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Digital Strategy and Manufacturing: Benefits and Outcomes

 

Manufacturing organizations face multiple challenges in providing maximum value for customers while working to improve their overall experience, reduce costs, and increase profits. As manufacturing processes become increasingly driven by changes in technology, organizations that adopt a proactive approach towards hardware and software integration can drive innovation. Research from the IDC suggests that by 2022, half of all manufacturing supply chains will have invested in supply chain resiliency and artificial intelligence with a fifteen percent improvement in productivity. Adopting a digital strategy throughout the entire organization can assist manufacturers in cost reduction as well as increased productivity and profitability.

Digital Strategy vs. Digital Transformation

Digital strategy refers to the target application of technology to improve business performance. Aspects of any digital strategy include modifying current internal processes, IT and other networking concerns, and changes in existing hardware and software. Working with legacy systems, for example, some manufacturers may opt for either systems or application integration software to ease data sharing and analysis. Some manufacturers often engage with consultancies for specific advice on software integration services within their systems. Adopting an overall integration solution that takes full advantage of existing hardware and software capacities can streamline internal manufacturing processes towards greater efficiency and productivity.

Although often used interchangeably, digital strategy is not the same as digital transformation. Digital transformation focuses on internal changes within an organization to drive greater efficiency and productivity. Focusing on business models and operational processes, digital transformation drives internal organizational change while digital strategy drives external operational change. Although adopting newer technologies like artificial intelligence (AI), integration point software, and the Internet of Things (IoT) can improve manufacturing efficiency, organizations that make internal changes to make their culture more technology-ready can sustain those efforts over long periods.

Both processes help enterprise-level manufacturing organizations increase productivity and efficiency. While digital transformation allows for internal and organizational change, digital strategy provides a rationale and blueprint for the necessary tools and expertise to implement those changes. Working with consultants and experts can help manufacturers select the best options such as an enterprise application integration software suite that functions efficiently with legacy systems and other software packages to ensure lower costs. Transitioning to a data-driven digitally-driven model involves an honest assessment of current capacity and determining the required tools and skillsets for success.

Effective digital strategy involves having several critical factors in play. Strong leadership and direction in crafting a formal strategy are necessary at the CIO/CTO or CEO levels to assure organizational buy-in. Another key factor in digital strategy and transformation is adopting a more forward-thinking perspective rather than a purely reactive position to drive digital and technical excellence. Ensuring that digital strategy meets current technical capacity can also strengthen efforts to add digital tools and strategy to manufacturing efforts. Finally, maintaining a forward-thinking approach that allows a manufacturing enterprise to adapt to changing conditions with consistent vision provides optimal conditions for success.

Specific Benefits for Manufacturing

Although a 2013 Oxford Economics survey found that only 25% of executives believed that digital strategy would impact manufacturing, much has changed over the past few years. One of the key benefits is the ability for a manufacturer to use data in running their processes more effectively. Machine learning and artificial intelligence can help enterprise-level organizations increase efficiency and productivity while simultaneously reducing processing time. Integrating appropriate data collection and analysis allows manufacturers to gain production insights with more thorough data. Customer and logistical insights can also be streamlined and accelerated providing a more efficient experience.

Adopting a digital strategy also has a practical application in ensuring that manufacturing equipment works effectively and efficiently. As hourly downtime costs rise, manufacturers require specific solutions to maintain consistent production and ensure overall profitability. Although software integration solutions exist for ensuring more consistent data sharing, artificial intelligence and IoT solutions can more easily predict potential equipment failures and decrease downtime.

Another benefit to enterprise-level manufacturing organizations is the ability to streamline the product lifecycle. Digital tools within a manufacturing organization can foster innovation through stronger, more effective internal collaboration as well as greater insight in shaping products. Integrating specific tools as part of an overall strategy can allow manufacturers to develop a “digital twin” to observe how real-world dynamics impact a given product. Digital tools would also allow manufacturers to develop a prototype and test products more quickly to send them to market.

Specific Challenges in Adoption in Manufacturing

 A recent article in CIO Review highlighted many challenges that manufacturers face in implementing digital strategy. Several factors focus on internal dynamics, including employee pushback, lack of expertise and specific strategy, and organizational/budgetary restrictions. Although these can complicate digital strategy efforts, the primary solution is developing a clear digital strategy plan which includes goals, outcomes, and implementation steps. Organizations that have a clear plan are more easily able to drive digital transformation efforts, allowing staff and employees to accept and adjust to changes within current organizational processes.

Internal factors can potentially impact enterprise-level efforts in digital strategy and manufacturing. One complication is distinguishing between digital strategy (which focuses on processes and methods) versus IT strategy (which focuses on hardware investment). Streamlining data sharing and processing through API integration software can also be daunting since many organizations require specific consultation. Quality assurance is paramount in adopting such strategies, with manufacturers needing to integrate warranty monitoring, product customizations, and collaborative tools into their efforts.

Another challenge for manufacturers is adjusting to a post-COVID landscape where logistics and supply chain dynamics have been disrupted and are being reinvented. Understanding the current trends in supply chain and logistics can inform and influence digital strategy efforts by manufacturers. Manufacturers face the challenge of reinventing and rethinking their business processes to meet greater demand with greater efficiency. Understanding the roles that newer technologies and concepts like blockchain and “big data” are influencing these industries can facilitate a greater readiness and creativity in implementing digital strategy and transformation within an organization.

Digital strategy in manufacturing enterprise-level organizations can seem daunting, as transforming the organization while applying specific tools and processes may seem complex. The manufacturing industry has a great opportunity to move towards greater efficiency and productivity through integrated select digital tools.

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