Digital transformation in manufacturing: The 4 main areas of digital
transformation
Wise managers and business owners are digitalizing their businesses to
maintain a competitive edge. In this article, learn all about digital
transformation in manufacturing to take your business to the next level.
Software, robots, AI, gadgets, and gizmos.
The latest insights into manufacturing trends show that businesses are
quickly transitioning from ye olden ways of doing things to using sleek,
state-of-the-art technologies that can help them manage their business.
This article on digital transformation in manufacturing will help you
to understand what it is and how you can implement it into your business
processes.
What is digital transformation in the manufacturing industry?
Digital transformation in manufacturing refers to integrating digital
technologies, processes, and data throughout the entire manufacturing
value chain to:
Optimise business operations
Increase efficiency
Improve customer satisfaction
They accomplish this through automating production processes, gathering
and analysing data, and facilitating speedy decision-making —
utilising tools like the [2]Internet of Things (IoT), artificial
intelligence (AI), robotics, and cloud computing. This helps
manufacturers improve their production processes, reduce costs, and
increase their competitiveness in the market.
Digital transformation in the manufacturing industry is about leveraging
technology to create a more efficient and customer-centric manufacturing
environment, enabling companies to stay competitive and adapt to the
changing business landscape.
THE 4 MAIN AREAS OF DIGITAL TRANSFORMATION
Now you know what digitization in manufacturing is and about the huge
advantages of adopting it into your business — the next step is
deciding what to transform.
There are many ways you can go about digitally transforming your
business. However, there are some areas that other manufacturers tend to
favour when making this transition. Here are the four main areas you can
focus on to get you started.
1. PROCESS TRANSFORMATION
This involves digitising and automating existing processes, making them
more efficient and streamlined. This includes using digital tools and
technologies to optimise processes and reduce costs, such as
implementing robotic process automation (RPA), workflow automation, and
data analytics.
Here’s a plan you can follow in the process transformation journey:
Identify areas for improvement — The first step in process
transformation is to identify business areas that can be improved
through digitization and automation. This can include production, supply
chain management, and customer service.
Define digital goals — Once areas for improvement have been
identified, it’s important to define specific digital goals for each
area. For example, a goal for production might be to reduce downtime by
implementing predictive maintenance using IoT sensors.
Evaluate current processes — To identify opportunities for
improvement, it’s important to evaluate current processes and
workflows. This can include mapping out existing processes and
identifying areas of inefficiency and waste.
Select digital tools and technologies — Based on the digital goals and
process evaluation, select the digital tools and technologies that will
most effectively achieve the desired improvements. This includes tools
like RPA, workflow automation software, and data analytics platforms.
Implement digital solutions — With the digital tools and technologies
selected, it’s time to implement them into your manufacturing
processes. This may involve integrating the new digital solutions with
existing systems and processes.
Monitor and analyse performance — To ensure that the digital solutions
are meeting the desired goals and achieving the expected results, it’s
important to monitor and analyse their performance. This can include
setting up key performance indicators (KPIs) and analysing data to
identify areas for further improvement.
Continuous improvement — To ensure ongoing success in process
transformation, it’s important to adopt a continuous or lean
improvement approach. This involves regularly reviewing and refining
digital solutions to optimise their performance and ensure they continue
to meet the evolving needs of the business.
2. BUSINESS MODEL TRANSFORMATION
This involves leveraging digital technologies to create new business
models and revenue streams.
This includes using digital platforms to connect with customers,
creating new digital products and services, and exploring new markets
through digital channels.
One example of a successful business model transformation is Amazon’s
move from an online bookstore to a global e-commerce giant and cloud
computing provider. When Amazon was first founded in 1994, it was an
online bookstore with a limited selection of books. However, the company
quickly realised the potential of the internet to disrupt traditional
retail and began to expand its offerings to include other products, such
as electronics and toys.
Over time, Amazon continued innovating its business model by launching
new services and offerings such as:
Amazon Prime
Amazon Web Services (AWS)
As a result of these business model transformations, Amazon has become
one of the world’s most successful and valuable companies, with a
market capitalization of over $1 trillion as of April 2023 [3].
The company’s success has been driven by its ability to innovate its
business model and adapt to changing market conditions, allowing it to
maintain a competitive advantage and grow.
3. DOMAIN TRANSFORMATION
This involves using digital technologies to transform entire industries
or domains.
This includes using technologies such as AI, blockchain, and the IoT to
create new products and services, optimise supply chains, and create new
business models.
There are several ways to categorise domain transformation, but here are
four types of domain transformation:
Industry-specific transformation — Transform specific industries, such
as healthcare, finance, or manufacturing. For example, in healthcare,
digital technologies can be used to improve patient outcomes through
personalised medicine and telemedicine.
Market-focused transformation — Expand into new markets or serve
existing markets more effectively. For example, a retail company might
use digital technologies to create an online store and reach customers
in new geographic areas.
Product or service transformation — Transform the products or services
a business offers. For example, an automotive manufacturer might use
digital technologies to create connected cars that can communicate with
other vehicles and infrastructure.
Functional transformation — Transform specific functional areas within
a business, such as finance, HR, or supply chain management. For
example, a business might use digital technologies to automate routine
finance tasks such as accounts payable processing or to optimise its
supply chain using predictive analytics.
4. CULTURAL/ORGANISATIONAL DIGITAL TRANSFORMATION
This involves creating a culture of digital innovation within the
organisation.
This includes developing a digital strategy, investing in digital
talent, and creating a flexible and agile organisational structure that
can adapt to new technologies and changing market conditions.
Putting together a digital transformation strategy can be a complex and
challenging process, but here are some general steps that can be
followed:
Define the scope and objectives — The first step is to define the
scope of the digital transformation initiative and its objectives. This
involves identifying the business areas that will be impacted, such as
processes, systems, people, and culture, and determining the desired
outcomes, such as increased efficiency, improved customer experiences,
or new revenue streams.
Conduct a gap analysis — Once the objectives have been established, it
is important to conduct a gap analysis to identify the current state of
the business and the gaps that need to be addressed to achieve the
desired outcomes. This involves assessing the existing systems,
processes, and infrastructure and identifying areas that need
improvement.
Develop a roadmap — Based on the objectives and the gap analysis, a
roadmap should be developed that outlines the steps that will be taken
to achieve the desired outcomes. This roadmap should include a timeline,
milestones, and metrics to track progress.
Identify the necessary resources — Digital transformation initiatives
often require significant financial investment, technology expertise,
and organisational support. It is important to identify the necessary
resources and secure the support of key stakeholders, including senior
leadership and employees.
Implement the plan — Once the roadmap and necessary resources have
been identified, it is time to implement it. This involves changing
processes, systems, and infrastructure and providing training and
support to employees. Monitoring progress and adjusting the plan to
ensure the desired outcomes are achieved is important.
Continuously improve — Digital transformation is an ongoing process,
and it is important to continuously monitor and improve the systems and
processes that have been implemented. This involves collecting and
analysing data, soliciting stakeholder feedback, and making necessary
adjustments to ensure the business achieves its desired outcomes.
THE KEY COMPONENTS OF A SUCCESSFUL DIGITAL TRANSFORMATION IN
MANUFACTURING
Here are some key components of a successful manufacturing digital
transformation:
Clear vision and strategy — A clear vision of the desired outcome and
a well-defined strategy are essential for a successful digital
transformation. This includes setting clear goals and identifying the
key business areas that need to be transformed.
Leadership and cultural change — Digital transformation requires a
cultural shift within the organisation, with leaders driving the change
and fostering a culture of innovation and collaboration.
Data management — An effective data management strategy is essential
for successful digital transformation. This includes collecting and
analysing data to gain insights and improve decision-making.
Technology infrastructure — Implementing the right technology
infrastructure is key to achieving digital transformation. This includes
adopting modern technologies such as cloud computing, IoT, and AI.
Integration and interoperability — Ensuring that all systems and
processes are integrated, and interoperable is essential for a
successful digital transformation. This includes integrating new
technologies with legacy systems and ensuring that all systems can
communicate with each other.
Talent development — Developing the skills and capabilities of the
workforce is crucial for successful digital transformation. This
includes providing training and upskilling programs to ensure that
employees can adapt to new technologies and processes.
Continuous improvement — Digital transformation is an ongoing process,
and continuous improvement is essential for long-term success. This
involves monitoring progress, identifying areas for improvement, and
making changes to the strategy as needed.
