He predicts that manufacturers will use the internet to connect machines, using a concept Forrester has dubbed "X internet". The technology will tackle remote management and capture information to improve customer service. One example of where such technology is being deployed is at BP.
"Rather than fly engineers to oil rigs, sensors feed information back to head office. The operator can then use exception tracking to ensure parts are replaced," he said. This approach avoids the expense of manual inspections.
Managing directors in manufacturing are increasingly turning to outsourcing to lower costs, which leads to a number of challenges for IT directors, according to Simon Bragg, an analyst at ARC.
He said, "Previously manufacturers were focused on reducing inventory and hitting delivery dates using supply chain optimisation, but now IT directors need to share data with the outsourced plant to forecast production."
The challenge for manufacturing is tracking the product once it is in transit. Bragg said one option, as used by fashion retailer Burberry, is for the manufacturer to use a third-party logistics operator to deliver goods direct to the retailer. Bragg thinks RFID or Savi, a satellite-based smart tag deployed by the Department of Defence in the US, can be used.
One of the biggest challenges AMR Research has seen in manufacturing is the need to plan and influence demand for products. Bill Swanton, vice-president for research at AMR, said, "Manufacturers need to speed up the introduction of products without disrupting the supply chain."
The demand-driven supply network is one way in which manufacturers and their customers can track demand for products.
Swanton said the supplier and the retailer collaborate to adjust stocking levels, based on what people want to buy.
For it to work Swanton said, "The manufacturer needs constant visibility across its facilities and to have in place a process to respond to changes in demand."