Direct investment in the digital transformation between the years 2020 and 2023 is expected to reach 6.8 trillion US dollars. Still, 70% of digital transformation initiatives completely fail.
Direct investment in the digital transformation between the years 2020 and 2023 is expected to reach 6.8 trillion US dollars. Still, 70% of digital transformation initiatives completely fail.
Most of the future-oriented manufacturers are already down the digital transformation road. But the digital transformation in manufacturing has its own set of risks and challenges that very few people recognize.
That is what we are looking to address here.
In this article, you’ll find out:
- What is digital transformation in manufacturing
- Lessons from the digital transformation implementation
- Fundamental instances of digital transformation at work
- The benefits of digital transformation in manufacturing
Digital Transformation in Manufacturing
Digital transformation is a pretty vast term that’s talked about in almost every industry. Still, very few business leaders have a deep contextual understanding of what digital transformation really is and could be. Is it cloud computing? Is it digital optimization? No, digital transformation in manufacturing is a lot more than that.
Digital Transformation Means Redefining Your Manufacturing Business
Digitizing your manual processes, shifting from the traditional on-premises software to cloud-native solutions, shifting from a physical office to a remote one– they are all forms of digitization. And they are also essential. But they are not digital transformation per se.
Digital transformation means the merger of operation technology with information technology to transform how a company creates value for its customers. It also means basing the decisions on data rather than gut feel (especially when it belongs to a C-Suite that came up before the internet) and redefining the business models and strategies on the back of technology.
In a nutshell, if you are not using new technology to change what you do, not simply how you do it, then you may wish to reconsider your digital transformation goals.
Digital Transformation in Manufacturing Is Not Just About Technology
This one is somewhat of a provocative heading. Still, a lot of people would argue that this technology itself is an easy part of digital transformation, especially during the implementation of new software.
Today’s SaaS vendors compete highly on usability and the ease of implementation, keeping everything accessible, even for the non-technical users.
The difficult part is adoption, which comes down to the company culture.
As per Behnam Tabrizi, teaching Leading Organizational Transformation at Stanford University’s Department of Management Science and Engineering: “digital technologies provide possibilities for efficiency gains… But if people lack the right mindset to change… digital transformation will only magnify those flaws.”
Together with the colleagues, Tabrizi highlights five of the most important factors that govern the success through digital transformation:
#1: Close out your business strategy even before you spend any money
Digital transformation needs to be guided through a broader business strategy and goals, not by what the competitors are doing or what seems like a good idea. There’s no highly dynamic technology. Most will benefit from different spends across different combination of tools.
#2: Stay alert from outsiders
Bringing in external consultants to consult on the digital transformation “best practices” definitely has its own place. But these consultants will never have that intimate knowledge of day-to-day operations to maximize the ROI. For that, you need to make the use of insiders, who often tend to get overlooked.
#3: Use a customer-centric approach
In the end, digital transformation is all about delivering an outstanding value to your customers. But how can you maximize your client satisfaction without even consulting with customers first? Well, you can’t.
Talk to your customers right at the digital transformation concept stage. Hold your focus groups, if possible. Be alert enough to find out customer needs, problems, and priorities.
#4: Recognize employees’ fears of being replaced
Whether conscious or unconscious, employees view their digital transformation, and AI in particular, as a threat. It’s a very understandable fear, but depending on which study you go through, not necessarily is in fact. Digital transformation leaders have to figure out these fears and then provide the needed reassurance to create an organization-wide buy-in.
Here’s what many thought leaders are expecting for automation and jobs. As you can see, there’s a huge disparity in opinion.
The doomsayers are of the opinion that automation will displace millions of jobs:
Twenty million manufacturing jobs will be lost to robots by 2030 (Oxford Economics).
In 512 counties, home to 20.3 million people, 25% of workers will be displaced (McKinsey Global Institute)
The optimists state that automation will create more jobs than it destroys:
Seventy-five million jobs will be dislocated, but 133 million new ones will be created worldwide by 2022 (World Economic Forum).
Two million new jobs will be created till 2025 (Gartner).
5 Digital Transformation in Manufacturing Instances
Digital transformation in manufacturing has a broad range of technologies. But they are not isolated. IIoT (industrial internet of things – see below) depends on BDA (big data and analytics), which then counts on cloud computing, and so on. The final goal is the creation of a smart factory – “a highly digitized shop floor that collects and shares data through interconnected machines, devices, and production systems.”
Here are the five best digital transformation examples in manufacturing:
1. Big Data and Analytics (BDA)
Big data refers to the huge volumes of data that the traditional analysis methods can’t be used for their processing. Networked sensors inside the manufacturing machinery collect huge quantities of data to improve product quality, energy management, and safety. Condition monitoring makes the use of real-time feedback for the prediction of failures even before they arise.
2. Cloud Computing
Cloud computing is an obvious inclusion here – it’s already ubiquitous. But most manufacturers are just scratching the surface of this technology’s potential.
5G and the future wireless technology will keep expanding this ability to store an ever-expanding amount of production data, creating smart factory networks that lead to collaboration between humans and machines.
3. Additive Manufacturing (3D Printing)
Additive manufacturing is a disruptive technology in every sense – it swears to alter how the entire manufacturing industry operates. Printing of three-dimensional objects make batches highly profitable, promises to reduce the entry barriers, and also localizes the different manufacturing facilities.
4. Augmented and Virtual Reality (AR and VR)
Augmented reality provides the manufacturers with an ability to overlay computer-generated images on the real world. VR places users within a simulated reality. AR has multiple applications in the assembly guidance, maintenance and repair, and quality control. VR can be a truly invaluable asset for training purposes.
5. Autonomous Robotics
Autonomous robots work independently, with one another, or even with humans to say it out, carrying out multiple creative tasks with just a click of the button. Without any need of retraining or retooling, manufacturers produce customized products for the same unit cost as they do so for a batch of thousand.
Benefits of Manufacturing Digital Transformation
US companies are expected to spend a $2.3 trillion on digital transformation by 2023 alone. There are a huge number of reasons as to why it is a sound investment. While the advantages of digital transformation in the manufacturing industry vary significantly through companies, most fall into just one (or more) of the following categories:
- Better efficiency in operations and product quality
- Less rework, maintenance, and resources wastage
- Reduced costs (wages, supply chain issues, inventory miscalculations)
- Better decision-making (higher-quality data, better customer insights, as well as predictive analytics)
- Boosted performance and also condition monitoring (predictive maintenance)
- More employee collaboration and retention (fewer silos and digital culture)
- Better customer satisfaction (an omnichannel experience)
- Increased agility (faster adaptation to dynamic market situations)
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