Digital Transformation for Manufacturing Industry
This smart, technology-driven manufacturing approach allows companies to make the most of industrial solutions and adapt production to changing conditions and requirements in real time, streamline processes, improve management and internal workflows, optimize production, or transform any other aspect of your manufacturing business.
This industry disposes of a great number of physical assets (from the factory floor, the supply chain, the back office, the IT infrastructure, etc.) and retrieves huge amounts of data (from CRM and ERP systems, transactions, social media, etc.). The goal of digital solutions here is to bring assets and data together in such a manner that they will combine to add value to every operation and process.
Industry 4.0 is the current industrial revolution that lies at the heart of digital transformation in manufacturing, as it automates processes and enables their real-time control. This is made possible through reliance on the efficient technologies that fuse together assets and data and combine digital with traditional factories to derive the best results.
The introduction of advanced digital solutions helps businesses cut costs, enhance the customer experience and improve ROI; however, it has its challenges. What are the challenges that hinder digital transformation initiatives at manufacturing companies?
- The consent of upper management. Going digital inevitably involves heavy expenses and major workflow and HR management changes, which may be balked at by upper management.
- The realignment of the IT department. No technical transformation is possible without the proper tuning of all IT-related processes, the IT department structure and the technology stack.
- Personnel support. Changing processes, workflows, schedules and responsibilities, and employee retraining may be considered threatening or unwanted, and may be met with resistance by the personnel.
- Budget limitations. Technological innovations in manufacturing require a considerable budget, which may become an issue for many businesses.
- Extremely connected manufacturing systems. Systems where parts are tightly connected and delays are fatal may be unsuitable for changes and transformations.
- Changing customer behaviors. Customer demands have been constantly changing (from high service speed to higher product quality and to all-round customer experiences), requiring companies to second-guess future needs, which is why digital transformation initiatives should be thought out proactively.
- Turbulent geo-political and macro-economic conditions. Changing customer expectations, turbulent markets, disruptive competition, political uncertainty and other reasons make it difficult to create an all-encompassing transformation strategy.
Supposing you decide to close the door on tried-and-true methods and tackle the above-mentioned challenges, what benefits does digital transformation provide to your manufacturing business?
- Data-driven decision-making. Manufacturers that have implemented a proper digital transformation strategy get to enjoy efficient data handling, processing, analytics and advanced decision-making, which is reflected in CRM, ERP, e-Commerce and other systems.
- Streamlined processes. Many operations are automated and methods are revolutionized based on real-time insights, which helps optimize production and internal workflows.
- Production efficiency. Digital transformation is inextricably linked with technical innovations that improve process efficiency and use of the floor space.
- Better control. Real-time monitoring and advanced maintenance solutions enable an uninterrupted, 360-degree overview of the production processes and industrial capacities.
- Lower costs. Efficient workflows, process automation and optimized use of resources encourage labor savings and reduce expenses.
- Focus on the customer. Advanced software solutions allow manufacturers to synchronize production with customer needs by monitoring demand, ordering and their specifics according to a region, season, etc., as well as to shift from mass production to customized production.
- Higher quality of products. Enhanced processes enable better quality of assembly, bonding, blanking, etc., which is the key to enriched products.
- Enhanced safety. Digitalized processes help obviate human involvement in dangerous and difficult tasks, which contributes to safety and minimizes accidents.
Technologies, methods and approaches change at the speed of light, throwing entire industries into turmoil, to which manufacturing is no exception. Let’s explore the current trends that impact the digital transformation in the industry.
Predictive Analysis as the Basis of Decision-Making
At a certain stage of a manufacturer’s maturity, predictive analytics gathers huge amounts of data that can provide valuable insights if properly processed. Predictive analytics solutions combine machine learning algorithms, big data processing tools and cloud computing technologies to help companies interpret data such as:
- personnel productiveness
- customer demand
- production effectiveness
- lead and shipping time
- cost efficiency
- safety issues
These solutions not only analyze the current situation but also help find areas for improvement, such as ROI maximization, process streamlining, inventory management optimization and the improvement of operational efficiency.
Transition from B2B to B2C
Manufacturers have started to shift from impersonalized sales to customer-centricity — unmediated transactions with their ultimate clients have become one of the priorities. And for good reason — by leaving out intermediaries, this business model provides both parties with the following benefits:
- Financial. Companies get the full profit based on the manufacturer’s recommended retail price, while customers can buy at prices that don’t include the intermediaries’ commission.
- Time-related. Companies release products faster, and customers get products faster.
Reputational. Companies are in complete control of their brand reputation, and buyers aren’t disoriented by possible poor representation by intermediaries.
Quality-related. Because it’s now possible to track clients’ response and behavior firsthand, manufacturers can quickly make the necessary changes to produce products of higher quality and provide a better customer experience.
To enable efficient sales, manufacturers need powerful e-Commerce platforms that support both B2C and B2B and allow companies to manage orders, make transactions, perform marketing activities and have a complete overview of all customer interactions. Easy synching with other internal systems, such as ERP and others, is a must-have functionality for modern e-Commerce platforms.
The Reinforcement of ERP Solutions
Enterprise resource planning (ERP) solutions have always been important in manufacturing, as they automate many hefty and data-intensive tasks and provide real-time, precise information. Recently, companies have started to enrich these solutions with additional layers of applications that perform tangent functions that are urgently needed in the industry.
Working as a complement to the existing software, this approach doesn’t require significant changes to ERP systems and enables quick and easy time to value.
A Transformation Strategy
Transition from conventional manufacturing procedures is a costly, complex and long process (but one definitely worth the hardship). To make it as smooth as possible, a company needs a circumspect strategy. Let’s find out what basic steps a good strategy should include.
Optimization of Processes and operations
Companies should assess their IT capabilities, do a cost-benefit analysis and identify areas of improvement in every aspect of their business, such as production, HR, product quality assurance, etc. LEAN manufacturing serves well here as it helps find these areas and elaborate a change strategy.
Together with engineering, operational and information technology, process optimization will encourage new, more efficient working models and enhancement roadmaps.
Implementation of AI and IoT
These technologies are impressively efficient in the manufacturing industry, as they help boost productivity, raise profits and minimize waste. To enjoy all these benefits, companies should prioritize their introduction and seamless integration with engineering and operational technologies.
Harnessing Customer Data
Modern direct-to-customer business models allow manufacturers to understand their clients and their requirements by gathering and processing their information. By building a system that can store and manipulate customer information, manufacturing companies can get closer to their end customers and better meet their needs, and therefore demand.
To win over customers, some manufacturers think outside the box. One such manufacturer is John Deere: this tractor producer built an online store selling a wide range of complement and related products. This innovative approach allows the company to gather client data and drive revenue in an unconventional way that has put it squarely ahead of the competition.
Personnel Training and Reskilling
Complex devices and sophisticated platforms require completely new skills and knowledge, which is why companies should invest in employee training or hiring new team members. This means that they should prepare for considerable costs and time investment.