement digital solutions,and increase their investments in advanced technology.Today,manufacturers and B2B organiza-tions are focusing more and more on maximizing the ROI on existing digital investments.Many are driven by the shift toward a composable/headless approach,software-as-a-service(SaaS)platforms and industrial servitization.They continue to adopt new technology and devise innovative business models to facilitate smoother cross-functional collaboration,increased organizational flexibility,operational efficiency,and superior customer experiences.To make this report possible,Valtech and Copperberg teamed up to survey over 60 handpicked B2B digital leaders and decision makers from large industrial manufacturers around the world.The respondents were asked to share their transformation goals,business strategies,and challenges on their journey.Many shared their personal experiences in hashtags and inspiring open answers.We are very grateful to these digital leaders for their effort in sharing their journey in digital transformation;Providing tips and tricks of what worked well,but also being open about the challenges.All too familiar when you are involved in digital in a large B2B organization.COPPERBERG|VALTECH5SURVEY REPORT#VODL23 Join Lets talk B2B LinkedIn groupThe survey is built with a hybrid research approach;a combination of two market research techniques,qualitative and quantitative through an online survey tool.The quantitative elements were designed as multiple checkbox questions to collect numerical data that can be used to measure variables.The results are used to support general conclusions from the research and should be considered as indications.The qualitative elements were designed as open ended questions in the same online survey tool.Qualitative research seeks to delve deep into the topic at hand to gain information about peoples motivations,thinking,and attitudes.The open-ended questions in this case,are there to put a human voice to the objective numbers and trends in the results.The data selection approach is a two-stage cluster sampling.The cluster is defined by the following screening criterias;Selection on size of organization,industry vertical,job function and influence over decisions within the surveyed topic area.From this selection a randomized convenience sampling approach was used for collection of data.The screening was included in the online survey and respondents not matching the populations criteria were disqualified before entering the survey.Only qualified respondents answers are included in the total data analysis.This report aims to describe a general state,with comparable results to last years report.The answers to it should not be considered as statistically significant(64 valid responses),but mainly thanks to its qualitative approach,reflecting the underlying attitudes and trends forming the respondents answers.The results in this reportthe recommen-dations and practical advicewill help you navigate this years challenges.It will empower you to make more informed decisions on your transformation journey as you bring your digital ambitions to life.*This report will be complemented by various webinars and small-group sessions to further elaborate on topics and help each other advance to the next level.Survey respondents:B2B manufacturers International operations 250 MEUR annual turnover Leaders in digital and commerce Decision making power within digital initiatives and projectsLisa Hellqvist,Managing Director,Copperberg Herbert Pesch,Managing Director B2B Commerce,ValtechMascha Tamarinof,Vertical lead B2B,ValtechTHE VOICE OF DIGITAL LEADERS IN MANUFACTURING 20236INTRODUCTIONHow B2B Companies Are Transforming to Become Future-Fit01.SURVEY REPORT2023In recent years,digital transformation has been at the top of the priority list for many manufacturers.While initiatives have taken off and implementation projects have been accelerated,industry players still have to bring their journey to maturity and fully leverage the potential of their investments.Despite the challenges and macro-environmental changes that have disrupted the status quo over the past three years,2023 promises to be a year of advancement and consolidation.Processes and operations have been widely elevated by digital.Manufacturers are now quickly shifting gear and pivoting toward new business models that streamline innovation,resilience,product development,and time to market,with a growing focus on customer satisfaction.With advancement and consolidation in mind,survey respondents have tempered their ambitions regarding digital.The majority of participants,up to 59%,describe themselves as ambitious.Just 3%give themselves the status of market leader.Last year we saw 47%respondents listing themselves as ambitious and 24%claiming to be digital market leaders.On the whole,the ambition level has dropped.This might have been caused by the fact that respondents have become more realistic about what being a digital leader really means.The digital ambition of the entire organization is:Not important20222023LimitedAverageAmbitiousMarket leader0%0%8%2G$0Y%3%COPPERBERG|VALTECH#VODL23 9CHAPTER 1userid:145584,docid:525676,date:2024-09-29,63%of manufacturers state their digital maturity is comparable to their competitorsTHE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202310HOW B2B COMPANIES ARE TRANSFORMING TO BECOME FUTURE-FITReality is kicking in showing an overall progression in the industryComparing both the ambition level and maturity level with last years results,the respondents indicate an overall shift towards the middle of the curve.This shift is indicated by the decrease in the numbers of manufacturers who stated they were ahead of the maturity curve last year,from 31%to 14%this year.This year,those who claimed to be ahead,have shifted down the ladder to the group 47%of manufacturers have increased their digital related budgets by up to 20%for 2023The digital maturity compared to competitors is:Far behind20222023BehindComparableAheadFar ahead3%0$D1%2c%2%COPPERBERG|VALTECH#VODL23 11CHAPTER 1that claims to be comparable to their competitors.This shift results in a total of 63%of manufacturers claiming that their digital maturity level is comparable to their competitors.Maximizing digital investments2022 was a year of investment for manu-facturers.Our findings this year indicate that they are now looking to maximize these digital investments.The years of continuous growth of investment in digital for the vast majority seem to be over.For 11%of survey participants,the budget has decreased by as much as 20%while for 39%,the budget has stayed the same.Those who are looking to catch up to their competitors,or get ahead of the curve,continue to increase their budgets.47%of our respondents have increased their 2023 digital investment budget by up to 20%,compared to 63%in 2022.The number of respondents who increased their budgets by more than 20%has dropped from 20%last year to 3%now.For 44%of our survey respondents,IT has the biggest say in how this budget is spent,closely followed by marketing(31%)and the sales department(27%).For 17%,finance and after sales/service departments are getting more involved in the process,The budget for digital investments next year is going to:Decrease with morethan 20 222023Decrease by 1-20%Stay the sameIncreaseby 1-20%Increase with more than 20%0%0%2c 9G%3%THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202312HOW B2B COMPANIES ARE TRANSFORMING TO BECOME FUTURE-FITwhile the rest are split between production,supply chain,and procurement.For 19%,the budget is determined by a dedicated digital team or a cross-departmental team with representatives from sales,marketing,industrial operations,and strategic development.19D1%6%2%0%The divisions/departments with the most influence in decision making on this budget is:ITMarketingSalesOtherFinanceAftersales/ServiceProductionSupply ChainProcurementHR#VODL23Join the conversationCOPPERBERG|VALTECH#VODL23 13CHAPTER 1Uncertain market conditions lead to an increased focus on short-term business valueTHE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202314HOW B2B COMPANIES ARE TRANSFORMING TO BECOME FUTURE-FITThe Voice of Digital Leaders:Digital StrategyWe asked the surveyed leaders for the#hashtag they would use to best describe their organizations digital strategy and later on to elaborate on that hashtag.This is what they told us:#disjointed#almostthere#digitalsecond#inprogress#end2end#exploringnewvalue#commercialeffectiveness#readytogo#projectdriven#sendhelp#globalacceleration#lotsofpotential#softwarization#acceleration#shiftinggears#godigital#develop#incredible#erratic#digitaltransformationjourney#fixthebasics#implementing#learning#digitalsalesahead#growing#salestransformation#multichannel#fragmented#aware#digitalcollaboration#startingCOPPERBERG|VALTECH#VODL23 15CHAPTER 1“Manufacturers are now pivoting towards new business models that streamline innovation,resilience,product development,and time to market,with a growing focus on customer satisfaction.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202316HOW B2B COMPANIES ARE TRANSFORMING TO BECOME FUTURE-FITKey TakeawaysManufacturers are consolidating their new digital infrastructure and maximizing their investments.Although the growth of digital budgets has decreased,digital remains a focal point within the strategy.It is now a matter of infusing digital within every level of the organization,breaking down silos,and learning how to fully harness its power.COPPERBERG|VALTECH#VODL23 17CHAPTER 1The#digitaltransformationjourney is#inprogress for some,while others are#readytogoThe majority of manufacturers are still ambitious regarding digital initiatives,but many have reached a level of digital maturity that is comparable to their peers.Even those who have just begun their journey are optimistic about the future,acknowledging that going digital is the best option for their business and customers.Many who are#almostthere are now#shiftinggears to keep up with#globalaccelerationIf last year was one of digital investment,this year is one of consolidation.Manufacturers want to make the most of the digital solutions available to them now.With the guidance of their IT,marketing,sales,and after sales departments,they are better managing their budgets.To get ahead of the curve,they are looking for ways to expand their value-added and digital offerings.It is the ideal time for#implementing,#learning,and#growing on the journeyManufacturers know where they need to be.Forward-thinking leaders have a vision and a roadmap for their journey.This is a journey that must be taken step by step,and many are learning as they go.The challenge is in how to align services on a global digital level whilst simultaneously improving IT and data infrastructure to fit that bigger picture.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202318HOW B2B COMPANIES ARE TRANSFORMING TO BECOME FUTURE-FIT“On the business side,we are moving to more e-commerce and a more direct relationship with customers and on the product side,we offer increasingly connected products.No central drive for process alignment,resulting in many local,disjointed,initiatives.We have goals but limited budget,resources,and knowledge to pull it off!A lot of initiatives,low coordination,still lack of the fundamentals on data.Main focus is to fix the basics in terms of our manufacturing footprint,supply chain set-up,resilience and security of our IT backbone and data availability.The Leading Voices#shiftinggears#disjointed#sendhelp#erratic#fixthebasicsCOPPERBERG|VALTECH#VODL23 19CHAPTER 1The last two years were for digital transformation.There was a huge acceleration but at the end of the day,this growth is not sustainable.We have to slow down because people can not cope with the changes so fast.Never lose focus on your business benefit and get your data ready from start.“Peter Simon,Head of Applications,Sika Informationssysteme Karin rnsten,Smart Portal Program Manager,Atlas Copco THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202320HOW B2B COMPANIES ARE TRANSFORMING TO BECOME FUTURE-FIT“We have great awareness to progress new initiatives on digitalization,but concepts or business models,even customer readiness to accept,is missing or hard to sell.Strong willingness,high ambitions,but not coordinated and resourcing not in alignment with the power points.We finally realized that Digital Transformation is a matter of change management,with cross functional impact:data must represent a backbone.Steps are taken to improve,however lack of resources and knowledge is hampering this.Seems central decisions makers are more focused on what they can use for self-promotion rather than finding solutions that drive the business forward.The Leading Voices#readytogo#confused#aware#lackofresources&knowledge#whantmorethancapableofCOPPERBERG|VALTECH#VODL23 21CHAPTER 1Transformation is not a destination,it is a journey.We will continue to aim for growth and acceleration as long as we have customer needs to meet in an ever evolving world.I believe this is the reason behind the continuous investments the industrial manufacturing sector has put towards rapid adoption of digital technology.The digital transformation of this sector has been fueled by the development of new technologies such as the Internet of Things(IoT),artificial intelligence,and cloud computing.In conclusion,digital transformation has revolutionized the manufacturing sector by enabling manufacturers to improve their operational efficiency,reduce costs,and create new business models.The benefits of digital transformation are clear,and manufacturers that embrace this technology are poised for growth and success in the years to come.“Lisa Hellqvist,Managing Director,Copperberg THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202322HOW B2B COMPANIES ARE TRANSFORMING TO BECOME FUTURE-FITBusiness Strategies for Future Change02.SURVEY REPORT2023Recent events have taught manufacturers that building resilience is key to future-proofing their business.Constant supply chain disruptions,global crises,and perpetual cycles of inflation and recession have prompted many to devise contingency plans and adopt flexible solutions that can adapt to change.Digital solutions powered by artificial intelligence(AI)and connected by the internet of things(IoT)to enable remote diagnosis,virtual assistance,predictive maintenance,and others,are all ways to keep the organization moving forward in the digital-first world.A world where business continuity is less compromised 63%of manufacturers report that their organizations digital agenda is shared company-wide COPPERBERG|VALTECH25CHAPTER 2#VODL23 2c%9%The structure of the digital strategies and initiativesWe only have ad hoc employee initiated initiatives with little to no leadership or overall strategyWe are operating with a company-wide digital agenda but no cross regional/cross departmental alignment and varying digital maturityNo clear company-wide strategy We are operating with departmentally driven initiatives and local/project-based executionWe are fully digital(to the core):central and regional leadership are fully aligned and overall execution is harmonizedby unforeseen disruptions.Improving and optimizing foundational services,like transactions(e-commerce)and digital services(customer portals)are considered important elements to become more flexible and cost efficient.Many manufacturers have worked to align,expand,and consolidate their digital agenda across the organization.By establishing a digital foundation within their infrastructure,they have created the opportunity to scale up and maximize their digital investments.Digital on the organizational agendaWhen asked what statement best describes the structure of their organizations digital strategies and initiatives,63%revealed that they are operating with a company-wide digital agenda.However,it has not been implemented throughout the organization and does not yet cover cross-regional or cross-departmental alignment;the organization has varying levels of digital maturity.Facing this THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202326BUSINESS STRATEGIES FOR FUTURE CHANGEorganizational transformation challenge is high on the agenda this year.Having a company-wide strategy is important to transform the organization,but 27%of our survey participants lack a clear plan because their departmentally-driven initiatives and operations are executed in isolation,based on region,business unit or project.For the 9%of manufacturers who have gone fully digital,central and regional leadership is now fully aligned,and overall execution is harmonized.But for all its benefits,2%of manufacturers have yet to commit to the journey.They lack a company-wide strategy,and their digital transformation goals are initiated by employees who have little to no support from the board.Digital to boost cost-efficiency,customer satisfaction,and revenueThis year,29%of manufacturers plan to use digital to increase revenue by developing or expanding new services and products,and upselling to their existing customer pool.From value-added services,to predictive maintenance and other add-ons,digital offers a myriad 29%of manufacturers want to increase revenue by expanding their offering and upselling to their existing customer pool in 2023COPPERBERG|VALTECH27CHAPTER 2#VODL23 of opportunities to increase the margins of the company.For 27%,it is more important to harness the power of digital to become more cost-efficient by optimizing current processes and resources.For 25%it is important to secure customer loyalty and satisfaction through better experiences and delivery of services and products.Meeting these goals is certainly possible,as these respondents already have the minimal digital capabilities necessary to The most important business goals of digital transformationTo increase revenue through expanding NEW services/products by upselling to existing customer pool(value added services,maintenance,add-ons,etc.)To increase revenue through expanding our current service/product offering to NEW customer/marketsTo introduce completely NEW digitally driven business models and revenue streamsTo be more cost efficient by optimizing current processes and resourcesOtherTo secure customer loyalty and satisfaction through better experience and delivery of service and productsWe are currently not digitally transforming6)%5%5%3%THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202328BUSINESS STRATEGIES FOR FUTURE CHANGE60%of manufacturers recognize inflation and rising costs of operations as the biggest external threat to their organizations success in 2023pursue their objectives.The same can be said about the 6%who are looking to increase their revenue by expanding their current service and product offerings to new customers and markets,as well as the rest who are looking toward new digitally-driven business models and revenue streams or a combination of both.COPPERBERG|VALTECH29CHAPTER 2#VODL23 60C!8%8%The main external threats to organizational success next yearRising costs of operations(inflation,raw material prices,lack of components)Competitive landscape(outcompeted on digital adoption)Shortage of workforce(finding,training,and retaining people)New entrants into the market,disruptors of business modelsComplexity of market structure(distribution/channel conflicts)OtherSupply chain disruptionsRising customer expectationsRising costs threaten organizational successAlthough many are optimistic about meeting their objectives in 2023,manufacturers recognize the challenges that may hamper their success this year.According to our findings,the biggest external threat for 60%of our respondents are inflation,rising operational costs,and increasing raw material prices.The 2022 inflation that persists across the globe,is the result of pressures put on THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202330BUSINESS STRATEGIES FOR FUTURE CHANGE37%of manufacturers say that existing customers use their digital channels for repeat orders governments and businesses by the global crises of the past three years.As inflation continues to soar,consumer confidence is falling and the global economy faces the prospect of a downturn.Stemming from the same root issues,supply chain disruption is the main concern for 43%of our survey participants,owing to the disruption caused by the global pandemic,Brexit,the Suez situation,and the geopolitical conflicts in Eastern Europe.Such macro-environmental changes are not always predictable and there is often no telling how they will impact the business landscape.Many are cautious and turning to digital for solutions.For 38%of manu-COPPERBERG|VALTECH31CHAPTER 2#VODL23 facturers,leveraging digital can be complex in itself.Hybrid or digital workplaces require a skilled workforce that is not readily available.Acquiring,training,and retaining the right talent continues to be a challenge.Leveraging digital can help manufacturers to become more efficient by reducing manual work and“increasing productivity without adding headcount”as one of the respondents mentioned.Another external threat identified by 25%of the respondents is the complexity of the market structure with its distribution and channel conflicts.To overcome this challenge requires a higher level of digital maturity and a skilled workforce that can easily navigate the complexity of a new hybrid market approach.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202332BUSINESS STRATEGIES FOR FUTURE CHANGECustomers have shifted their buying behavior towards digital channels in the past 2-3 yearsYes,for recurring orders/existing customersYes,for research/orientation/documentation or in testing modeYes,for 1st orders/new customersNo,they still buy mainly offline(phone,meetings)Yes,for price quotes and offers177%05(%Increased earnings from digital channels as B2B customers migrate onlineChanging customer behaviors are increasing market complexity.Though not all B2B customers are ready for digital services,many have shifted their buying behavior to digital channels.37%of our respondents note that their existing customers are moving towards digital channels for repeat orders.Another 28%have noticed that their customers are shifting to digital channels to get price quotes and offers,while 17%use these channels for research,documentation,or testing.For 35%of manufacturers,traditional transactions continue to be the primary way of doing business with their customers,who continue to make offline purchases via phone calls or meetings.The shift toward digital sales channels is still at an early stage in Industrial manufacturing.This is reflected in how COPPERBERG|VALTECH33CHAPTER 2#VODL23 0F%8%7%7%4%1T&%2%8%9%1%The revenue split over sales channelsDirect Sales/Sales RepPartners/DistributorsEDI(digital/online)E-commerce(digital/online)Contact CenterOther channelsOCI/Punchout(digital/online)20222023companies are splitting their revenue between sales channels.Although digital is increasingly important in the whole buying process,most of the actual sales transactions are still done through traditional channels such as direct sales/sales reps and distributors.The revenue share from direct sales has dropped from 54%last year to 46%this year while the revenue from partners and distributors has only increased by 1%.This suggests that some of the direct sales is shifting towards digital channels such as Electronic Data Interchange( 6%),and punchout( 1%).THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202334BUSINESS STRATEGIES FOR FUTURE CHANGEThe Voice of Digital Leaders:Transformation GoalsWe asked the surveyed leaders for the#hashtag they would use to best describe their main goal of digital transformation within their organization and later on to elaborate on that hashtag.This is what they told us:#increasebusiness#smartmanufacturing#relevance#efficiency#revenue#becomingatechcompany#easytodobusinesswith#bepresent#upsell#speed#innovation#customer360#organicgrowth#customersatisfaction#improveearnings#recurrentrevenues#conversion#seamlesscustomerjourney#bebetterthancompeditors#reducecomplexity#opportunities#combininglearningwithearning#simplification#service#integration#gotomarket#fixitondemand#enhanceperformanceCOPPERBERG|VALTECH35CHAPTER 2#VODL23“Leveraging digital can help manufacturers to become more efficient,by reducing manual work and“increasing productivity without adding headcount”as one of the respondents mentioned.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202336BUSINESS STRATEGIES FOR FUTURE CHANGE36BUSINESS STRATEGIES FOR FUTURE CHANGEKey TakeawaysManufacturers acknowledge digital as a core part of their strategy for the future.Digital solutions are flexible and adaptable to change.They provide options to navigate external threats such as inflation,the rising cost of operations and internal threats such as the lack of organizational alignment.Many have a company-wide digital agenda to help them meet their objectives in 2023.Still,very few have gone fully digital,with central and regional leaderships aligned,and overall execution harmonized.COPPERBERG|VALTECH37CHAPTER 2#VODL23 Creating#opportunities to#upsell by boosting#efficiencyManufacturers want to increase their revenue,become more cost-efficient,and secure customer loyalty,especially at a time when customer confidence is dropping.The way to achieve these goals is to infuse digital at every level of product and service development,sales,and resource optimization and thus boost overall efficiency for the company and its customers.There is a need for#simplification and to#reducecomplexity for the customerThe many threats and challenges affecting manufacturers today make the industry a tricky environment to navigate.Distribution and channel conflicts affect the customer too,so manufacturers are relying on digital tools to make complex business processes easier and facilitate aftermarket transactions with their customers.Customer#conversion to digital is the key to boost#customersatisfactionThe preference of B2B customers to use digital channels for their transactions and product research is growing,although some are still resistant to change.This has caused an increase in revenue from EDI and OCI punchout solutions,but direct sales overall continues to be the main source of revenue for manufacturers.With online sales coming to the forefront,manufacturers want to provide their customers with easy and frictionless user experiences.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202338BUSINESS STRATEGIES FOR FUTURE CHANGE“Staying relevant in an increasingly changing and digitalized market.Our company understood the importance of service and recurrent revenues offered by digital services.Be a leader in manufacturing through digitalization.There will only be action when there are pull factors.Putting customer success at the center of our focus will drive long term recurring revenues in addition to onboarding new business.The Leading Voices#stayingrelevant#recurrentrevenues#smartmanufacturing#fixitondemand#customersuccessCOPPERBERG|VALTECH39CHAPTER 2#VODL23 Take your time for the strategy.You need a holistic strategy from start to end.“Alina Reinhold,Manager E-Commerce,Kalmar Two years ago,we became more focused on the development of our digital services to strengthen our lifecycle propositions.Strong lifecycle offerings have become a prerequisite for future growth.“Frank Velthuis,Director Digital Service Development,Vanderlande THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202340BUSINESS STRATEGIES FOR FUTURE CHANGE40BUSINESS STRATEGIES FOR FUTURE CHANGE“Our main goal is to reduce friction and increase reliability/accountability/consistency of delivery to our customers with the help of technology and smarter processes/use of our data.The first mover will benefit greatly.We need to be present online to reach out to buyers.Our industry is still very much offline when it comes to purchasing,but the decision is given(or at least affected by presence)online.The Leading Voices#easytodobusinesswith#opportunities#bepresentCOPPERBERG|VALTECH41CHAPTER 2#VODL23 Short term business value contribution and integrated services are the two concepts that will play a central role in the strategy of large industrial manufacturers in the coming years.The times of casual digital experimentation and innovation with a slow or uncertain time to market are over.Boardrooms and CDOs will prioritize digital initiatives based on their expected business value contribution and the speed at which this can be unlocked.Starting with the potential of generating more revenue through digital channels,followed by their contribution to cost reduction and increased customer satisfaction.This trend of going back to the core is of course fueled by the current uncertainty and negative market conditions.The second,and even more exciting trend,will be the integration of many different digital services in order to create a unified,seamless customer experience.More and more,large manufacturers understand that customers dont want to be confronted with multiple separate digital channels and siloed information and services.High on the priority list are Customer Portals that combine and integrate digital services.To be able to do so,different departments must start working together,multiple IT systems must be connected,and people must truly start adopting digital transformation throughout the organization.We are really looking forward to helping Industrial Manufacturers with this challenging but promising adventure.“Herbert Pesch,Managing Director Valtech B2B and Vertical Lead B2B,Valtech THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202342BUSINESS STRATEGIES FOR FUTURE CHANGE42BUSINESS STRATEGIES FOR FUTURE CHANGEMaximizing Digital Investments03.SURVEY REPORT2023Last year,digital investment was at an all-time high within the industry,and this year,manufacturers are looking to utilize their digital resources in the most cost-efficient ways possible.They are focusing on areas such as e-commerce and data analytics to leverage the full potential of digital tools.By engaging with customers online,understanding their behavior and learning about them via their transactions and equipment,manufacturers can create additional value for their installed base.Whether its from order history or machine sensors,they can acquire information that tells them about the needs of customers before the customers themselves become aware of them.There are still challenges standing in the way of achieving these goals.The lack of organizational alignment or a single source of data makes it difficult to promote well-informed and accurate service development and pricing decisions.Further investments in digital tools and change management can bring the organization together.The year of digital services and e-commerceThis year,50%to 52%of manufacturers will be focusing on transforming their e-commerce platforms,customer portals,and digital services.With customers willing to make bigger B2B transactions online,these focus areas are important for accelerating business and boosting customer satisfaction.To make digital commerce work,before,during and after the transaction,collabo-ration between sales,marketing,IT,aftermarket services and other depart-ments is mandatory.It is also mandatory to have access to data and actionable insights to inform the online offering and derive information about the customers.52%of manufacturers are focusing on transforming their digital services in the year ahead COPPERBERG|VALTECH45CHAPTER 3#VODL23 47%of manufacturers consider data analytics and insights to be an important focus area in 2023.33%are looking to IoT technology and innovations,including AI,machine learning,and virtual reality to expand their aftersales and pivot toward servitization.*22lieve that marketing is in need of transformation and 14%consider process innovations as important focus areas.Lack of alignment is standing in the way of business valueThe focus areas of manufacturers for 2023 are meant to create additional business value,whether by facilitating sales online or creating digital services.For many,the IT infrastructure is poised for transformation,but the biggest hurdle is organizational Digital services/servitizationData analytics and insightsIIOT technology/innovationsProcess innovationsCustomer portalMarketingOtherE-commerce52P3PG%2%The target areas for digital transformation in the coming year*Servitization is generally defined as adding services to your product-focused business and often in B2B refers to the shift of a product-based business model to a service-based one.The first step is for manufacturers to offer services,such as mainte-nance,repair,and consulting,along with their traditional products in order to create new sources of revenue and secure customer loyalty.The long-term ambition is to deliver a desired outcome to the customers on an ongoing basis.This often leads to a point where the business becomes primarily solution-focused,and set in a financial subscription model with recurring revenues.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202346MAXIMIZING DIGITAL INVESTMENTSchange or cultural transformation,as expressed by 31%of our survey respon-dents.As such,change management is an important means to come to a successful digital transformation.26%of manufacturers revealed that their biggest hurdle is a siloed departmental structure of information.Not having access to a single source of truth or centralized data makes it difficult to scale up and can slow down decision making.19%of manufacturers are struggling to integrate new technologies into their legacy IT infrastructure,9%are not getting the C-level support they need to execute their transformation projects,and another 10%are split between lacking the right talent and designing new service business models.Only 2%are now in a place where they have achieved a mature level of integration and servitization,only to struggle with communicating new value-added offerings and onboarding customers.Many have begun their transformation journey towards servitization with the customer in mind,bringing them along for the ride and adapting together.Some 31%of manufacturers state that cultural transfor-mation is their biggest hurdle COPPERBERG|VALTECH47CHAPTER 3#VODL23 customers have security concerns and difficulty understanding the benefits of new subscription or outcome-based propositions.This makes it difficult for manufacturers to focus on their servitization journey and convince their customers that going digital and embracing these new propositions will positively affect their bottom line.Including the Voice of the Customer(VoC)is important when new digital services and business 31&%5%5%9%3%2%The biggest hurdle to get business value from IT investmentsCultural transformation(organizational change)Lack of skills/competence/capacity from current workforceIntegration of new technologies in current(and legacy)IT infrastructureOtherGetting C-level supportCommunicating new value added offering to customers(onboarding and selling to customers)Siloed departmental structure of informationDesigning new service business models(serviti-zation,x as a service,marketplace,etc.)THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202348MAXIMIZING DIGITAL INVESTMENTSmodels are created.The need to always stay focused on VoC is often mentioned by the respondents.The most important digital investments of 2023Manufacturers are planning to overcome their challenges by basing their digital strategy on advanced technology.43%of survey respondents prefer composable,best-of-breed solutions supported by custom-built microservices.A compos-able approach and technology allows them to create their own flexible e-commerce ecosystems and juggle multiple tools whilst avoiding vendor lock-in.Platform solutions are preferred by 41%of respondents,who use feature-rich platforms with minimal customization for their digital strategy.Only 12%use bespoke or fully customized solutions,and even fewer use low-code technology.The technology foundation for digital strategyComposable(best of breed solutions supported by custom build micro services)Low codeOtherPlatform solutions(feature rich platforms with minimal customization)Bespoke(fully custom made solutions)2C%2A%COPPERBERG|VALTECH49CHAPTER 3#VODL23 43%of manufacturers choose composable solutions while 41%prefer feature-rich classic platforms for their digital strategiesTHE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202350MAXIMIZING DIGITAL INVESTMENTSThe Voice of Digital Leaders:Digital InvestmentsAlthough the growth of digital investments has slowed down,manufacturers are still planning investments to enrich their digital strategies and get a stronger competitive edge.We asked the surveyed leaders for the most important area of investments:AICRMCustomer services and portalsWorkforce trainingE-commerceAccount Based Marketing(ABM)ContentOmnichannel toolsData management and analyticsERPPlatform developmentIoT platformsCloud servicesMarTechCOPPERBERG|VALTECH51CHAPTER 3#VODL23“A composable approach and technology allows manufacturers to create their own flexible e-commerce ecosystems and juggle multiple tools whilst avoiding vendor lock-in.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202352MAXIMIZING DIGITAL INVESTMENTS52MAXIMIZING DIGITAL INVESTMENTSKey TakeawaysManufacturers are making the most out of their digital investments this year,focusing on their e-commerce platforms,customer portals,servitization,and data analysis.The biggest hurdles stem from a lack of cultural transformation and a siloed landscape that can be handled with change management and further investments in the right tools.COPPERBERG|VALTECH53CHAPTER 3#VODL23 E-commerce and servitization continue to be a focusHalf of our survey respondents continue to put a strong emphasis on e-commerce and digital services and the benefits they can derive from integrating them.With online sales continuously increasing,they are making efforts to ensure their customers can access their services and product information in the digital space via seamless experiences,often via a Customer Portal.Lack of organizational alignment is an inside threatWorking in silos affects a companys culture and operations by slowing down decision-making and business growth.Through cross-departmental collaboration,companies can make better use of their data,infrastructure,and services,and work toward the same successful outcome.Getting ahead of the curve with digitalManufacturers are now more aware of their vulnerabilities in the digital space and have realized what tools theyre missing to reach the next level.In the year ahead,many are looking to invest in AI-powered solutions,customer portals,data management,and even workforce training to ensure that their efforts so far pay off in the most profitable ways.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202354MAXIMIZING DIGITAL INVESTMENTSIn B2B commerce,success is not only measured by the transactions made,but by the relationships built and the value delivered to the customers.The key really lies in making your customers life easier.Creating a frictionless interaction with your organization and adding so much value that they dont want to go elsewhere.So,talk to your customers and listen to what they need.Stop thinking in product lines,embark on your customers journey!Understand what their day-to-day looks like and find out what your organization can do to make that easier.Fun fact:Once you start doing that,you will start working cross departments and break the silos.Your customer sees your organization as one,why dont you?“Mascha Tamarinof,Global Vertical Lead B2B,ValtechCOPPERBERG|VALTECH#VODL23 55CHAPTER 3Move slowly,move agile,involve local people,and educate,educate,educate.“Gertjan Kleinhout,Group Manager Client Support Digital Commerce,Rijk ZwaanTHE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202356MAXIMIZING DIGITAL INVESTMENTSThe Voice of Digital Leaders in Manufacturing Expert Insights04.SURVEY REPORT2023Manufacturers have come a long way since last year.The majority have leveled up with their competitors in the digital space,but the journey is far from over.Even the most forward-thinking industry players are still facing challenges on the way to digital success.Even as they are consolidating their digital investments and onboarding customers on the journey,todays inflationary environment is threatening the outcome of their business.External threats ranging from rising costs to supply chain disruptions and workforce shortages are one thing,but the internal threats stemming from a lack of organizational alignment and siloed data are another.So how are they navigating these issues?What are the key considerations for digital transformation in 2023?What opportunities and pitfalls should you be aware of?Our digital leaders have answered these key questions to inspire you on your transformation journey and provide fresh perspectives for your digital strategy.Consider this as you continue your digital transformation journeyAccording to the digital leaders,internal communication and diplomacy are key.That is a surefire way to get support across the organization and bring your customers along for the journey.It is important to align your digital strategy with the top management and take the time to convince them of the benefits.COPPERBERG|VALTECH59CHAPTER 4#VODL23 Ensure that what you are doing is solving your customers problems.Make them the center of attention and always listen to the Voice of the Customer(VoC).Start small and scale fast.First experiment with small and agile tools before investing in infrastructure and big IT solutions.Clean your data,and review your processes and workflows.Understand that in digital,a risk is an oppor-tunity you saw too late.Digital solutions are a means to an end for being supportive of any kind of strategic direction appropriate to your organization.Define your vision and break it down into attainable goals.It is not only about technology,it should come last.Customer-centric perspectiveScalingDataRisk managementPerceptionVisionTechnologyRecommendations by Digital LeadersListen and learn from your customers in order to create a digital channeldont assume you know their needs about what they want and expect digitally.Tanja Tschech,Digital Manager,Rhm“THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202360THE VOICE OF DIGITAL LEADERS IN MANUFACTURING EXPERT INSIGHTSWe have seen how a lack of alignment can deeply affect core processes,so it is best if the head knows what the hand is doing.A word of advice from one of the respon-dents:do not resistit is mandatory so do your best to accompany the change.For this transition to be successful,the biggest element is a mindset change.The respondents state that transformation is not possible if the company does not make a unified cross-organizational commitment.This type of company-wide effort is improb-able without change management.How does digital help build resilience during a global recession or other macro-environmental threats?As our experts have stated,digital encourages the organization to be agile,flexible,and react quickly to change.That is a core competency needed in todays world and indeed in todays disruptive and inflationary environment.Flexibility and adaptability are common descriptors of how digital helps build resilience during times of crisis.Digital enables manufacturers to make savings and productivity gains with the help of remote access,machines,and tools that offer better visibility,transparency,and data insights.The same solutions enable better decision-making which allows companies to react faster to market volatility.And at a time when customer confidence has dropped,digitalization is being leveraged as an asset of customer modernization,which creates a competitive advantage for manufacturers.As one respondent explained,with digital it is easier to promote business,and it makes it easier to work with customers,to find deals that were not possible before.Other respondents echo the same thought,explaining that the role of digital definitely should be in creating a sustainable competitive advantage that is recognizable to customers,creating trust to remain business partners and withstand the incoming threats.Perhaps the most promising role digital plays today is in increasing service revenue.Because service is one of the few growth drivers in a mature market,it needs to be largely digital because customers have less time and expect faster responses.Finally,digital should be considered as a support function and not something disconnected from the rest of the busi-ness.Digital must support all types of communication and business processes in order for it to generate value.61CHAPTER 4COPPERBERG|VALTECH#VODL23 The main goal is to make the customer satisfied.The revenue,the cost efficiency and other benefits will follow automatically.Uwe Zurth,Head of Customer Benefits,SEW-EURODRIVE“How digital saves the day according to the digital leadersIncreases productivity without adding headcount.Enables communication with customers and internal departments,creating transparency and forecasts with AI.Streamlines operations and decreases business costs,which result in a stronger organization.Optimizes services related to sustainability,circular economy,and life extension.Drives efficiency and remodeling of supply chains.Supports a growing service demand for solu-tion-driven offerings for extending customer life cycle and addressing sustainability.It connects us and keeps the business going even if we cannot meet face-to-face or travel.Digitalization can improve productivity as well as be there for customers 24/7.Reduces costs,creates operational insights,and gets you closer to customers.It helps you go online to enter new territories when your market is decreasing.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING EXPERT INSIGHTS62THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 2023How digital enables manufacturers to meet and keep up with changing customer demandsDigital transformation makes it possible for manufacturers to expand their offerings with value-added services.One of our experts explained that they now offer a broader range of digital services that cover most customers needs and this was possible due to digital transformation within the organization.For some this may mean that they have implemented solutions powered by Artificial Intelligence or Machine Learning such as remote diagnosis,virtual assistance,predictive maintenance,and others.But for others,this means collecting customer data and feedback across different channels for more informed decision-making in terms of pricing and service design.For most,it means digitizing more basic services like CPQ,installed base,technical product info,ticketing services etc.and offering them in an integrated customer focused way through customer portals or digital services platforms.A keyword the respondents use to explain how digital enables them to meet customer expectations is agility.The ability to react fast and ensure that the customers issues are solved or deal with external challenges before they become costly problems is the key to a reliable business.COPPERBERG|VALTECH63CHAPTER 4#VODL23 A network group for peers that are interested in the developments in digital transformation in B2B.With relevant articles,interviews,events and videos.Focusing on Manufacturers and Distributors.Join the conversation!Join Lets talk B2B LinkedIn groupWhat are experts doing to increase customer satisfaction?Lots of Voice of Customer and product management debate to set the best requirements,then act fast.We dont worry about perfection because there will always be changes.We always try to find the most up-to-date solutions and stay one step ahead of the competition.We keep the conversation flowing.Customers who feel heard and understood will tolerate some delays or setbacks.Being close to our customers at any time to act and not react.We keep on walking the extra mile for customers,listening to them,and translating their expectations by deploying the right elements of our service concept.THE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202364THE VOICE OF DIGITAL LEADERS IN MANUFACTURING EXPERT INSIGHTSExecutiveSummaryCOPPERBERG|VALTECHSURVEY REPORT2023In 2023,manufacturing will continue to grow digitally and become one of the most transformed industries today.As our findings indicate,the vast majority of B2B leaders have poised their infrastructure for further digital transformation and are reaching the appropriate maturity level to scale up.Creating business value The manufacturing industry has been late to the digitalization game and the recent years global crises,like COVID,inflation,geopolitical instability,have shaken many businesses to their core.However,many were already heading steadily towards a digital transformation journey that was supercharged during the aforementioned period.After accelerating their initiatives over the past three years,manufacturers are now balancing their investment budgets and focusing on enhancing their digital sales and customer portals.Manufacturers have come a long way since last year when implementation and deployment took all the focus.They are now entering a new phase on their transformation journey that will be just as challenging.Plenty are looking to further digital initiatives to increase their revenue streams and become more cost efficient;using digital to impact their bottom line.Organizational challenges Even though manufacturers have boosted their digital capacities over the last couple of years,the new territory comes with familiar hurdles in unique circumstances.The impact of the global pandemic,supply chain disruptions caused by macro-environmental challenges,shortage of COPPERBERG|VALTECH67SURVEY REPORT#VODL23 workforce and inflation are all threatening companies from the outside.From the inside,there lies a huge opportunity to minimize human errors like miscalculations and misinformation by applying more digital processes and preventing the organization from being siloed.Composable approach In response,digital leaders are facing these challenges head-on,recognizing the opportunities and turning to digital for solutions.Regarding tech stack,we see a split between manufacturers that choose platform solutions vs a Composable,more flexible architecture with a best-of-breed approach.With the right tools,they will bring their departments together in 2023,and organize their data into a single source of truth that is readily available to decision-makers.Customer portal The customer is becoming the center of attention in manufacturing.And thats about time manufacturers are increasingly bringing customers along on the journey,and creating new value for them by expanding offerings,designing for service,and innovating business models.The Customer Portal often being the environment that brings together all of these value adding elements.Many manufacturers are now treading on a more solid digital ground than last year with ambitions to outcompete their peers and satisfy their customers,they are ready to innovate.Top Trends in DigitalEnabling growth and new revenue streamsBuilding resilience and lower costsIncreasing customer focusAgility is keyTHE VOICE OF DIGITAL LEADERS IN MANUFACTURING 202368EXECUTIVE SUMMARYAboutValtechVisit our websiteValtech is the experience innovation company.Our client portfolio includes some of the worlds best known brands including LOreal,MAC Cosmetics,Levis,Aerolineas Argentinas,Lufthansa,Volkswagen,Toyota,AUDI,and BMW.Whether its one of our B2B solutions for Henkel,Grundfos,Vanderlande,Wavin,Sulzer,or Atlas Copco,or a new customer experience for Dolby,DAddario,or Profoto,we design,build,and deliver transformative digital solutions that improve human lives and make our clients businesses grow.Lets talk B2B!Lets talk B2B is a network for everyone involved in digital in B2B.Sharing knowledge,events,videos,exchanging experience and focusing on manufacturing and wholesale.Join our LinkedIn group Lets talk B2B!or watch the B2B interviews on YouTube:Lets talk B2B!Mascha Tamarinof,mascha.tamarinof Herbert Pesch,herbert.pesch COPPERBERG|VALTECH69SURVEY REPORT#VODL23 AboutCopperbergVisit our website“The great aim of education is not knowledge,but action.”Copperberg creates original content,on physical and digital platforms,bringing together the manufacturing community in order to grow and build relationships globally.Copperberg was founded in 2012 with the dream of becoming the leading community for aftermarket,service&manufacturing professionals across Europe.On a daily basis,we work hard to improve,develop and innovate our concepts and original content in order to ensure the best hands-on,real-life strategies for all our community members.Our ambition is to provide ideas,networking,and industry exchange between industry peers that inspires and leads to action.Lisa Hellqvist,lisa.hellqvist THE VOICE OF 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