The Importance of Digitalization in Manufacturing

Digitalization impacts the way products are created, used, and maintained, as well as the processes, operations, and energy footprint of factories. It’s clear that manufacturing undergoes a digital transformation, with data and technology empowering manufacturers around the world to increase their productivity.

Manufacturers need to improve their response to the changing customer needs. Today’s consumer expects to be able to buy online, at affordable prices, with quick delivery times. On top of that, today’s consumers want to be able to personalize the products they buy, according to their specific tastes and preferences.

The rise of the direct-to-consumer trend

A study by Deloitte shows that 1 in 5 customers are willing to pay a 20% premium price for a personalized product. This puts pressure on manufacturers to consider a direct-to-consumer model and add new sales channels to their strategy, such as e-commerce websites or online marketplaces. Those not offering personalisation options risk losing both revenue and customer loyalty.

However, adopting a direct-to-consumer model doesn’t come without challenges. It requires adapting the entire business operations and strategy, as well as optimizing core processes such as manufacturing, distribution, marketing, and customer service.

This is where digitalization comes into play. Using manufacturing software and smart digital tools enables manufacturers to match their production cycles with demand, mitigate waste and improve customer satisfaction levels.

Moreover, adopting automation helps to optimize processes and improve performance avoiding rework, downtime, defects and bottlenecks. This in turn will cut time and costs and empower manufacturers to make data-driven decisions.

Proper planning before implementation is key

When building a digitalization strategy, it is important to consider organizational and operational change. Resistance to change and a lack of stakeholder support are common obstacles in successfully implementing a digitalization strategy. That’s why it is important to:

  • Set clear digitalisation goals
  • Select the appropriate technology enablers
  • Define technology leadership
  • Introduce a digital culture
  • Train staff

Digital transformation benefits

There is no “one size fits all” when it comes to digital transformation in manufacturing. The process of creating a digital transformation roadmap in manufacturing is different for every organization, depending on their digital journey. 

However, in the long term it is clear that all organizations benefit from implementing a digitalization strategy, if it’s executed correctly. Here are few of the benefits:

Mitigate waste 

Today, the modern consumer expects more than just reasonable prices. Sustainability, for example, is an increasingly important concern. It not only provides value to customers but also promises substantial revenue and profit benefits for manufacturers. 

Automating the production processes and moving from old-school business applications to the more scalable cloud-based applications, manufacturers can optimize inventory management, anticipate equipment malfunctions, and reduce human errors. This, in turn, helps to avoid overproduction waste.

Decentralize production

The fourth industrial revolution is based on connectivity and the ability to make decentralized decisions based on integrated devices. Decentralized production means flexibility, low labor costs in specific areas, and motivated managers and employees. It also allows receiving more detailed and up-to-date information and conducting more in-depth market research.

Cut costs

Supply chain issues concerning demand, delivery, and inventory levels are easily handled when the operation processes are digitized. Digitalization and automation help cut overhead costs, save time, and enable companies to focus on business development. 

Become more agile 

Digitalization enables organizations to become more agile. Agile companies usually adopt continuous improvement technologies, which essentially help improve costs, delivery, and quality of products. By investing in digitalization manufacturers can achieve better employee collaboration, reporting, data analytics, and connectivity.  

Sync production in real-time

Access to real-time information about the different production steps helps to mitigate production issues, optimize processes and machinery lifecycle, and cut costs. The sync between different production steps also helps to get real-time feedback, which can improve the design and production timelines. 

In the past, analyzing a product meant putting the entire production process on hold, which caused delays in delivery and wasting resources. Using digital twins is the solution of the modern manufacturers, today. Essentially, it’s a digitally identical replica of the actual product, that can be used for testing and experimenting, without influencing the production process.

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