Manufacturing is an industry that has a multifaceted impact on all our lives, shaping everything from the energy that powers our homes to the cars we drive and the planes that take us on adventure. It has long been a key signifier of change. From the steam engines of the Industrial Revolution in the mid-1700s to the assembly lines of the 20th century, manufacturing has consistently pushed the boundaries of what's possible.
Now, we stand on the brink of an even more exciting era, the fourth Industrial revolution (also known as ‘Industry 4.0’) where physical systems and processes are integrated with digital technologies and data. With the rise of AI and digital technology, manufacturing is poised for a transformation that will make the past seem slow by comparison. Imagine factories where machines learn and adapt in real time, where production is streamlined and efficiency soars. This is the future of manufacturing, and it's closer than you think.
The best part? This isn't just about the big players. The tools of the digital revolution are within reach of manufacturers of all sizes. Whether it is a startup with a game-changing idea or an established company looking to stay ahead of the curve, the power to transform is in their hands.
Digital Transformation at a Glance
Digital transformation typically falls into five key trends:
Artificial intelligence (AI) and machine learning (ML), which refer to creating software that mimics human reasoning and neural networks, as well as predictive analytics and data management.
The Internet of Things (IoT), which is classed as a network of smart devices connected through software hubs, granting much faster and more efficient data sharing. This can help manufacturing organisations redefine how products are manufactured and delivered.
3D printing and Additive Manufacturing, a practice that can be used to build cheaper prototypes and also to enable the creation of products that cannot be produced through traditional -material subtracting- methods.
Augmented Reality (AR) and Virtual Reality (VR) are revolutionizing manufacturing by enhancing training, streamlining design and prototyping, and boosting shop floor efficiency. These immersive technologies deliver real-time guidance and insights to workers, and allow for the simulation of intricate procedures and situations.
Agile methodology, a strategic approach focusing on key principles that bring a rapid response to the customer, such as flexibility, continuous improvement, and collaboration.
With each of these components bringing about a sea change, what do we need to know about digital transformation for manufacturing?
The Importance of Digital Transformation in Manufacturing
Digital transformation is of paramount importance, with the industry experiencing a significant shift towards digitization. The transformation into a more digital-focused world involves integrating different digital systems within existing and traditional production processes, making them more effective and cost-efficient. The importance and impact of digital transformation for manufacturing are far-reaching and can encompass improvements in the following areas:
Quality
Efficiency
Revenue
Sustainability
There are many other different benefits that go across the entire value chain too; from enhanced operational efficiency to informed decision-making using real-time data, as well as product innovation, improved overall product quality, talent development and cost optimisation.
The Key Benefits of Adopting Digital Transformation in Manufacturing
The key benefits of adopting digital transformation are multifaceted:
Improved Efficiency and Increased Operational Efficiency
Digital transformation enhances manufacturing efficiency in many different ways. It reduces time, effort, and most importantly, resources required to produce products without sacrificing quality and allows manufacturers to streamline operations and improve productivity.
But, more importantly in a manufacturing setting, digital transformation leads to increased operational efficiency because the traditional manual processes are left behind. Opting for digital technology like machine learning, AI, and automation can work to mitigate human error and this can make a major positive impact on the daily operations and the industry as a whole.
Greater Customer Satisfaction
Leveraging digital technology can result in a better customer experience. According to a trends report, 57% of customers would switch to a competitor if they had even only one bad customer experience, which is a very precarious position to be in. This shows that efficient processes work for both businesses and consumers.
Enhanced Safety
Digital transformation can improve workplace safety by fostering streamlined processes with the use of automation, AI, and ML. These are tools that can be used in different and customizable ways to bring about the best results. For instance:
Wearable technologies and RFID tags can be used to track the use of Personal Protective Equipment (PPE), ensuring that workers are properly equipped for tasks and environments.
Responses in emergency situations such as fires, spills, or injuries could be accelerated For example, AI-powered systems could automatically detect emergencies and alert responders.
Simulation software can be used to model workflows and identify potential bottlenecks or hazards.
Cost Reduction
Manufacturers with a high digital transformation maturity can report higher net cost reductions. AI, ML, and IoT can bring predictive maintenance and grant greater equipment reliability by introducing corrective actions prior to equipment breaking down, reducing downtime and benefiting costs on a larger scale.
Future Readiness
Embracing digital transformation for manufacturing is essential for staying competitive in an evolving market, allowing companies to keep up with evolving customer needs and technological advancements, concurrently positioning them for greater future success.
Challenges Faced During Digital Transformation in Manufacturing
Despite digital transformation providing a huge range of benefits, it's not without its challenges. Organisations can modernise companies' processes and make them future-ready; however, it is easier said than done. There are many obstacles to digital transformation for manufacturing:
Capital Investment
If an organisation wants to transform its business operations, the initial expenditure can be a cause for concern due to the volume of necessary capital. Transformation involves initial investment costs, which can be minimised with a solid expenditure plan and evaluation of the overall return on investment.
Resistance to Change
Despite manufacturing undergoing a significant overhaul, manual labourers can be heavily resistant to it because there is the belief that it renders the workforce irrelevant and inefficient. It's important to quell employees' doubt and uncertainty by involving the employees within the transformation process.
Rigid Infrastructure
Outdated systems and infrastructure in manufacturing pose a challenge to the integration of modern digital technologies, resulting in compatibility issues and inefficiency. One of the keys to avoiding this problem is to start small and focus on the small wins with careful planning and a focus on change management to ensure a successful transition.
Lack of a Comprehensive Strategy
Without a clear and comprehensive digital strategy, manufacturers may struggle to effectively execute their digital transformation, resulting in suboptimal outcomes. The solution here is to have a strategy in place that effectively covers every stage in the process of digital transformation. Failing to prepare is preparing to fail.
The Best Practices for Successful Digital Transformation for Manufacturing
Ensuring there are actionable strategies and best practices is essential for successful digital transformation in a manufacturing organisation.
A Comprehensive Digital Strategy
Manufacturing companies should have a solid strategy that is not just digital-first but also aligns with the business's overall objectives. They ought to initially assess the current circumstances and how ready they are to be digitally ready. That may include some of the following components:
Opportunities associated with the transformation
The digital transformation goals, priorities, and KPIs to monitor
Potential challenges and risks that could be encountered throughout the transformation
A clear roadmap for successful implementation
Integration of digital technologies in quality and continuous improvement plans and strategies
Investment in Digital Capabilities
To remain relevant and competitive, manufacturing companies must invest in technology and software to gain an edge in an overly competitive market.
Addressing Skills Gaps
It is essential to ensure that all employees have the requisite skills, knowledge, and experience not just to make the most of new technology but also to instil confidence amongst employees in the tools and the organisation. There can be a number of training programs available, such as certification programs, workshops, skills swaps, and other on-the-job training. It is critical, however, to regularly monitor and evaluate outcomes of any training initiatives, ensuring there is a positive impact on the employees' skills.
Focusing on Value Creation and Strategic Investment
Identifying the key areas of value creation that can be enhanced and addressing strategic investments for maximum Return-On-Investment (ROI) can help to navigate the challenges of implementing any new process.
Case Studies of Successful Digital Transformation in Manufacturing
As digital transformation for manufacturing is revolutionising practices in so many ways, organisations big and small are finding competitive advantages:
Airbus and its IT Solution
Airbus, a global leader in aerospace, embarked on a digital transformation to address user experience and IT inefficiencies. By consolidating 15 ITSM tools into a single, user-friendly Open Source platform, Airbus significantly improved the digital experience, reduced Service Desk incidents by 30%, and quickly resolved issues. The new platform's knowledge base empowered users to find answers independently.
Tesla and its Automated Quality Control
Traditionally, quality control in manufacturing involves human inspectors checking products for defects. This can be time-consuming and prone to errors, as humans can miss things. Tesla's new system automates this process. Cameras and sensors will scan the interiors of vehicles as they move through production, checking for any defects or issues. This allows for much faster and more thorough inspections.
Rolls-Royce and its Engine Health Monitoring System
Rolls-Royce leverages digital technology to proactively maintain its fleet of gas turbine engines. Internal to the engine sensors provide real-time data, enabling the company to predict and schedule maintenance activities, ensuring optimal engine performance, safety, and cost-efficiency.
The Future of Digital Transformation in Manufacturing
The future of digital transformation for manufacturing is characterised surprisingly by ongoing revolution and adopting advanced technologies to drive growth and innovation:
The market size is estimated at USD $367.60 billion in 2024 and is expected to reach USD $876.10 billion by 2029.
According to “Statista” by the year 2025, predictions indicate that the number of IoT connected devices will surpass 75 billion. This would signify an almost threefold rise from the number of IoT devices that were installed in the year 2019.
Companies are shifting gears using advanced technology to automate manual processes and improve operational efficiency across the board.
Manufacturing companies will find they must invest in technologies and digital capabilities to gain an edge in the competitive ma rket.
It will be essential to implement a comprehensive strategy and address challenges like resistance to change, skills gaps, and other typical “human” problems.
Digital transformation for manufacturing is making a sizable impact, and this notion of ‘Industry 4.0’ continues to evolve. We are right in the eye of the storm, and therefore, for manufacturers to have a better ability to weather it, digital transformation needs to be a key part of any organisation's strategy.