Why Is Digital Transformation in Manufacturing Falling Behind?

Markets are continuing to evolve digitally. This tendency is forcing small and medium-sized businesses (SMBs) wishing to remain competitive to keep their fingers on the pulse of emerging trends.

While seamless automation and increased mobile interaction have been part of the digital transformation landscape for years, a bring-your-own-device trend in workplaces and schools has placed an increased emphasis on cybersecurity, leading causing a digital shift toward data protection technologies.

Also, advances in artificial intelligence, cutting-edge analytics and algorithms, and cloud-based and other digital technologies are combining with cost reductions to make adoption of state-of-the-art automation and equipment necessary for competitive companies.

For SMBs, digital transformation is a crucial exercise for staying relevant in a hyper-competitive market. However, not all industries are adopting digital processes at the same rate.

Digital Transformation Across Industries

While digital transformation is a widespread trend that many enterprises are using to overcome challenges and uncover new opportunities, some industries are moving to a digital model more swiftly than others.

Let’s review some of the major industry categories and how they are making progress towards transformation.

• Banking, Retail, Media: Analytics and automation are being used to understand customers better and creating a consistent experience across platforms and channels. Large amounts of information are being organized to make it easy for customers to perform nearly any function.
• Insurance, Healthcare, Pharmacies: With nearly 72% of physicians reporting the use of electronic health forms of some type, these companion industries are making groundbreaking efforts at transformation. Again, there is an emphasis on customer service, with the additional restraint of regulatory challenges.
• Airlines and Automotive: Real-time pricing for travel through high-tech digital analytics has the airline industry at the forefront of digital change. And, auto manufacturers have leveraged the power of advanced robotics to create a better experience for drivers and a more streamlined workflow for increased productivity on the production line.

Each industry is working toward transformation at a different speed, in part influenced by specific challenges inherent in that industry’s capacity and capability.

Digital Transformation in Manufacturing

Of all industries, it seems that manufacturing is taking a backseat in the race for digital transformation.  A study by Deloitte shows that, despite an early surge prompted by advanced analytics and artificial intelligence that drive supply chain workflow and productivity, many manufacturing enterprises are lagging when it comes to broader enterprise-wide initiatives such as customer-centric innovation and human resources.

Part of the problem is the continued use of “legacy systems,” or outdated technologies that are present enterprise-wide—such as network infrastructure, operating systems, CRMs, hardware, and ERPs.

Issues with these cumbersome, hard-to-change systems include:

• Maintenance issues, resistance to learning a new system
• Incompatibility with modern digital solutions such as cloud and SaaS
• Weak security, lack of updates and patches
• Inflexibility that impacts the customer experience

Modernizing a legacy system might be complicated and time-consuming, but it brings a host of benefits for manufacturers, including a competitive advantage, increased employee productivity and satisfaction, increased growth and performance, better security, and the ability to use big data to support business decisions.

What About Digital Maturity?

When your company responds to the trends in the market that foster digital competitiveness, you move into digital maturity.

Digital maturity comprises attributes that span all aspects of an enterprise—from attracting knowledgeable digital talent through cutting-edge HR recruitment to securing leadership that is willing to commit resources where needed to encourage transformation.

Why is digital maturity critical? Because it pays off in the long run. A study of over 1900 companies across the United States and Europe shows that higher levels of digital maturity equate with an increase in performance and competitiveness.

Advantages include improvements in time-to-market, an enterprise-wide enhanced cost efficiency, increased product quality, and a higher level of customer satisfaction.

The study also found that the fastest maturing organizations had the following components: significant digital investment, the recruitment of digital experts, and an embedded digital strategy that permeates the organization.

Transforming Your Fortunes

For enterprises wanting to reap the benefits of digital transformation in manufacturing, it’s crucial to look at how frontrunners in the industry are applying these new technologies.

First up is an organization that comprehends the value of these digital manufacturing solutions and is ready to begin company-wide adoption and integration.

Frontrunners are confident that digital manufacturing will deliver strong financial results to, in turn, deliver stakeholder value.

Also, they are ready to implement a flexible digital strategy over the long term because they understand that digital transformation in manufacturing is all about progress—and results.

Manufacturers that opt into the trend experience:

• Increased productivity: Heightened productivity is due to an increase in the speed and efficiency of the design and development process. Better digital tools and data analysis lead to streamlined production and reduction in errors.
• Higher quality products: Better product quality is attainable through the application of machine learning algorithms and cutting-edge sensors that audit and control production parameters along the production line.
• Controlled costs: Costs are controlled—or decreased—through significant data analysis of all parts of the manufacturing process that can identify areas where costs can be managed more effectively.
• Increased product offerings: Using digitized manufacturing lines, products can be customized easily and efficiently to increase competitiveness and customer satisfaction.
• Better safety: Sensors can alert staff to hazardous conditions and robotics can take the place of human workers in dangerous environments.

Digital transformation in manufacturing brings a host of benefits to improve, enhance, and propel organizations to the forefront of the competition.

Takeaways

• Digitally evolving markets are forcing SMBs that want to remain competitive to stay ahead of the digital transformation process.
• Most industries are capturing benefits from digital transformation, but manufacturing is lagging.
• Manufacturers are neglecting to adopt customer-centric, enterprise-wide digital strategies and continuing to rely on cumbersome, “legacy” systems.
• To transform to digital manufacturing, companies should comprehend the value, begin company-wide adoption and integration, and implement a long-term, flexible digital strategy.
• Digital manufacturing can offer increased productivity and competitiveness, higher quality products, controlled costs, and better worker safety.