Are Manufacturers Ready for Digital Transformation?
The manufacturing industry is a beacon of innovation. Lean operational models got their start in the auto manufacturing sector. The Internet of Things is gaining some of its most prominent use cases across supply chains and production lines. Now, the need to transform around digital is becoming acute in manufacturing, and businesses the world over can learn lessons from what industrial organizations are doing.
Where Manufacturers Stand on Transformation
Generally speaking, manufacturers tend to be attracted to the idea of going digital and are embracing the movement. A study by McKinsey surveyed manufacturers across the United States, China, Japan and Germany. While Japan stands out as somewhat pessimistic about the move to digital, 60 percent of respondents from the other three nations feel optimistic about the impending trend toward digitization in the sector and the value it offers. At this point, digital-focused business processes are focused on pilot projects and similar startup initiatives.
Within this framework, McKinsey asked companies what use cases are relevant to them. Respondents that considered a use case important have either begun having strategic discussions, rolled out a pilot or launched a program. Major areas of emphasis include:
- Digital data quality management, which 79 percent of manufacturers are engaging with
- Digital performance management, which 78 percent of respondents are working on
- Real-time supply-chain optimization, which 63 percent said they find relevant
This is just a sampling of the types of projects manufacturers are exploring. All told, however, McKinsey found that businesses are focused on following through on three key principles in adjusting around digital. First, they diagnose problems and design their digital plans. From there, they work to deploy data and technology and advance those solutions to the point that they are impacting the business. The final step happens when all of these capabilities come together and help organizations actually transform their operations around digital capabilities.
This last step represents a major turning point for businesses, and manufacturers must move quickly to adjust their systems and culture if they want to actually glean results from their digitization efforts.
“Manufacturers must move quickly to adjust their systems and culture if they want to actually glean results from their digitization efforts.”
An IDC study exploring how businesses are moving to embrace new technologies found that significant roadblocks still exist before companies can get results. By 2018, IDC expects that just 30 percent of the manufacturers making investments in digital transformation will have maximized the outcome. The problem – too many businesses are having innovation stifled by outdated business models and technological limitations.
The study from IDC paints a picture of a manufacturing world where systems are coordinated from the entry points into the supply chain, through production and out to customers’ doors. Technology is making this possible by bringing data together across various business units so organizations can adapt and refine processes in real time. This includes not only adjusting production plans on the fly, but also offering a greater degree of customization alongside better service quality to improve customer experiences.
In 2018, 60 percent of large manufacturers will have developed systems allowing them to use information-based products and services alongside embedded intelligence to bring in new revenue, the IDC study found. Data-driven insights will open the revenue floodgates.
By 2020, G2000 manufacturers will have 60 percent of workers on the plant floor operating hand-in-hand with robots, artificial intelligence systems, 3-D printers and augmented reality systems, according to IDC. Ultimately, 50 percent of companies will be creating value through full integration of business systems, including the supply chain, product and service life cycle management and plant operations.
This vision for an end-to-end operational integration depends on digital transformation, and with half of all manufacturers set to achieve that goal before the end of 2020, organizations need to start moving now or risk falling behind.
Using Process-Based Low-code Development Platforms to Keep Up with Digital Transformation
The maneuver to rebuild manufacturing operations around digital technologies requires more than just shifting away from paper processes and improving IT efficiency. Businesses must develop strategies to move data seamlessly between disparate systems, user bases and locations to allow workers – both humans and robots – to operate as intelligently as possible.
Data underpins just about every process in a digital manufacturing setup. Want to optimize inventory management to minimize asset shrinkage? Integrate enterprise resource planning data, warehouse information and production process updates into a single ecosystem that can notify stakeholders when processes need to be initiated and leverage robotic process automation to initiate repeatable tasks without human input. Want to give financial decision-makers greater visibility into the relationship between supply chain processes and customer experiences?
“Data underpins just about every process in a digital manufacturing setup.”
Applications devoted to connecting business units can provide the data integration needed to track processes and their fiscal implications in near real time.
Low-code development platforms can serve as a central engine for digital transformation. The platform itself, which resides in the cloud and features a combination of development and business process management (BPM) systems, can be integrated with a variety of business systems. As a result, manufacturers can create apps that bring information together from across different parts of the business to quickly and easily trigger new processes based on changes.
For example, if a custom production run is waiting on the delivery of a new shipment, you don’t have to worry about a clerical error or a similar problem leading to delays or disruption. All of the data relative to the processes in the project can trigger alerts, notifications and automated processes within the platform so users can stay on top of relevant tasks. When the shipment is scanned upon arrival, an app can automatically notify production managers that the assets are ready. Prior to that fact, shipping data and updates can be used to accurately project when goods will be ready, allowing leaders to get ahead on planning production.
These types of digital processes create a framework for rapid, intelligent and coordinated operations in manufacturing. They take files and databases from being digital file cabinets to strategic assets, letting companies transform their operations and get ahead of the competition. All of this is possible with low-code platforms that allow for rapid app development and simple data integration, letting manufacturers build out the business processes and technological foundation they need to get a head start in creating value from digital investments.