Manufacturing Transformation: How to Balance Profitability, Operational Efficiency, and Sustainable Development?

Author:Acloudear , 2023-09-09 16:02   
In the current uncertain period of rising global risks, executives of growth manufacturing companies have emphasized three core goals: increasing revenue, improving operational efficiency, and reducing risk.


A new survey from SAP Insights * Research Center shows that manufacturing executives are actively adjusting their operational strategies to improve sustainability and proactively reduce risks. The survey also revealed the respondents’ views on current and future priorities, opportunities, and threats, as well as the transformation plans they plan to implement to enhance the company’s profitability and competitive advantage.


Focus on revenue


The interviewed executives believe that the primary task for the current and future is to increase revenue, usually achieved through the launch of new products and services. The study also found that sustainable development, as an emerging strategy, is crucial for manufacturing enterprises to increase revenue, and is equally important as traditional business priorities such as expanding the market, enhancing brand awareness, and improving customer experience.


In the current market environment, many manufacturing companies are no longer satisfied with just selling products, but instead integrate sustainable development into their business strategies to explore new market opportunities. Customers expect to gain added value and reliable results from purchasing products. By incorporating sustainable development into a service-oriented business model, manufacturing companies can provide benchmark testing, predictive maintenance, and energy or water analysis services to assist customers in optimizing product usage while reducing environmental impact.


Sustainable development has become an important consideration factor for enterprises, directly affecting their decisions to increase revenue, improve efficiency, and stimulate innovation.


Open up new ways to improve operational efficiency


When asked how to improve operational efficiency, the top executives interviewed mostly chose to improve the level of process automation, but also emphasized the sustainability of operational processes and the importance of partner networks, indicating that more and more enterprises hope to break away from linear supply chains and establish collaborative supplier networks.


A survey shows that business leaders believe that automation, cost control, and expense management are important factors in achieving efficient operations, and they pursue the establishment of sustainable operational processes and reliable supply chains.



Manufacturing enterprises have long recognized the importance of digital transformation, but with customer needs, market dynamics, and resource changes, they urgently need to improve flexibility and adaptability. In fact, 43% of respondents prioritize improving flexibility and adaptability in improving processes, usually requiring the first step in improving operational efficiency.


The respondents’ digital technology priorities reflect their innovative driven thinking. They selected key technologies for future operational process improvement, of which 73% are closely related to digitization, including cloud computing, business process intelligence, automated business intelligence (BI) dashboards, data management, Internet of Things, robot process automation, conversational artificial intelligence, machine learning, as well as virtual reality and augmented reality.



Currently, manufacturing enterprises are facing enormous pressure from customers, investors, regulatory agencies, partners, and stakeholders, and urgently need to strengthen workplace ethics, social responsibility, and environmental awareness to achieve excellent supply chain operations.


Avoiding risks


Nowadays, growth oriented manufacturing enterprises cannot be limited to traditional risks such as competitors and new market competition. Compared to these traditional risks, companies need to pay more attention to current business threats, such as supply chain issues, cyber attacks, talent shortages, and brand reputation risks. Among the long-term global risk factors, manufacturing companies are far more concerned about economic stagnation than about the collapse of cybersecurity systems, job crises, and natural resource shortages.



Manufacturing companies have found that shifting the focus to these urgent risk factors can help businesses grow faster. For example, with the improvement of automation, executives must enhance their network security capabilities. At the same time, in the face of supply chain disruptions, insufficient talent and resources, timely response is crucial to avoid long-term impact on brand reputation. Therefore, enterprises need to remain vigilant, proactively handle risks, and pay attention to sustainable development and talent cultivation to ensure the smooth operation of the supply chain.


Manufacturing enterprises have long recognized the importance of digital transformation. However, with the continuous fluctuations in customer demand, market changes, and resources and labor, improving the flexibility of enterprises has become increasingly important.


Highlighting the need for process optimization


About 71% of respondents stated that they have made some progress in digital transformation and even achieved their expected goals in certain areas. However, due to the continuous emergence of new industry risks and customer expectations, 83% of respondents believe that the digital transformation path of enterprises is still full of challenges.


Looking ahead, 84% of leaders believe that technological innovation is the top priority for the next three to five years. Other important priorities include product and service innovation (80%), sustainable development (79%), business model transformation (77%), and digital experience (77%).


This forward-looking trend indicates that manufacturing companies hope to improve processes from key aspects, such as establishing quality management standards and procedures, monitoring and optimizing production processes, simulating and enhancing production networks, and achieving factory control and automation.




In the current uncertain period of rising global risks, executives of growth manufacturing companies have emphasized three core goals: increasing revenue, improving operational efficiency, and reducing risk. These measures are crucial as they ensure that businesses can provide sustainable products, services, and customer experiences. In the future, these goals will continue to rise and become key components of the company’s core strategy.


Although manufacturing companies understand that innovation and transformation are crucial for improving revenue, they also value efficiency. In the limited profit space, cost control and expenditure management remain the primary tasks. At the same time, finding sources of goods and reducing carbon emissions in an ethical manner has gradually become equally important.


Although technology upgrades may involve high costs, Acloudear digital experts believe that not adopting new technologies in a timely manner will bring huge risks. Growth manufacturing enterprises should invest in Industry 4.0 solutions and technologies, establish flexible collaborative supply chain network platforms to improve efficiency, speed, and profitability, and respond to the challenges of supply chain disruptions.


Finally, growth oriented manufacturing enterprises also need to transform their thinking, solve long-term business problems through transformation and innovation, and integrate sustainable development concepts into various processes, operations, and priorities. Just as Acloudear’s shared network has enabled Qingdao Huadi to achieve digital transformation, the SAP ERP public cloud has helped Huadi create a complete business loop including production, sales, and supply chain, achieving business and financial integration, standardizing production standards, improving management efficiency, and promoting sustainable development.


The SAP Insights Midmarket Senior Executive Priority research report collected data from 10507 executives from companies with annual revenue of less than $1 billion, covering 41 markets and 28 industries. The interviewees are all the top managers and supervisors of the business department, including directors, chief executives, etc.


Click on the link below to learn how SAP cloud solutions can help you achieve business transformation:


This article "Manufacturing Transformation: How to Balance Profitability, Operational Efficiency, and Sustainable Development?" by AcloudEAR. We focus on business applications such as cloud ERP.

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