Digital Transformation Roadmap for Manufacturing Companies

A digital transformation initiative is the most financially intensive decision a company can take, but it is met with innumerable obstacles. According to a study conducted by McKinsey, 70% of all digital transformation projects fail, and even reputed companies fall short in this endeavor. A prominent example of this failure was General Electric’s (GE) attempt to transition itself into a digital industrial machine company.

There are numerous reasons which can be attributed to failure. In the case of GE, the company tried to pivot too quickly without any goals in mind. They had no roadmap in mind, which resulted in spreading out resources too thin across various departments. The company underestimated the cultural and organizational change that is required to pull off a successful digital transformation for a manufacturing company. Digital transformation for a manufacturing company is a complex event that requires more than technological prowess to succeed. Consultants have laid out a step-by-step roadmap that must be followed to ensure optimal adoption.

"Embracing new technology & tools can make your business more efficient & effective," Nidhi Jain, Chief Financial Officer, ICCS.
 

Assess Current State and Define Objectives

Before undertaking a digital transformation project, it is critical for organizations to assess their current operations, technology infrastructure and organizational capabilities. This assessment should identify their drawbacks and areas which have the most improvement potential. Based on these evaluations, clear objectives should be defined that align with the overarching business goals. Whether streamlining production, cutting costs or improving product quality, outlining specific, measurable, achievable, relevant and time-bound (SMART) goals lays the base for a focused transformation strategy.

Acme Manufacturing, prior to embarking on their digital transformation journey conducted a comprehensive assessment of their operations. Identifying bottlenecks in their supply chain, inefficiencies in the production cycle and challenges in their inventory management.

"To succeed, organizations must first understand their business goals for the next three to five years. They should identify the necessary technology, skillsets, and process optimizations required to achieve these objectives," Aditya Kaushik, ICT Director, ZMI Holdings.

Technology Selection and Integration

Selecting the right technology is paramount for manufacturing experts, choosing the right mix of digital tools is what drives the transformational change. This can be anything ranging from IoT sensors to artificial intelligence. It is vital to opt for technologies that seamlessly integrate with existing infrastructures while simultaneously tackling business challenges. Moreover, considerations such as scalability, security and interoperability should not be overlooked. Collaborating with technology partners and vendors has been proven to secure valuable insights to gain useful information and choose the best practices.

Boeing, in its heyday, made significant investments in modernizing their technology infrastructure. They deployed advanced robotics and automation systems on their production lines, implemented digital twin technology for virtual prototyping and adopted cloud-based platforms for seamless collaboration across global teams.

"Embrace technology's transformative power, balancing innovation and long-term vision, as we navigate the complex terrain of operational evolution," Shyam Nambiar, Chief Operations Officer, Avito.
 

Data-driven Decision Making

The famous fictional detective Sherlock Holmes once said, “It is a capital mistake to theorize before one has data,” Data lies at the core of digital transformation in the manufacturing sector. As factories increasingly become interconnected, they generate vast amounts of data, which is leveraged to gain insights that permit the concerned personnel to make informed decisions. Robust data governance must be established to maintain data quality and security. Advanced analytics techniques like predictive maintenance, quality forecasting and demand planning have enabled manufacturers to anticipate issues before they arise, optimize existing resources and improve overall operational efficiency. Investing in good data analytics infrastructure and fostering a data-driven culture is the cornerstone of the digital transformation roadmap.

An example of a company that leveraged big data analytics is Ford Motor Company. They leveraged their data to optimize their supply chain management process. Analysis of real-time data from suppliers, distributors and production facilities has resulted in them optimizing their inventory levels, reducing lead times and minimizing production disruptions, ultimately improving customer satisfaction.

"Real-time data ingestion is integral for AI systems to function effectively to make contextually relevant predictions. This continuous influx of data allows AI algorithms to seamlessly integrate new information with existing knowledge, providing a rich context crucial for training AI models," Srinivasalu Grandhi, VP Engineering & Site Leader, Confluent.

Change Management and Skill Development

A common misconception about digital transformation is that it is purely technological, but it is also cultural. One of the biggest factors for the failure of a digital transformation project is the resistance to change. Manufacturing experts are increasingly taking note that embracing digital technologies requires a fundamental shift in the mindset and behavior of the entire organization. Change management strategies are now employed at all levels in major organizations across the world. The vision and mission of the company are communicated to employees at all levels. Additionally they invest in skill development initiatives to ensure all the workers possess the competency to thrive in a digital environment. This involves providing them with training programs, upskilling existing staff and recruiting talent with expertise in emerging technologies.

Schneider electric prioritized change management and skill development as part of its digital transformation strategy. Through comprehensive training programs and organizational restructuring, they empowered their workforce to embrace digital technologies and drive innovation at all levels.

"Communication should be clear and concise and should be delivered in a way that every employee can understand. It is also crucial to listen to employees' concerns and address them promptly to ensure a smoother transition," Rico Wang Committee, Chairman Singapore Chamber of E-Commerce.

Embarking on a digital transformation journey is a costly yet necessary action. The cost of not-undertaking one cannot be quantified as it comes in the cost of giving up future opportunities. By following a structured roadmap, one can ensure a higher probability of success.