By 2026 Indian firms to invest $2.3 bn to digitise supply and production facilities: Report

Companies in India are currently investing an average of $70 million in 2023 to digitise, automate, and relocate supply and production facilities. This investment is expected to increase to at least $2.3 billion or nearly 3.5x in 2026, according to a new study published on Tuesday.

According to Accenture’s “Resiliency in the making” research, technology leaders are increasingly prioritising proximity-based hubs that concentrate production facilities and sales within the same region. This strategy aims to streamline logistics, improve inventory management, and accelerate response to market demand.

The global IT consulting major predicts that by 2026, 63% of companies in India intend to purchase most key items from regional suppliers, which is an increase from the current 34%. Additionally, 77% of organisations in India plan to produce and sell the majority of their products in the same region by 2026, up from 29% at present.

However, to achieve these goals, companies must enhance their digital maturity, the researchers said. This involves investing in cutting-edge technologies such as data, AI, and solutions like digital twins. Developing mature capabilities in these areas allows companies to build reconfigurable supply chains and autonomous production. Furthermore, these capabilities enable dynamic and sustainable product development, as well as support decentralised, real-time decision-making at the frontlines of operations.

Sandeep Dutta, Senior Managing Director and Lead – India Business at Accenture, stated, "Our research shows that only 13% of companies in India have a near real-time alerting mechanism for supply chain and production process disruption. To fuel the next phase of India's economic growth, it is critical to invest in digitising engineering, supply, production, and operations processes for better visibility and control. Digital, data, and AI can help companies improve sustainability, customer and employee experience, optimise costs, and increase revenue."

In recent years, disruptive events such as geopolitical shifts, extreme weather, technology breakthroughs, and material and talent shortages have increased. Only a few businesses have maintained their resilience and achieved long-term growth amidst this turbulence.

The study noted that globally, companies missed out on $1.6 trillion in additional annual revenues in 2021 and 2022 due to disruptions in their engineering, supply, production, or operations. However, the 25% most resilient global companies achieved 3.6% higher annual revenues compared to the 25% most vulnerable companies.

Vinod Kumar, Managing Director and Industry X Lead for Accenture in India, emphasized the importance of embracing resiliency in the face of constant disruption. He stated, "In today's fast-paced consumer and tech-driven world, digital technologies and solutions such as gen AI and digital twins can help companies unlock new value and adapt faster to sudden changes based on data-driven decisions."

The report recommends three areas for companies to focus on in order to increase their resiliency. Firstly, companies should enhance visibility by making supply chains and production processes more predictable and autonomous. For example, smart end-to-end control towers can monitor processes and analyse different scenarios in real-time to detect and correct issues early on. Secondly, companies should prioritize resiliency in design by moving activities earlier in the development process.

Lastly, businesses must upskill their workforce in data, AI, and other digital technologies to enable data-driven decision-making at the frontlines of the business. Currently, only 25% of companies in India have a multi-skilled, digitally literate workforce, but 67% plan to have one by 2026, the study said.