By: Julia Figlotti Riley
Digital transformation is the process of integrating new digital technologies into every step of an organization’s practices – from internal operations and company culture to consumer interactions. The end goal? To refine business models, improve the overall customer experience, and operate with greater efficiency.
As technology continues to advance at a shocking rate, it has become more and more necessary for companies to adapt their processes in order to secure a competitive advantage in the market. Such a transformation requires more than a simple “out with the old, in with the new” approach: in addition to phasing out existing tools and processes and preparing for the implementation of new technologies, companies must prepare a digital strategy to ensure their workforce – and workflow – keep up with the evolution.
Because, while all industries are being pulled in the natural direction of this digital transformation, your workforce may not immediately follow suit. In general, people are creatures of habit, and many are innately hesitant to change – and that includes organizational change. But employee buy-in and adoption are crucial to the success of any digital transformation, and the manufacturing industry is no exception. That’s why it’s important to invest in an effective strategy – one that prepares your company and workforce not only for the current transformation, but for the reality of future digital disruptions as well.
A look at Digital Transformation in Manufacturing
Trends and Statistics
Before making a case for why manufacturing leaders should be investing in digital transformation, let’s take a look at current trends in the industry – from digital transformation initiatives to other areas of development.
It is first and foremost important to note the reliance on technology that is so prevalent in the manufacturing industry. 86% of manufacturing firms are aware that a single hour of downtime in their systems, networks, applications, or other hardware could cost them at least $300,000. And as society becomes more and more reliant on being “always on” and interconnected, those numbers are only likely to increase.
That’s why, in 2019, roughly 63% of manufacturers believed that applying the interconnection of sensors, networks, cloud computing, data, and analytics – in other words, the Internet of Things (IoT) – to products would increase profitability over the next five years. In fact, as a whole, the manufacturing industry was projected to invest $267 billion in the market by 2020.
We should also consider success rates so far. As of April 2019, only 22% of manufacturing organizations experiencing a digital transformation are able to successfully scale their initiatives and drive growth and adoption. So where is the disconnect? Perhaps not surprisingly, it lies in strategy and communication. Leading companies define their vision for a digital transformation by investing in an effective communication campaign and strategy to enable their change to take root and grow.
Smart Manufacturing: Industry 4.0
As technologies continue to evolve, manufacturing companies will have to do the same. Enter Industry 4.0, also known as smart manufacturing. Industry 4.0 fosters a smart factory approach by balancing traditional manufacturing techniques with the implementation of recent digital technologies, such as cloud computing, data analytics, big data, the Internet of Things, artificial intelligence, and machine learning.
How is it relevant?
Leaders in the manufacturing industry have been historically hesitant to adjust with the expansion of technology due to the costs associated with making those shifts. But just as Henry Ford disrupted manufacturing with the assembly line, modern disruptions are being brought to the manufacturing industry through digital technologies and advancements. Although these components were once available only to larger-scale manufacturers because of their cost, an increase in affordability over time has made digital transformation not only possible, but practical for manufacturing companies of all sizes.
Why should your company evolve?
Planning and executing on a digital transformation in manufacturing is about more than just keeping up with technology. Most manufacturing companies expect their investment in digitization to lead to both lower production costs and increased revenue. And they’re not wrong – when done successfully, the benefits of a digital transformation to your company and workforce can be outstanding. By working to digitize key physical assets throughout your company’s value chain, you will be building a fuller digital ecosystem that enables enhanced production, increased customization, better-quality products, lower costs, and a greater information accessibility for your workforce.
With digitization comes the first and most noticeable side effect: an increase in productivity. From rapid prototyping, research, and development to production and performance analytics, a successful digital transformation leads to a more streamlined production process. A digitized process utilizes connected machines and predictive analytics to record and send maintenance data. This data is then used to prevent malfunctions and optimize output, leading to a safer production environment. Such a transformation can also identify lags in the production cycle that could be improved upon, or track customer feedback and behavioral user data, allowing for last-minute alterations that don’t disrupt production.
No one wants to make themselves fit into a one-size-fits-all product. By investing in digital transformation, manufacturers will be able to offer attractive, personalized options to their customers, all the while remaining competitive through efficient operations and continued mass production. How? By utilizing data-driven production machines that can read and apply customization parameters directly within the production line. While a personalized product is more work, digital transformation allows for the opportunity to establish a loyal customer base no matter the size of your company.
Digital transformation in manufacturing comes with machine learning and sensors throughout the production line. Algorithms can be applied to production data to better understand issues within the process that might be wasteful, and the causes of product defects. By utilizing digitization, you can incorporate production tools that have the ability to monitor their own performance, notify operators about maintenance needs, and even predict failures. This benefit extends beyond the production line itself, and applies to your actual products themselves – this focus on enhancing production can ultimately leading to a higher-quality end product, one that is created in an efficient, well-maintained process.
Once you’ve embraced and invested in a manufacturing process that’s so in-tune with data analytics and logistics, you can use that data to save some money. These ongoing analytics and conversations between smart production tools can help your company identify opportunities for cost reduction, such as improvements to the production process, inventory management as delegated by supply and demand, and the flexibility to make quick tweaks to your products without holding up production. And, those who utilize technologies like virtual or augmented reality will be able to save money before production even begins, providing realistic live demos to gauge consumer interest, and allowing manufacturers to make changes ahead of the assembly line kickoff – ensuring the final product is the best it can be before it’s even created.
Finally, an investment in digital transformation in manufacturing brings with it enhanced collaboration tools and platforms for your workforce. Enhanced digital communication helps provide employees with a real-time, bird’s-eye view of the supply chain, allowing them to have the most up-to-date information about the production process, product output, and any concerns therein. In addition to providing a heightened feeling of trust and respect, this awareness allows employees to make informed decisions about the manufacturing process, final products, and marketing strategy respectively.
Many companies choose to partner with an employee communication software provider to ensure their workforce has flexible, convenient access to necessary information from any device – from production metrics to company safety policies to core values communication.
Digital Transformation in Practice
Before embarking on your own transformation, gather inspiration from these trailblazers who have successfully implemented digital transformations in the manufacturing industry.
Movie theaters are forced to react quickly to the technological advancements in projection equipment. Barco came up with a solution that would allow these cinemas to adapt without choosing between spending more than they earn and working with outdated technology: delivering the projection service itself instead of selling actual projectors, charging theaters per tracked hour projected instead of a large up-front cost.
- Joy Global Inc.
When a company manufactures and services heavy machinery, it’s important to catch issues as early as possible. Joy Global Inc. began installing sensors in the machines they build, helping them communicate important service or replacement needs with their clients before they become an issue.
- Ingersoll-Rand PLC
The maker of Trane commercial air-conditioning and heating equipment uses remote monitoring and data analysis to develop operating strategies for its customers, balancing the need for lighting and comfort with the demand to meet energy consumption goals.
As a company that outsources manufacturing, Cisco still wants to maintain and control the production process and product quality. That’s why the company developed a manufacturing execution system platform that virtually shares supply chain quality data in real time.
By introducing collaborative robots to help operate their production site, Trelleborg has lowered the human-to-machine ratio from 3:8 to 1:8, allowing more human hours to be spent on quality improvement and an increase in talent acquisition.
Now that you know the ins and outs of digital transformation, it’s time to begin your own. Consider these tips as you move forward to implement your changes:
- Follow these steps – assessing the current state of your business, determining objectives and needs, creating a roadmap, and preparing your work culture – to successfully implement a digital transformation strategy.
- To ensure your transformation will start strong, empower buy-in and adoption, and lead to lasting results, consider utilizing a change communications platform. Such a platform allows you to create a campaign, track analytics, and keep your employees engaged and informed before changes are introduced and during the transition.
- Put in the effort toward making your digital transformation a success: do your research, invest in a reliable campaign management system, and make sure your workforce is on board for the ride ahead.
Whether you’re ready for it or not, the fourth industrial revolution has arrived. Those who do not invest in digital transformation in manufacturing are likely doomed to fade as the rest of the industry catapults into the digitized future.