Digital Transformation Roadmap for Manufacturing Industry
If several years ago only the bravest and most ambitious enterprises embarked on the digital transformation journey, today the industry landscape has changed. Now the digitalization of manufacturing and supply chain processes has become imperative. This holds especially true in the post-pandemic world where COVID-19 managed to shine a light on gaps and weaknesses in the manufacturing industry. Earlier this year Fictiv released their State of Manufacturing report which says that 95% of industry leaders acknowledge that digital transformation is a necessity for their company’s development and success. In order to compete in this constantly changing market, manufacturers are expected to provide more and more digital-driven services such as real-time production, tracking, and analysis. And the first step to achieving that is creating a digital transformation roadmap. It helps set priorities, manage change, identify and allocate resources, and much more. A digital transformation roadmap is crucial for successful digitalization within any organization.
This blog post can be beneficial to enterprises as well as to small and medium-sized companies focused on automobile, furniture, electronics, machinery, textile, and any other manufacturing subsector. Whether you oversee technology, information, digital transformation, or innovation, this article will guide you through the process of building your digital transformation roadmap for the manufacturing industry.
Why do you need a digital transformation roadmap in manufacturing?
Digital transformation is a vital change in any organization, especially when it comes to the manufacturing industry. Unfortunately, many manufacturers do not utilize enough digital and technology solutions. This can happen due to various reasons — lack of knowledge, security concerns, weak supply chain, not enough digital talent, or relevant experience. And even if manufacturers embrace the need for digitalization within the organization, the scale and complexity of those changes are often overwhelming.
Digitalization affects every part of the company and thus it needs to happen in a highly coordinated and well-planned way. The roadmap presents a staged approach which the senior management uses to create a strategy, define end-goals, allocate all available resources and assets needed for the transformation. This helps to identify where the company stands at the present moment and where it wishes to be when it comes to digitalization. It also answers crucial questions such as — What are your company’s priorities? Where should resources be allocated? How to use digital transformation in order to produce the biggest profit? Does the company have the needed institutional support to even begin the transformation?
In other words, the goal of the digital transformation roadmap in manufacturing is to help the stakeholders get their ducks in a row before embarking on the journey. Only then you are prepared to successfully digitalize your assets, manufacturing processes, follow your KPI’s and much more.
Steps for creating digital transformation roadmap in manufacturing
The process of creating a digital transformation roadmap in manufacturing can look very different for each organization. It very much depends on where exactly the company stands in its digital journey — is it starting from scratch or is it looking to further leverage emerging technology advancements? Regardless, in order to successfully create your digital transformation roadmap in manufacturing you need to go through the following steps:
Clearly define the company’s position and digital strategy
Before undertaking any type of transformation, organizations should have a very clear vision of what they are trying to achieve with it. Being able to communicate the company’s goal with partners, employees, and clients is crucially important for the leadership team. Only then they can ensure their vision is understood and supported by everyone within the organization. Ideas that resonate with your team members, are feasible and have the potential to achieve sustainable change, which will drive your organization’s success. The process of digital transformation is very ambitious and therefore not always smooth. Those difficulties along the way can only be overcome when everyone is on the same page regarding the scope, pace, and target of the digital transformation.
Once that is done, only then you can focus on discussing further the implementation of various technologies, business models, and processes, as well as the availability of enough digital talent, which is often a major bottleneck in companies’ digital transformation.
Define your financial baseline
An essential moment when creating your digital transformation roadmap is taking the time to properly and realistically plan your budget. Sometimes brainstorming and coming up with ambitious ideas about the digital future of your organization can come easily. However, once you add up everything, those ideas may not be feasible due to budget restrictions. You should be very clear about what is possible and what should be included in the scope based on your resources. Calculate clearly and weigh the complexity and cost of each implementation and the impact it is going to have. Additionally, you can separate the budget and allocate it to different owners. You can schedule regular meetings and discuss if any changes need to be made and if that budget impacts in any way the general business resources.
Digital transformation is a never-ending journey. You can always start small and make incremental changes as you go and once your budget allows you to. Establishing a budget is an important step in defining your strategy. And the clearer that strategy is, the more trust and support you will see in people within the organization.
Ensure internal agile processes are set in place
Implementing Agile methodologies into the digital transformation in manufacturing companies as well as in the end-to-end internal processes can have great benefits on flexibility, efficiency, and productivity. Agility allows enterprises to create products and services at a much faster pace, dividing the process into smaller iterations. This helps to shorten the production timeline, get in-time feedback on delivered products, and act accordingly. Agility allows the entire team to be more flexible and adaptable to new environments and technology changes that digital transformation brings.
Once the digital transformation has been implemented there will come to the need of realigning the manufacturers’ organizational structure along with the customer journey. All new technologies, skill-sets, and capabilities should be implemented throughout the entire lifecycle — design, production, testing, and maintenance of the final product.
By conducting data-driven analysis and gathering insights about user behavior, manufacturers can now see what their customers are interested in — What do they buy? What their feedback is? What channels do they use for purchasing items? When implementing agile methods, manufacturers can use that purchasing data and make ad-hoc changes to the user experience integrating more channels such as applications and websites.
Conduct talent and technology assessment
Moving into this new chapter of digitalization, you need to assess your organization’s talent and technology capabilities. A key factor in this transition of processes and business models is the technical and operational expertise within the company. The superheroes of your digital transformation are indeed cloud computing, data analytics, connected devices, Internet of Things (IoT), robotics, etc. and your team needs to possess both the knowledge and willingness to adjust to those changing and constantly developing technologies in order to achieve a successful transformation. In cases where this is not possible, many enterprises choose to opt for an IT solutions company, such as Accedia, which can provide an experienced dedicated team of software consultants who can guide the process from start to finish.
Then comes the question of the technology platforms you are going to use for your digital transformation. Take your time to research the market. This can potentially save you wasted resources. Ask yourself how this technology can fulfill the gaps and needs of your organization. You need to take a closer look into the legacy systems, applications, and processes currently in use and see what weaknesses can be fixed by moving to digital solutions. This is a great opportunity to also consult the above-mentioned IT solutions companies who can advise on the best practices.
Conducting a thorough assessment is vital as it can help the leadership team make strategic and data-based decisions regarding the digitalization of resources and processes.
Choose the right digital transformation partner
Once you have completed your in-house talent assessment, you might have realized that it simply wouldn’t be able to suffice and manage such an ambitious change as digital transformation. Therefore you might find yourself and your organization in need of a trusted collaborator who will be there along the way and will support you through the digital transformation journey. Before choosing your technology partner, you need to carefully consider their expertise in the manufacturing industry, technology capabilities, ability to consult and lead a successful digital transformation strategy. Those are just some of the reasons many manufacturing leaders have chosen Accedia for managing digital transformation projects.
A clear example is one of the biggest European manufacturers and distributors of high-quality ready-mixed and prefabricated concrete: “During the last two years, we’ve been working on establishing a so-called business collaboration platform on which to provide different kinds of digital services to our clients. We had the goal of establishing a model web portal and mobile app where we could share different kinds of information with our customers. This was all in order to make our collaborations easier and more efficient…[Accedia’s] technical expertise and willingness to learn new things set them at the forefront of technology…It’s very important for us to have that kind of technical skill from our consultants.”
How building a digital transformation roadmap for manufacturing can improve your business in the long run?
According to a survey by Mondor Intelligence in 2020 the digital transformation in manufacturing was valued at USD 263.93 billion and by 2026 it is expected to reach USD 767.82 billion. This proves that regardless of the hesitation in some organizations, digitalization is not something that can be fought any longer. It is not a question of if enterprises are going to adopt those emerging new technologies, but rather when that is going to happen and how manufacturers can best take advantage of their digital transformation. It is time the manufacturing industry got on the right side of history. Here are just a handful of the benefits your organization is going to experience once digital transformation is in place:
Reduces overproduction and waste
In today’s world customers are not only looking to receive their desired product at a reasonable price. In order to compete with other companies on the market, manufacturers need to commit to a more digital, sustainable, and adaptable process. Sustainability not only provides value to customers but also promises substantial revenue and profit benefits. And while sustainability is not a new phenomenon it is only lately that manufacturers have started paying it the needed attention.
By implementing high technologies in the production process and migrating from the old out-of-date legacy business applications to the more scalable and functional cloud-based applications, companies can now cut down on inventory management, predict equipment failure, and reduce human errors, which often result in overproduction waste and inevitably higher costs for the manufacturer. Overproduction can also be a sign of weak communication between different processes and teams. To mitigate that digitalized companies implement tools predicting the market demand and provide real-time data between production sectors ensuring constant communication.
Helps decentralize production
In asynchronous manufacturing, operators use auto-identification technologies to receive updates about what steps need to be taken to produce the needed product. This holds especially true in the flexible and constantly evolving Industry 4.0. At the core of the fourth industrial revolution stays the idea of connectivity and the opportunity to make decentralized decisions based on interoperating devices. In decentralized manufacturing production processes are divided into multiple facilities in different areas, which allows manufacturers to create and distribute products close to the end customers. Decentralized production holds many benefits such as high flexibility, lower labor costs in certain areas, and motivated managers and employees. It also allows receiving more detailed and up-to-date information and conducting more in-depth market research.
Increases profitability and reduces costs
By digitalizing the operation processes manufacturers can easily notice any supply chain issues regarding the demand, delivery, inventory levels, and so on. This visibility helps the leadership team mitigate any risks of unnecessary spending such as wrong deliveries and overproduction. Digitalization and automation not only reduce overhead costs, but also save time and enable companies to focus on the strategies for developing their business in new locations, branch out, or target new customers. Due to the reduced costs, leaders expect a 23% increase in their revenue in the next two years.
Makes organizations more agile when it comes to meeting current trends
It is a fact that by digitalizing the manufacturing industry, organizations become more agile, which helps intertwine the planning and development processes with new technologies. By becoming more agile companies tend to adopt more Continuous Improvement technologies, which essentially help improve costs, delivery, and quality of products. By investing in digital architecture and meeting current technology trends, organizations manage to achieve better employee collaboration, reporting and analytics, connectivity, and much more. It is said that innovation tends to lead to innovation. Therefore, by adopting digital transformation manufacturers embark on an incremental and holistic journey to optimization.
