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Industries Average 40 Percent Digitization, McKinsey Finds

  • APICS staff
  2017
A new report from McKinsey & Company reveals that the digitization trend is not as pervasive as it seems. On average, industries are less than 40 percent digitized, it reports. 

The research survey asked 2,000 executives to rate the amount of digital penetration in a variety of industries. Based on the results, McKinsey & Company estimates that the consumer packaged goods industry is 31 percent digitized; the automotive and assembly industry is 32 percent digitized; the telecom and travel, transport, and logistics industries are each 44 percent digitized; the health care systems and services industry is 51 percent digitized; the high-tech industry is 54 percent digitized; and the retail industry is 55 percent digitized.

As digitization becomes more pervasive, it could create new levels of competition and dampen revenue and profit growth for some, especially the bottom 25 percent of companies, McKinsey & Company reports. Current levels of digitization have already taken out as many as six points of annual revenue on average, and more economic pressure is expected to come. However, the leaders will be those that initiate digital disruptions and have a bold, tightly integrated digital strategy, it advises.

Another key success factor will be investing the right amount in the key areas of digitization. McKinsey & Company’s analysis suggests that total digitization of supply chains could stunt revenue growth by 6.8 percent. However, if firms are assertive in their investments, supply chain digitization can actually contribute a 2.3 percent boost to revenue growth. Total, assertive digitization across the board for a company could boost revenue growth by 11.2 percent.

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