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Digital Transformation in Manufacturing Guide 2024

Digital transformation in manufacturing is the introduction of technology in the manufacturing industry, that practically reduces time, effort and costs, thereby guaranteeing better results. This sudden shift in the industry has increased especially after the pandemic, and many CIOs of manufacturing companies are incorporating technology in their manufacturing units.

In this blog, we will therefore elaborate on digital transformation in manufacturing to gain a decisive advantage in the cutthroat market.

What is Digital Transformation in Manufacturing?

Digital transformation in manufacturing refers to the replacement of obsolete technology with updated technology and digital know-how. It lets manufacturers respond to the changing market trends at a much faster rate and cater to the demands of their customers. The manufacturing industry does away with its physical assets and stores all its data. Digital transformation in manufacturing helps combine the two elements to produce efficiency in operations. This is what makes it important for the industry to digitalize itself.

The Benefits

Digital transformation in manufacturing has multiple benefits. This is why an increasing number of manufacturers are adopting digitalization in their units. Here, we will elucidate the benefits that you may avail.

  1. Empirical decision-making: With more details and data, manufacturers can take better decisions and keep a check on data handling, processing and analysis. This is evident in systems like CRM, ERP, and e-commerce.
  2. Optimize processes: Digitalization also encourages automation and improves operations, using data that is more insightful and available whenever required.
  3. Maximize produce: Better technology helps manufacturers produce better and more products, that are intricate and even, personalized as per the demands of the customers.
  4. Efficient control: Technology also helps manufacturers monitor operations 24×7, leading to a more controlled environment with advanced maintenance.
  5. Reduced costs: When everything is automated and planned, processes become cost-extensive and there is a deduction in the labour costs as well.
  6. Customer-centric: Digitalization helps manufacturers cater to the needs of their customers and personalize or customize their orders. Moreover, it makes customer care available round the clock.
  7. High-quality products: Through the use of machines and technology, the products are top-notch in quality. There is a lack of human-induced errors, which further improves production.
  8. Increased safety: When most work is done by machines, humans don’t need to get involved in hazardous work. This increases their safety and reduces accidents.

Why Should Manufacturers Implement Digital Transformation

Now that you know the benefits of digital transformation in manufacturing, you must be clear about the need for the change. But, to make things clearer, we will now be elaborating on the reasons why manufacturers must implement digital transformation in manufacturing.

  1. Higher quality products: With the help of digital technology, manufacturers can easily increase the quality of their products by using automated testing, sensors, as well as quality control. They may also use the Pareto Principle to amend the line of production, for a reduction in the number of errors.
  2. More efficient operations: Automation also helps manufacturers reduce human errors, by combining machine learning and AI. This form of automation is popularly called hyper-automation.
  3. Eco-friendly: Digital transformation in manufacturing ensures that there is the least waste of resources. It helps enhance efficiency, reduce the consumption of energy and encourage less material consumption.
  4. Less costs, more profits: Using technology like IoT practically reduces costs, by reducing downtime. It also helps manufacturers find out where their units are lagging and find solutions for the same.
  5. Customer-first approach: Technology also helps manufacturers customize products as per the demands of customers. It also makes them more responsive and agile to dynamic customer needs.
  6. Flexibility: Digital transformation also makes it easier to adapt to the changing market trends, respond to market trends remotely and use cloud-based systems for integration.

Drivers of Digital Transformation in Manufacturing

The process of transformation is primarily driven by two major elements, which must be paid attention to:

Technological leap and competition

Technology plays an important role in digital transformation in the manufacturing industry, which has led to a lot of positive results through services like AI, IoT, and cloud-based systems among others. With advanced technology at their disposal, manufacturers can easily analyze data, and improve their regular operations. To be precise, technology helps manufacturers witness a more efficient version of their products and services.

More competition is another force that drives digital transformation in manufacturing. Currently, manufacturers face global competition because of this they are always trying to improve their products. There is a pressing need for offering unique goods and services. This can be a driver for digital transformation in marketing.

The demands of customers are dynamic in nature and so are the market trends. These two can also act as the driving force behind digital transformation in manufacturing. The process helps manufacturers cater to the demand for personalized or customized goods, faster delivery and even, better quality products. Digitalization helps manufacturers achieve all these goals and respond to market trends quickly.

Key Technologies

An efficient digital transformation in the manufacturing industry involves the following technologies:

IoT

As per N-iX, by 2023 the market size of IoT in manufacturing is estimated to reach about $994 billion. IoT helps companies understand their business better and monitor the production floor, improve performance and address problems instantly. It also helps better the following:

  1. The process of production
  2. Management of personnel
  3. Management of assets

Machine Learning

Machine learning helps manufacturing units become more efficient with the help of smart algorithms. It also revolutionizes the way data is collected and processed at different levels, thereby reducing the risk of data loss. Moreover, such a solution is also more effective with zero errors.

Artificial Intelligence

AI systems help manufacturers train machines, analyze data and predict customer demands, shipping times et cetera. Such solutions can easily handle tasks like decision-making, arrangement of products and features, quality control, maintenance and analytics.

Robotics

Robots are the future and therefore, manufacturers should ensure that they utilize the same in an optimum manner. Once robots become collaborative, they can help manufacturing units perform the following functions:

  1. automation of assembly lines
  2. automation of repetitive operations
  3. control composite processes
  4. monitor performance
  5. gather data
  6. data-driven decision-making
  7. ensure safety

3D Printing

3D printings help manufacturers improve their production. It allows the creation of exact copies and parts. This technology is cheap and takes relatively less time. The speed to market is also increased in this process, thereby catering to the demands of customers instantly.

Blockchain

Blockchain technology was initially created for Bitcoin however, it has become a widespread phenomenon across industries. It helps manufacturers develop supply chains that are smart, thereby enabling them to track the product at every phase. This also introduces transparency and reduces the chances of fraud and theft.

Challenges of Digital Transformation in Manufacturing

Digital transformation in manufacturing is surely a one-time investment, that gives a lot of benefits to those who implement it. However, these benefits also come with certain challenges, which we will be discussing next.

  1. Finding suitable technology: It is very difficult to find and then invest in the technology that suits your needs. It is essential to have the right set of technical know-how that can help you stay ahead of your competition and succeed. It is also crucial to conduct a thorough research about one’s own company before finding a suitable technology.
  2. Effective change management: It is important to adapt to the automation and look forward to evolving with the same. It is also advised that communication is established, to ensure flexibility among the stakeholders and avoid any confusion. One can always avoid the “one-size-fits-all” approach and try to customize, it wherever required.
  3. Training employees: A lot of times, training becomes difficult because this phase requires planning. Moreover, many employees may take time to adapt to new technology. Digital adoption can be very trying for a lot of them. It is important to alleviate the fear of technology and the skills gap as well.
  4. Scaling: Implementation is one thing, scaling is another. It is important to communicate the goals of the project to each stakeholder and develop a unique work culture, that everyone can relate to. If the implementation is going to be siloed, there is going to be no practicality, and an increase in duplication.

Now that we have a basic understanding of digital transformation in manufacturing and the challenges that the process involves, we can move ahead. The industry is driven by 10 key trends, which are listed below:

digital transformation in manufacturing

Predictive analytics for decision-making

Predictive analytics in digital transformation in manufacturing has the potential to store data and provide valuable insights into it. Such techniques involve the use of high technology like machine learning, cloud-based systems, and processing, and help manufacturers understand data related to:

  1. workforce productiveness
  2. customer requirements
  3. effectiveness of production
  4. shipping time
  5. cost
  6. safety glitches

LEAN manufacturing for Success

LEAN manufacturing is a technology that helps manufacturers reduce wastage and ensure the optimum utilization of resources rationally. This system is based on predictive analytics, which results in better decisions for the manufacturing units. This style of working helps in the following:

  1. Finding and fixing faults
  2. Demand-driven production
  3. Optimum utilization of time and facilities
  4. Better logistics

Prioritizing safety

Digital transformation in manufacturing is becoming widespread in the industry, especially post-COVID-19. To enhance safety and reduce errors, manufacturers have started investing in digital solutions. Moreover, they are replacing humans with machines and robots for hazardous tasks.

Push toward IoT

As per Statista, expenditure on IoT is bound to touch $1.1 trillion by 2023 and more than 21.5 billion devices will be connected to it globally by 2025. IoT is the current trend in digital transformation in manufacturing because it helps in asset management, without any human errors. It is the best way to monitor manufacturing remotely.

Predictive maintenance

This trend is growing formidably because of its ability to prevent data loss, enhance efficiency and reduce costs. This system is capable of predicting future problems like downtime so that manufacturers can find solutions accordingly. One such example is Tetra Pak, a packaging company, that has initiated predictive maintenance to gain better insights into operations.

Shift from B2B to B2C

Manufacturers have started shifting towards the customization of products and a customer-first approach. Such a paradigm shift has various fiscal, time-based, recognition and quality-based advantages to manufacturers. It is advised that they adopt strong e-commerce platforms, which allow them to monitor operations and manage daily functions. Manufacturers may invest in ERP systems for this.

Boosting ERP solutions

Enterprise resource planning can be a game-changer in digital transformation in manufacturing, which allows the automation of data and provides real-time information. These systems encourage manufacturers to take better decisions, which are driven by data and integrate operations.

Focus on data

Digital transformation in manufacturing is also becoming more focused on data, which is the most important part of the process. They are increasingly integrating systems and sensors that help properly manage data. This, in turn, gives valuable insights into the functioning of the unit.

Replacing humans with AR and VR for customized task

IoT has reduced the work of humans and freed them of the burden that was on them. It has also brought technology like augmented reality (AR) and virtual reality (VR), which help manufacturers initiate troubleshooting, training, testing and skilling, as major operations.

Onshoring

Digital transformation in manufacturing is slowly returning to onshoring or producing domestically. As per Supply Chain Management Review, between 2010 and 2018, more than 750,000 jobs returned to the USA. This helps manufacturers strengthen the economy, work with more reliable infrastructure, reduce the cost of transportation, and replace humans with technology. It has also become a trend post-pandemic.

Transformation Strategy

It is essential to have a strategy for digital transformation in manufacturing, for a successful deployment. A good transformation strategy must have five elements, which we will be elaborating on next:

Advancing processes and operations

It is always advised that manufacturers understand their technical capabilities and initiate a cost-benefit analysis as part of their strategy. They must understand the pain points of their business and then, work towards finding a solution. In such cases, LEAN manufacturing offers the best option. Optimization becomes successful when you improve technology in the realm of engineering and information.

Deploying AI and IoT

AI and IoT are quite useful in digital transformation in the manufacturing industry because of their various benefits. This modern technical know-how help manufacturers increase productivity, enhance their profits and reduce errors. It is advised that manufacturers also incorporate these in the operations of their manufacturing units.

Tackling customer data

Manufacturers must ensure that they understand the demands of their customers, which becomes easier with the help of customer-related data. Technology lets you develop a system to store all important information, create customized or personalized products and cater to the dynamic needs of customers.

Atypical thinking

One needs to think out of the box, to come out as a unique competitor. John Deere, who produces tractors, understood this very well and created an online website that lets customers buy complementary products. Not only is this technique suitable for customers, but it also helps manufacturers gather relevant data about them and work as per their needs.

Training employees

Digital transformation in manufacturing industry provides manufacturers with technology that makes training and reskilling of employees easier. It is considered wise to invest in such systems and be prepared for investing more money, time, and effort. Good and well-trained employees will only help boost manufacturing as an output.

Case Studies

A lot of manufacturing companies have initiated the process of digital transformation in manufacturing in the past, which has brought a lot of success for them. In the next few paragraphs, we will be elucidating one of those two companies that have gained a lot out of this change.

BMW

BMW is a well-known brand that manufactures luxury cars globally. This company, since its inception, has worked towards modernizing itself through technology. It began by prioritizing its customers and offering them the best-engineered product that it could. Its initial project ‘i 1.0′ was meant to build electric vehicles however, its ‘i 2.0’ was on an automated, network driving system.  

The company also implemented a digital supply chain management system, through which it was able to remotely monitor its everyday operations. These changes have let the company decrease lead time, better planning, and increase adaptability. As per Statista, the global revenue of BMW Group was 142.6 billion euros in 2022, a 16.39% increase from 2020.

Airbus

Airbus is a popular company in the aerospace industry, which leads in designing, producing and delivering products related to the industry. The company started with its digital transformation in manufacturing quite early and one of its most important elements was Digital Twins.

The company used VR and other technical tools to construct new aircraft and even, test them. The Airbus330 is one such example, that now takes less than one-fifth of the time that it would have taken otherwise. With the help of robots and 3D printing, Airbus has also worked on the quality of its products. Its revenue in 2022 was over € 58.8 billion, a rise of 13% from 2021.

Conclusion

The digital transformation of manufacturing has brought about significant changes in the way products are made, delivered, and maintained. It has enabled companies to optimize their processes, improve their product quality, and enhance their customer experience. Digital transformation has also allowed manufacturers to collect and analyze data in real-time, enabling them to make data-driven decisions and achieve greater operational efficiency. It has opened up new opportunities for collaboration and innovation, allowing manufacturers to build more agile and flexible supply chains.

However, digital transformation is not without its challenges. It requires significant investments in technology, training, and infrastructure, as well as a culture of innovation and agility. Manufacturers must also be aware of the risks associated with digital transformation, such as cybersecurity threats and data privacy concerns. To succeed in the digital age, manufacturers must be willing to adapt and embrace change, and continuously innovate and improve their processes and products.

FAQ

What is digital transformation in manufacturing?

Digital transformation in manufacturing refers to the use of digital technologies to transform and optimize manufacturing processes, products, and services. This includes the use of technologies such as IoT, artificial intelligence, and data analytics to improve operational efficiency, product quality, and customer experience.

What are the benefits of digital transformation in manufacturing?

Digital transformation in manufacturing can bring several benefits, including increased operational efficiency, improved product quality, enhanced customer experience, and greater agility and flexibility in supply chain management. It can also enable manufacturers to collect and analyze real-time data, make data-driven decisions, and achieve greater innovation and collaboration.

What are the challenges of digital transformation in manufacturing?

Digital transformation in manufacturing requires significant investments in technology, training, and infrastructure, as well as a culture of innovation and agility. Manufacturers must also be aware of the risks associated with digital transformation, such as cybersecurity threats and data privacy concerns. To succeed in the digital age, manufacturers must be willing to adapt and embrace change, and continuously innovate and improve their processes and products.

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