Why Manufacturers Need to
Embrace Digital Transformation
or Risk Being Left Behind
White Paper
White Paper - Why Manufacturers Need to Embrace Digital Transformation or Risk Being Left Behind
2
Introduction
While most manufacturers know they need to transform their business to remain
competitive, the reality is that most of these organisations are cautious by nature
and are not racing to adopt new and emerging technologies that can deliver a
competitive advantage. Instead, they are looking for ways to tweak their business
models with minimal risk.
This approach is confirmed by recent research by PricewaterhouseCoopers (PwC),
which showed that only 30 percent of US-based industrial manufacturing executives
said that they would increase technology spending in the next 12 months.1 However,
the manufacturing sector remains vulnerable to international market conditions,
continuing competition from cheaper overseas manufacturers and geopolitical factors.
It’s critical for manufacturing companies to take steps to protect their businesses against
these external forces. The entire supply chain ecosystem must transform to deliver
competitive advantage, which means manufacturers need to re-tool and re-skill.
Manufacturers need to evolve as they face changing customer expectations and a
changing competitive landscape. Customers expect everything to be faster: innovation;
product to market; production; and order fulfilment. Manufacturers have to stand
out from the competition through faster response times, better quality products, and
excellent customer service. Manufacturers need to have flexibility to innovate.
Manufacturers are also facing a growing number of new competitors, who are taking
advantage of technology to lower their cost of entry and increase their speed to market.
This whitepaper outlines the key trends affecting the manufacturing industry, and
how companies can use technology to take advantage of the opportunities and
manage the challenges in a rapidly changing landscape.
1 http://www.pwc.com/us/en/industrial-manufacturing/
assets/pwc-manufacturing-barometer-q2-2016.
pdf?_ga=2.73563282.1439194879.1497925607-
1518776202.1496965074
Table of Contents
Introduction .......................... 2
Key trends affecting the
manufacturing industry ........ 3
Internet of Things .................. 4
How to respond to these
changes in manufacturing ... 6
White Paper - Why Manufacturers Need to Embrace Digital Transformation or Risk Being Left Behind
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“industry 4.0 refers to the
current trend of improved
automation, machine-to-
machine and human-to-
machine communication,
artificial intelligence, continued
technological improvements and
digitalisation in manufacturing.”
Key trends affecting the manufacturing industry
Industry 4.0: the future of manufacturing
It is now generally accepted that the manufacturing industry has reached the fourth
industrial revolution, known as industry 4.0.
According to the Australian Department of Industry, Innovation and Science,
“industry 4.0 refers to the current trend of improved automation, machine-to-
machine and human-to-machine communication, artificial intelligence, continued
technological improvements and digitalisation in manufacturing.” 2
Manufacturers need to implement modern enterprise software to ensure they can
adapt to this new reality.
The below design principles let manufacturers investigate a transformation to
industry 4.0 technologies (extract below taken from: https://www.cleverism.com/
industry-4-0/ based on “Design Principles for Industrie 4.0Scenarios” by Hermann,
Pentek, and Otto):
• Interoperability: Objects, machines and people need to be able to communicate
through the Internet of Things and the Internet of People. This is the most essential
principle that truly makes a factory a smart one.
• Virtualization: Cyber-Physical Systems (CPSs) must be able to simulate and
create a virtual copy of the real world. CPSs must also be able to monitor objects
existing in the surrounding environment. Simply put, there must be a virtual copy of
everything.
• Decentralization: The ability of CPSs to work independently. This gives room
for customized products and problem solving. This also creates a more flexible
environment for production. In cases of failure or having conflicting goals, the issue
is delegated to a higher level. However, even with such technologies implemented,
the need for quality assurance remains a necessity on the entire process.
• Real-Time Capability: A smart factory needs to be able to collect real time data,
store or analyze it, and make decisions according to new findings. This is not only
limited to market research but also to internal processes such as the failure of a
machine in production line. Smart objects must be able to identify the defect and
re-delegate tasks to other operating machines. This also contributes greatly to the
flexibility and the optimization of production.
• Service-Orientation: Production must be customer-oriented. People and smart
objects/devices must be able to connect efficiently through the Internet of Services
to create products based on the customer’s specifications. This is where the
Internet of Services becomes essential.
• Modularity: In a dynamic market, a Smart Factory’s ability to adapt to a new
market is essential. In a typical case, it would probably take a week for an average
company to study the market and change its production accordingly. On the
other hand, smart factories must be able to adapt fast and smoothly to seasonal
changes and market trends.
2 https://industry.gov.au/industry/Industry-4-0/Pages/default.aspx
White Paper - Why Manufacturers Need to Embrace Digital Transformation or Risk Being Left Behind
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Internet of Things
The Internet of Things (IoT) is having a major impact on manufacturers as they now have
access to more visibility into their operations as well as their supply chain. At the same
time, this brings several risks (ie. security) and challenges (ie. how do I use the data?).
Gartner is forecasting that 8.4 billion connected things will be in use worldwide in
2017 and estimates that number will reach 20.4 billion by 2020.3
Manufacturers will benefit from the IoT in that sensors and other devices will enable
further automation and efficiency gains. Being able to automatically monitor
operations delivers cost savings. For example, a sensor that alerts other systems
when the temperature in the factory reaches a certain level can help ensure the air
conditioning is always optimised: not too hot and not too cold. That can result in
energy savings while ensuring equipment doesn’t overheat.
Similarly, automatic remote monitoring can alleviate safety issues and concerns
by providing instant alerts if equipment is operating outside safe parameters. The
equipment can be shut down and re-calibrated or repaired before it causes damage
or injury. This can reduce the severity and duration of any unplanned downtime, and
let the business manage maintenance proactively.
Beyond the factory itself, IoT technology can be included in the products themselves.
This lets businesses diversify their offerings, such as building remote servicing
capabilities into products. This type of added value can help manufacturers compete
more effectively.
Agile manufacturing
Agile manufacturing is becoming increasingly popular as a way to gain a competitive
advantage. The concept focuses on three key trends in customer behaviour:
customers want things faster; they want choice and personalisation; and they can
change their minds quickly. To address these challenges, manufacturers are looking
to implement an agile approach, which gives them a competitive advantage.
With adaptive production processes, equipment, tools, labour, and materials, agile
manufacturing is designed to adapt and create new and custom products quickly,
while controlling costs and quality
Business intelligence for greater visibility
Thanks to better data collection and cloud-enabled analytics platforms,
manufacturers can get much greater visibility into their businesses and operations.
The data sources available to manufacturers have become more diverse and can
range from RFID sensors and internet-enabled things to product data and customer/
end-user data. The possibility of accessing such a large volume of data can be
daunting. Businesses need the right tools and systems to be able to extract, store,
analyse, manage and protect their data.
3 http://www.gartner.com/newsroom/id/3598917
8.4
billion connected things will
be in use worldwide in 2017
and estimates that number
will reach 20.4 billion by 2020.
White Paper - Why Manufacturers Need to Embrace Digital Transformation or Risk Being Left Behind
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Simply collecting or even aggregating data isn’t enough. Businesses must identify the
right big data strategy, from collection, aggregation, and storage to analysis, insight,
and action, to help meet its unique requirements.
Key considerations when it comes to data:
• Classify the data: this lets the business sort, filter and find data. Classification
will help with becoming more agile, as it means the manufacturer can be more
adaptive to changing demands.
• Understand the value of data: in a manufacturing environment, much of the data
is connected to the internet or to one another. This is key in terms of protecting and
keeping the data secure.
• Know where data is kept: some data may be cloud-based, other may be kept on-
premise. Knowing where the data is kept is important with regards to security and
privacy to ensure adherence to regulatory legislation.
B2B to B2B2C, or a customer-first approach?
Excellent customer experience used to be something B2B companies didn’t really
need to worry about too much. However, customer-centricity has become just as
critical in B2B. Customers’ expectations have changed and manufacturers have to
shift their approach to ensure they deliver an excellent customer experience. This is
known as B2B to B2B2C.
Most businesses today have taken control of their value chain to protect their brand
and ensure they can meet consumer expectations.
While manufacturing used to be insulated from the consumer market to some extent,
the faster pace of business and increasing consumer expectations are affecting
manufacturers directly. Companies need to reduce the time it takes to get products
to market, without increasing costs. Consumers expect a fast turnaround but they
aren’t willing to pay a premium.
The entire supply chain ecosystem must therefore transform to meet these demands.
To remain economically viable, retailers need to sell more products faster, and at
competitive prices. This puts pressure on distributors to shorten delivery times and, in
turn, on manufacturers to accelerate production cycles.
Consumers expect to be able to access information such as in-store inventory
information, but also information about the products they are purchasing. Manufacturers
need to have visibility into their supply chain and operations, and be able to share this
with their customers who can share it with their customers/consumers.
Using the right technologies, manufacturers can drive higher customer engagement
and growth opportunities. Early adopters have been able to increase efficiencies and
reduce costs through embracing the new customer-first culture.
Customers’ expectations have
changed and manufacturers
have to shift their approach to
ensure they deliver an excellent
customer experience. This is
known as B2B to B2B2C.
White Paper - Why Manufacturers Need to Embrace Digital Transformation or Risk Being Left Behind
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How to respond to these changes in manufacturing
DXC Eclipse can help
DXC Eclipse is a leading Microsoft partner with extensive global manufacturing experience.
DXC Eclipse works with customers to assess their current business systems,
processes, and readiness to transition to the Microsoft cloud. The team focuses on
managing the business risks, optimising the IT infrastructure, and managing the
integration, security, and new technical and operational opportunities available in
the Microsoft cloud.
DXC Eclipse uses a Dynamics 365 Readiness Review questionnaire to help businesses
understand their current and desired state, then plan a roadmap to the cloud.
Microsoft Dynamics 365 for Operations is an ideal solution for the manufacturing
industry. Dynamics 365 has been created with flexibility and change in mind, built with
operational excellence at its core, and focused on letting the business drive innovation
and stay ahead of the competition. Because it’s cloud-based and modular, Dynamics
365 can grow with the business, at the pace that is right for each organisation.
With the tools available in Microsoft Dynamics 365 for Operations, manufacturers
can develop new products and take them to market faster, run their factories more
flexibly, and fulfil orders more intelligently, all while saving costs.
With the tools available in
Microsoft Dynamics 365 for
Operations, manufacturers can
develop new products and take
them to market faster, run their
factories more flexibly, and fulfil
orders more intelligently, all while
saving costs.
White Paper - Why Manufacturers Need to Embrace Digital Transformation or Risk Being Left Behind
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Dynamics 365 for Operations will let manufacturers get ahead by focusing on
three key areas:
1. New product development
A key competitive differentiator for manufacturers is how quickly they can conceive
and build new products. Dynamics 365 for Operations can shorten that cycle by
offering simulation models and 3D-printed prototypes so manufacturers can validate
new product ideas and reduce the associated risk. It then helps fulfil demand through
smart connected products, intelligent automation and digital manufacturing.
2. Agile operations
Managing the production floor more effectively can help overcome skills shortages
and deliver increased productivity. Dynamics 365 for Operations includes the ability
to create workspaces, task guides, and work instructions tailored for operators and
supervisors, which can adapt to any device’s display, getting even inexperienced
workers up and running fast. It also delivers operational insights that let decision-
makers take appropriate action to improve efficiency and remove bottlenecks.
3. Smarter order fulfilment
Failing to meet promised delivery times to customers can erode trust and obliterate
a manufacturer’s ability to compete. Making realistic promises to customers, and
then delivering accordingly, is therefore key to a manufacturer’s ongoing success.
Dynamics 365 for Operations delivers visibility around inventory, manufacturing,
and logistics, and is available anywhere, on any device, so customer service
representatives can proactively solve customer challenges and accurately predict
order delivery timelines.
Forward-thinking manufacturers are beginning to embrace this new reality and have
started on their path to transforming their businesses. With the right technology and
the right partner, they can lay the groundwork for long-term growth. DXC Eclipse
offers agile solutions and industry expertise providing strategic guidance and helping
manufacturers take on their technology challenges and maintain a competitive edge.
About DXC Technology
DXC Technology (NYSE: DXC) is the
world’s leading independent, end-to-
end IT services company, helping clients
harness the power of innovation to thrive
on change. Created by the merger
of CSC and the Enterprise Services
business of Hewlett Packard Enterprise,
DXC Technology serves nearly 6,000
private and public sector clients across
70 countries. The company’s technology
independence, global talent and extensive
partner network combine to deliver
powerful next-generation IT services and
solutions. DXC Technology is recognized
among the best corporate citizens
globally. For more information, visit www.
dxc.technology.
Why work with DXC Eclipse?
Moving to Microsoft Dynamics 365 requires careful planning to get maximum
benefits with minimal risk. Businesses need to ensure the move is seamless,
successful, and non-disruptive.
DXC Eclipse is a leading Microsoft partner.
DXC Eclipse works with customers to assess their current business systems, processes,
and readiness to transition to the Microsoft cloud. The team focuses on managing the
business risks, optimising the IT infrastructure, and managing the integration, security,
and new technical and operational opportunities available in the Microsoft cloud.
DXC Eclipse uses a Dynamics 365 Readiness Review questionnaire to help businesses
understand their current and desired state, then plan a roadmap to the cloud.
DXC Eclipse is a Gold Microsoft partner for Microsoft Dynamics and intelligent
solutions in the cloud, on Azure, and on-premise. DXC Eclipse is the trusted partner
for CFOs with 97 per cent customer retention year on year.
DXC Eclipse has a global team of Microsoft consultants. We get to know your
business so we can develop the right solution to match your needs, both now and
into the future. We offer specialist industry solutions built on the Microsoft platform
for retail, manufacturing, banking, healthcare, and mining. No matter what size your
organisation is or what industry you operate in, we have a solution for you. We’ve
helped more than 2,000 customers achieve their business goals.
Learn more at www.uxceclipse.com
July 2017© 2017 Eclipse, a DXC Technology Company. All rights reserved.
