Digital Transformation in Manufacturing: Key Steps and Common Mistakes

calendar iconOctober 11, 2022

What is Digital Transformation in Manufacturing?

Digital transformation, a growing billion-dollar market, has far-reaching impacts. For manufacturing, digital transformation extends beyond using technology to improve safety, quality, throughput, efficiency, revenue, and sustainability. It involves reimagining the business for long-term success, enabled by technology. It improves the experience and needs of the customer while enabling the employees to work more efficiently and effectively. At its core, digital transformation is about people – the customers and the employees. For manufacturers, disrupting factors such as pandemic lockdowns, shipping, and supply issues and environmental and economic events are key elements driving a crucial need for digital transformation.

Impact of Digital Transformation on the Manufacturing Industry

Regardless of sector, implementing enabling technologies and digital strategies will help manufacturers perform, innovate, and compete. Enabling technologies such as 5G, IoT, cloud, edge computing, hyperautomation and predictive analytics are enhancing the end-to-end supply chain ushering in a new era of smart manufacturing and factories for the industry.

While change management can be a significant undertaking for any organization, digital transformation introduces an entirely new level of complexity. Because the initiative involves every entity within the organization, the potential for missteps is likely. In fact, research suggests that 70% of digital transformation projects fail.

Understanding key components of a digital transformation and the common mistakes made, can position manufacturers for transformative success.

6 Steps to Digital Transformation in Manufacturing

Step 1: Define Clear Goals and Objectives

A key first step to digital transformation in manufacturing is to map out your company’s objectives and goals and define what success means across the organization. This should include every entity from production through distribution and end with the customer. A narrowed focus or lack of defined goals and objectives will derail a digital transformation initiative.

Step 2: Commit the Right Leadership

With any digital transformation, talent is one of your greatest assets. A member of the C-suite must own the transformation and identify the proper team to execute and empower them throughout the journey. A clear lineage of change ambassadors from executive leadership to middle managers to employees must be established. Digital transformation stakeholders should be in career-advancing roles with a thorough understanding of end-to-end operations and possess a strong skillset of digital expertise. Assigning individuals to lead a transformation initiative with a limited understanding of global operations and processes and a narrow perspective on technologies and the supply chain, will either hinder progress or bring it to a halt.

Step 3: Align Skillsets with Roles

Of equal importance is ensuring the right talent is in the correct role as a transformation progresses forward. New technologies leveraging artificial intelligence, machine learning and hyperautomation may redefine roles from simple task automation for frontline workers, to process automation for production lines, to multi-plant business operations. Aligning skillsets with roles or upskilling your workforce will increase the likelihood of success for each role. Expecting employees to perform tasks without the skillset or knowledge will be counterproductive to the initiative.

Step 4: Communicate to Drive Adoption

Digital transformation is a complex, multifaceted initiative that requires constant, organization-wide communication to foster inclusion and promote adoption. Leadership needs to set the “tone at the top” about the change, which should be echoed at each level of leadership. Clearly communicating the why, and the how, along with expected outcomes of the digital transformation to every individual (“what’s in it for me”) within operations is critical. Additionally, “quick wins” and near-term successes need to be showcased to get further buy-in from leaders and professionals. It is important for employees to understand transformations can introduce sizeable efficiencies and foster new roles and innovative opportunities. Regardless, change can be intimidating; a lack of awareness regarding a transformation’s progress may have a negative impact on morale and hinder further adoption.

Step 5: Focus on Process before Technology

Technology is a key enabler in a manufacturing digital transformation. The segmented nature of manufacturing must be taken into consideration from a large industrial manufacturer with several factories, multiple product lines and extensive technology stacks to an autonomous manufacturer. It is important to carefully review each process and their interconnections throughout the supply chain to select the appropriate technology. Investing in new technologies without thoroughly evaluating business processes across the supply chain may lead to technology gaps and costly inefficiencies.

Step 6: Understand Digital Transformation is an Endurance Game

Understand that a digital transformation is an iterative process that requires a cadence of reviewing, testing, and refining to position your initiative for success. It requires long-term commitment, as a successful digital transformation can take 12 to 18 months. Clearly identifying key milestones and a detailed method of governance and testing overall progress will be critical. Deploying a digital transformation initiative without properly testing and measuring progress or assuming a digital initiative will hold because the technology has been deployed may stop the initiative from fully progressing.

Embarking on a manufacturing digital transformation journey may be daunting, but with proper preparation and execution, manufacturers will be able to quickly pivot during disruption, adapt to changing demands and elevate their overall ability to compete.

Cherry Bekaert is Here to Guide Your Manufacturing Company on the Digital Transformation Journey

In a rapidly evolving, complex, and uncertain marketplace, businesses look for innovative ways to continue to meet changing customer needs and manage profitable revenue growth.

Cherry Bekaert’s Digital Advisory team is comprised of strategists, technologists and analysts who have broad industry experience and keen business acumen. We drive important change management and ignite growth in productive and cost-effective ways by helping companies predict outcomes with data while adopting and applying relevant technologies to optimize performance.

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