The digital revolution has been transforming all industries since the 1970s, and especially in the last decade, it has propelled itself forward without a stop. No matter if it’s the media, finance, or healthcare industry, companies are adopting new technology and data leveraged to optimize processes. But what about industries that historically rely on a lot of hard manual labor? Certain areas of the manufacturing landscape have seen a considerable change, like the manufacturing of cars. However, digital transformation in manufacturing has been slower than in other areas. Why is that and what would the industry gain from it?
In this article, we’re going into depth about digital transformation in manufacturing, its benefits, what technology trends are shaping the industry right now, and best practices for smart manufacturing.
- What is Digital Transformation
- Why is Digital Transformation Necessary for Manufacturing?
- 4 Tips for successful Digitization in Manufacturing Companies
- Current Technology Trends Shaping the Manufacturing Industry
- Best Practice: Reebok & its Liquid Factories
- Other Best Practices for Smart Manufacturing
- Wrapping Up
What is Digital Transformation?
Digital transformation describes the implementation of digital technology in a company. Nowadays, it’s extremely important to digitize, innovate, as well as optimize processes to compete with a competitive edge and be prepared for global changes.
Naturally, technological change needs to come from forward-thinking leaders to motivate employees to adapt to a new way of working. People at the management level need a high level of digital understanding to communicate changes and shape how employees perceive and implement them.
Especially in manufacturing plants, employees can get anxious when modern machines take over the work that they’re doing. Even though it could lead to some layoffs, most of the time people will be trained to instead service these machines or do something else. If a company wants to do it 100% right, it should bring in a consultant for change management to make the transition to new work processes as smooth as possible.
Why is digital transformation necessary for manufacturing?
The most important reason why companies in the manufacturing industry should adopt digital technology is the almost guaranteed enhancement of business growth. Integrating, for example, an ERP and product sensors can give product engineers better insight into possible improvements to the product. Thus, information is passed more quickly between planning a product and executing the manufacturing. Let’s look at the other benefits digitalization can bring.
Digitization increases the efficiency of technical professionals working in a manufacturing plant as smart machines minimize downtime by optimizing themselves based on previous data or giving notice when something needs to be repaired.
Streamline production processes & quality control
Factories with smart machines and automation software can offer valuable insight into production processes. Since all equipment is connected to the internet, employees can remotely control them and quickly act when a machine shows a problem.
A lot of factories rely on effective protocols for quality control for an optimal production environment, for example for consumables. With the right technology, critical environmental factors like humidity, air quality, or temperature can easily be controlled. This prevents material degradation, unnecessary energy consumption, mold and bacteria growth, etc. In the end, better product quality can be the deciding factor for consumers when they’re looking at different brands.
Effective inventory management
Since digital inventory management keeps stock updated in real-time, it reduces costs for inventory holding or dead inventory. Read our full article on why you should switch your inventory to the cloud.
Cost Reduction through forecasting
As mentioned above, streamlining the production process helps identify trends and offers critical insight into factory efficiency. In general, companies spit out millions of data points that will never get analyzed. Having a system in place that knows how to automatically interpret the data and make it in digestible chunks can drastically reduce costs across all departments. Nobody can look into the future but past data can identify common patterns throughout a year.
Attract skilled employees
Setting up a technological environment where workers share the production workloads with smart machines makes the job more interesting. Instead of monotonous manual labor, machines take over the hard parts and employees can specialize in more mentally challenging areas.
4 Tips for successful digitization in manufacturing companies
Global developments, supply chain fluctuations, and price pressure have been putting pressure on manufacturers to digitize processes to stay competitive. If you’re in a manufacturing company and you’re facing digital transformation (maybe you even need to lead it), these tips will help you to take it step by step.
1. Build a Digitization Strategy
The groundwork for any successful undertaking is a strategy that clearly defines the vision, goals, and execution. If you have the budget, look for an IoT factory consultant like Bain & Company to spare you the time and effort of implementing something new all by yourself. This also decreases the risk of a wrong setup that will cause problems down the road.
2. Start with small projects
Applying technological changes to your company won’t happen overnight. To lighten the workload, think about what parts of manufacturing processes can be changed and start with smaller, tangible projects to implement new concepts. Like that, you can easily apply SMART tactics (specific, measurable, achievable, relevant, time-bound) and bring you smoothly on a path to digital transformation. Also, it will be safer for your employees as they can take the time they need to adapt to new environments.
3. Develop what you already have in place
You don’t need to rebuild your whole manufacturing plant to implement digital solutions. A lot of existing systems have cloud-based options or can be adjusted for a data-driven. Get in touch with representatives of the software you already use and ask about their digital transformation services.
4. Analyze, revise and refine
To get the most out of a new system or a new work environment, you need to revisit what you did, ask people working closely with it how effective it is for them, and so on. Act on this feedback and optimize what you’ve set in place.
Check out this Step-by-Step guide to building a smart factory by AdvancedTech for more information.
What are current technology trends shaping the manufacturing industry?
Are you familiar with the term Industry 4.0? A little reminder, it is the overarching term for using technology like Artificial Intelligence, IoT, and more in manufacturing. At first, all the individual tech that businesses have the option of implementing can seem daunting. However, if you see the single applications as part of one big puzzle of digital transformation, you can better imagine it as an enabler for automation. Only in the combination of several systems and processes, digitization can take place and create value.
So, let’s look at current technology trends that are shaping the industry.
Internet of Things, Sensors & Big Data
The IoT describes a network of physical objects that are sending data back and forth with the help of sensors. These sensors are installed throughout the manufacturing plant to monitor incoming and outcoming goods. Looking at product movement in general, for example how many shoes of a specific sort are being sensed, can have an impact on demand forecasting. This process is called “sense and respond”. Instead of pushing out as many standardized products as humanly possible, manufacturers should try to create smart, demand-based production cycles. Not only does this lighten the workload and frees up warehouse space but also reduces waste.
The huge amount of data collected is referred to as Big Data. This includes data collected at any stage of the production process in manufacturing or even along the whole supply chain. Products have a long way from the planning stage to shipping to finally ending up in the consumer’s hands. Collecting the data isn’t that hard if you implement the right devices, sensors, or trackers. However, analyzing them is another topic. The right software and employing a data specialist will give you the opportunity to receive interpreted data. With their help, forecasting or predictive maintenance of machines can increase efficiency and in the end, reduce costs.
Cloud computing puts the data collected by your technology in an easily accessible online environment. It features on-demand availability of information, reporting features, and depending on the software, manages manufacturing processes. Around 66% of manufacturing businesses around the world already use a cloud-based system. There are three main types of cloud computing: Software-as-a-Service (SaaS), Infrastructure-as-a-Service (IaaS), and Platform-as-a-Service (PaaS).
The first one, SaaS, is probably the most commonly used one. It simply describes software that is hosted on remote servers and enables the user to access its interface from anywhere, only requiring a stable WiFi connection. For larger companies, PaaS software is the favorable choice because vendors offer a fully customized platform tailored to the business’s needs. For even more complex digital projects, providers like Microsoft Azure or AWS offer IaaS services.
Clients unfamiliar with such systems are often apprehensive about security, training, and if it is really THAT valuable. Luckily, software vendors know these concerns and design their solutions with data security as a top priority. The question if it’s really that valuable depends on how the company is going to use it. A system that isn’t set up and utilized properly by its users can make operations even slower. That’s why professional training of employees and implementation services offered by vendors can be a deciding factor when it comes to the practicality of the application. Read here what services Megaventory offers for software implementation.
AI & Robots/Cobots
Artificial Intelligence in Manufacturing refers to using machines programmed to mimic human work and therefore, increasing efficiency and reducing the error rate of product manufacturing. Additionally, the intelligent machine collects data and considers it for making its processes better.
As of now, industrial robots are mostly used in the automotive industry closely followed by the metal or other manufacturing branches. It is expected that by 2025, implementing industrial robots will save companies up to 22% of costs.
But what is a cobot? Cobots are robots that work in collaboration with humans. Therefore, they physically interact with workers to perform given tasks with greater strength and accuracy. The global cobot market is predicted to grow by 44.8% until 2026 and will change the future outlook, especially for smaller manufacturers that make up about 70% of the industry.
Especially during Covid-19, the use of robots and cobots experienced a surge as it reduces the number of workers needed in order to meet social distancing measures. At the same time, online shopping was as popular as ever, and meeting consumers’ expectations was a challenge due to labor shortages, supply chain disruptions, etc. The need for automation is at an all-time high and it can be argued that only the implementation of AI can give companies the tools needed to compete.
If smart machines can take over most of the work, manufacturing plants can decrease in size which can create a shift in where products are produced. While companies often go offshore where labor is cheap, automation will give them the opportunity to move production onshore. According to a BCG survey, this innovation has already begun since 17% of manufacturers are moving production back to the U.S. This is a 13% increase from 2013. Read this article on Epicor why manufacturers are moving production back to their home countries.
When we’re on the topic of rethinking production processes and implementing smart machines, there’s no way around 3D printers. Go to the best-practice section down below and read how Reebok is using them to accelerate its shoe production.
You’ve probably heard the term blockchain in relation to financial services. And it’s right, the finance industry is seen as the clear leader for blockchain. But the runner-up is the industrial products and manufacturing industry. So, what is blockchain exactly and why is everyone so hyped about it?
Blockchain technology improves transparency, traceability, and trust in a closed environment of multiple data points across the industrial supply chain. Block refers to digital data and the chain refers to a database. If you add new data to the block, it is automatically added to the chain. Additionally, the blockchain is secured through a cryptographic algorithm which makes tampering or counterfeiting extremely difficult. The reason why it is so popular in the financial industry is that it enables seamless transactions without the need for consent. Nevertheless, the manufacturing industry is continuously taking advantage of this technology.
Applying blockchain in an industrial environment will be a solution for many of the existing problems that manufacturing companies have, such as…
- Supply Chain Visibility
- Counterfeit detection & piracy
- Slow-sharing capabilities for complex engineering designs (f.e. An aircraft)
- Identity management, user permissions & meeting regulations
- Tracking of expensive equipment
- Consistent Quality Management
Best Practice: Liquid Factories by Rebook
Shoe manufacturers have been at the front of digital transformation from the beginning even though the use of molds is still very prevalent. Using traditional mold processes forces companies to produce shoes in Asia, where time-consuming labor is cheap.
In 2016, Rebook launched its first liquid factory in collaboration with BASF to start manufacturing using a combination of software and robots. 3D printers draw the shoe in layers with a liquid material that provides twice the energy return of traditional rubber outsoles. Compared to conventional manufacturing methods this option provides greater room for changes and massively speeds up the process.
More Best Practices for Smart Manufacturing
Here are more examples of manufacturing companies successfully implementing new technology and being leaders in digital transformation.
- Appliance Manufacturer Whirlpool uses data to meet sustainability targets
- Siemens smart factory in Germany
- Automotive company Hirotec uses IoT to reduce machine unplanned downtime
- Hewlett-Packard (HP) opened a 6000-square-foot campus for research on smart manufacturing applications
The digital transformation in manufacturing has brought along a number of new technological trends to shape the industry. To conquer the rising level of competition of manufacturers to meet customer demands, companies should invest in digitizing their production cycles to achieve their goals. You can take inspiration from the best practices or directly start making a digital strategy for your business. If you’re in need of a cloud-based inventory management system with manufacturing capabilities, contact us to find out how we can help you on your way to a smart factory!
Svea Schüler is a Digital Marketer for Megaventory, the online inventory management system that can help medium-sized companies synchronize stock over multiple stores. She believes content and social media marketing are the best solutions to create awareness and secure long-term customer satisfaction.