Careful Consideration Is Key For Manufacturers In The Digital Transformation

While the plethora of new technology choices makes some companies want to try every single item, the key to success is determining which technologies fit into the long-term strategy of each manufacturer.

The manufacturing industry is in the era of technology enabled business transformation. As an industry that has been around for centuries, the rapid pace of transformation is creating a revolution unlike anything encountered before. While some manufacturers struggle to keep up with the changing technologies, others are taking full advantage of the streamlined processes, new business models and better customer service that the digital transformation is enabling.

New technologies seem to pop up daily and almost all manufacturers have moved into the connected — or Internet of Things (IoT) era. Today, machines communicate with other machines and with humans, and they provide in depth data and analysis that allows for close control of the supply chain, product monitoring, and even customer monitoring after products are in the market. In fact, Tata Consultancy Services predicts manufacturers will spend more than $120 million on IoT initiatives in 2018.

Three Stages of Digital Transformation

In many cases, the large number of innovations and the rapid pace that new technologies are being introduced can be overwhelming. How does a manufacturer that is unsure of joining the digital transformation get started? For most, there are three stages as they begin to move from the world of old-fashioned manufacturing into the connected world.

  1. Digitalization: All manufacturers want to streamline business processes. Digitalization is like dipping a toe in the water of the digital technology pool. For example, moving a manufacturing plant’s tracking system from static charts to a technology enabled, live and dynamic system is often the easiest first step.
  2. Digital Transformation: After the first taste of digitalization, there is often a hunger for more, and digital transformation tends to be the next step. Digital transformation allows manufacturers to revamp business process and create entirely new user experiences using technologies like mobile apps, social collaboration or predictive analytics. As an example, predictive maintenance gives manufacturers insight into when a machine needs work and prevents equipment failures before they happen.
  3. Digital Reimagination: The final and most sophisticated step is full reimagination. Digital reimagination allows for completely new business models enabled by technology. For example, virtual simulation allows plant operators to reimagine business processes and deliver more efficient operations by identifying critical bottlenecks in flow, understanding the behavior of systems and deploying solutions.

Benefits and Challenges of Digitization

Depending on the age of the manufacturer, existing systems and willingness to adopt new technologies, every plant goes through this journey at its own pace. While the need to implement new technologies is becoming more urgent due to the fast pace of innovation, manufacturers should carefully consider the value of each technology and the return on investment. According to a study by Tata Consultancy Services (TCS), among 13 industries examined, manufacturers achieved the highest revenue gains as a result of IoT initiatives.

And revenue isn’t the only gain manufacturing companies are realizing as a result of technology investments. From a process perspective, the use of near-real time data and big data analytics in supply chain, engineering and manufacturing provides opportunities to reduce latency in analysis and decision making. Often, this delivers big benefits for manufacturers, service providers, and supply chain partners. Another benefit is the ability to respond faster, or become more agile, in response to demand signals. This means manufacturers have a close eye on the supply chain through real-time data and can quickly optimize given a spike in demand for a product.

Even with significant benefits, there are challenges to implementing new technologies and joining the digital transformation. To start, the predominance of legacy systems and the systems from multiple OEM’s on a plant floor can pose a significant challenge to digitization. Manufacturing systems can’t just be replaced overnight, and in many cases, digitization requires a complete plant overhaul. For manufacturers, the startup and shutdown of product lines can cause a major — albeit temporary — loss in productivity and profit. While it might be a short-term loss, the investment in new technology is worth it as it will begin to show gains over a relatively short period of time.

The Future of the Digital Transformation

In order for the “factory of the future” to succeed, manufacturers must look at plants as a ‘system of systems.’ This means systems innovations must enable interplay and interoperability. Rather than focusing on small improvements, breakthrough innovations should be viewed as the key to successful digital transformation. For example, self-diagnosing, self-repairing and self-configuring systems need to be considered in the context of the digital transformation.

For manufacturers that are in the process of bringing digital transformation to their plants, it’s important to remember that some things don’t change. In simple terms, digitization is not a means of doing everything in a completely different way. Once the digital transformation or digital reimagination  is complete, plant systems will still be measured on the same metrics as before — OEE, throughput, yield, quality, safety, sustainability and more. Digitization merely positions each plant to achieve these metrics more consistently. What does change is the agility and responsiveness of the manufacturing facility and the ability to collaborate across members of the value chain.

Looking ahead, manufacturers have a virtual supermarket of technologies to try, purchase and implement, and currently, many are eager to invest. While the plethora of choices makes some want to try every single item, the key to success is determining which technologies fit into the long-term strategy of each manufacturer. If the rapid pace of new technology development continues, the need for a complete technology overhaul will come more frequently, too. The lesson here — careful, thoughtful investment is worthwhile.

Sreenivasa Chakravarti is Global Head of Manufacturing Innovation & Transformation at Tata Consultancy Services.  

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