Digital Transformation is Driving Manufacturing in 2019
The manufacturing sector is going through a very uncertain period; with lagging consumer confidence on one hand and bigger geopolitical issues on the other.
In the United States, there is the protectionist sentiment with manufacturing as a major focus points of the Trump Administration. In other regions and Europe specifically, comparable protectionist sentiments are also present.
In these conditions, the push to reduce risk by cutting long-term costs and raising efficiencies becomes even greater. We should expect to see an accelerated uptake of digital technologies, like internet-connected machines, where the primary drivers are identical to those in the first digital transformation: boost agility, decrease waste, reduce costs and strengthen efficiencies in both manufacturing and business operations.
Data-driven process optimization initiatives don’t just increase efficiencies and bring down costs, but also are what end customers and those in the manufacturing ecosystem are coming to expect. In an increasingly connected, optimized and transparent world, digital technologies are enabling businesses to be a more customer-centric in many regards, including the advancement of services towards consumers or industrial partners, the creation of goods better customized to demand and a superior customer experience.
How is Manufacturing Responding to Digital Transformation?
1. Disruption and opportunity
One ultimate result of digital transformation is the greater identification of new revenue opportunities, especially during the current ‘as a service’ revolution.
The old notion of the ‘extended enterprise’ is being pushed even further right now in the creation of new revenue sources; built around services and data. This development is reinforcing how digital transformation campaigns and innovations are realized in the traditional ecosystem of manufacturers, which includes the retail, shipping and logistics industries.
The most mature industry players with respect to digital transformation will likely adjust business models, or at least discover new ways to raise profitability, through information-based products and services. This space will see noteworthy disruption, ultimately becoming a competitive space. Meanwhile, other manufacturers who haven’t reached the same degree of maturity will be at significant risk of falling behind.
While many manufacturers today view digital transformation as a main concern, very few are seeing it in terms of new business possibilities, let alone new revenue sources. There is still a great deal of emphasis on optimization and lack of an all-encompassing approach.
2. A changing workforce
As the digital evolution of manufacturing rolls on, the reality of the modern workforce will transform. According to research company IDC, by the end of the decade, 60 percent of production floor employees at large global manufacturers will work together with automated technologies like robotics and machine learning systems.
Furthermore, the ongoing transformation will come with a human cost. From a business point of view, this is a major challenge. Every company must realize human costs of automation, as ignoring them can result in the erosion of everything from employee morale to overall brand, both in the labor market and in the commercial marketplace.
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