If you're working in the manufacturing sector, no doubt you've experienced in an increase in the importance of your IT in the running of your factory floor, plant, production line and / or other manufacturing processes. And the term "digital transformation" is probably familar to you.
Carry on reading to discover what digital transformation is, the opportunities it presents to manufacturers and how to tackle it...
What is digtial transformation?
Digital transformation refers to the increased and integrated use of information technology within everyday business processes. It is the use of computerisation to streamline the use of business data. The introduction of digital transformation has been growing for several years, but the combined pressures of Brexit and the pandemic have made it more important and more urgent now than ever before — and no more so than within the manufacturing sector.
Manufacturers need to take every opportunity they can to stay competitive and keep costs down. The only long-term hope for many is sweeping modernisation – and modernisation for the 2020s means digitalisation.
Most companies already use computers, but they tend to have been introduced in a haphazard manner over many years. Business processes have often become constrained around the computers they use, leading to inefficiencies in the firm’s operations.
Digital transformation is the process of updating business processes and implementing modern integrated information technology across the entire business infrastructure. [i]
This involves a major and potentially intrusive restructuring of business processes and is best done with the help of an experienced third party, leaving the business to continue running its business while the third party works to improve its efficiency. [ii]
The value of digital transformation to manufacturing
IDC has predicted that by 2022, at least half of all manufacturers worldwide will have been digitalised. Given the UK’s unique challenges, this figure may be even higher domestically. For example, the only way to effectively counteract post-Brexit supply chain disruption is to adopt a flexible, responsive business strategy. The only way this is possible is through increased visibility, active inventory and distribution monitoring and more efficient administration within the enterprise – none of which can be fully realised without an effective and comprehensive digital solution. [iii]
Downtime is one of the costliest hazards in manufacturing. Although often caused by equipment failure, downtime as a result of supply issues, staffing issues or a cyber security breach cannot be disregarded. Digitalisation affords greater visibility into the causes of downtime and allows more flexibility and efficiency in remedying errors. Deeper insight into the organisation ensures that potential downtime can be minimised or prevented.
Supply chain and resource issues can almost always be solved by giving greater transparency and visibility to team leaders. Digital solutions can give manufacturing enterprises actively monitored, live-updated inventories, detailed productivity metrics, and perhaps even advance warning of any upcoming supply chain issues. Cutting down on all inefficiency along the supply chain minimises disruption and decreases time to market, streamlining the whole organisation. [iv]
In the UK, digital transformation is also helping to close the engineering skills gap. The workforce of qualified engineers has been shrinking and aging, and as of 2017 there was an estimated shortfall of 69,000 workers qualified to level 3 or above. With students and younger people less likely to pursue engineering qualifications, digital manufacturing allows vital roles to be filled by workers with more widely held computing qualifications. [v]
Supply-chain based demand has been surging across many industries as economic activity has increased following the slump during the brunt of the Covid pandemic. Manufacturers that aren’t modernising risk floundering and struggling to fulfil the renewed demands placed on them, thus losing business to more competitive suppliers. No matter the size of the enterprise, the question faced by UK manufacturing is not ‘if’ it is time for digital transformation, but ‘how’ to do so now.
Obstacles to digital transformation
The benefits of digital transformation are extensive, and the consequences of failing to adapt could be dire. However, it’s much easier to recognise the need for digital transformation than to fulfil it. The manufacturing industry is incredibly diverse. With so many of today’s manufacturers being SMEs, each organisation will have unique capabilities, growth prospects, goals, and most importantly, unique needs. With digital transformation being inherently ground-breaking, there is no guidebook, no well-trodden path to successful digitalisation.
The split of expertise is perhaps the greatest obstacle for team leaders trying to digitally transform their manufacturing organisation. Management in manufacturing, especially in smaller enterprises, need to understand the physical, material needs of the manufacturing process as well as the personal needs of the staff. Without a separate IT department, a manufacturing leader also needs to thoroughly understand IT and data. Implementing digitalisation in the enterprise requires in-depth IT expertise, even though manufacturing leads can’t afford to specialise in IT.
Communication and collaboration are vital, especially for manufacturers where business usually takes place on the ‘shop floor’. Productivity apps such as Microsoft 365 and cloud-based storage can be a godsend for administration, sales, supply management and planning – especially in a nation that’s waking up to the value of flexible workplaces and work-from-home. No digital transformation would be complete without some form of cloud connectivity that meets the business’ needs. But selecting and implementing the right solution – if an off-the-rack, commercial cloud service that ideally suits the enterprise even exists – is a tall order for management.
Manufacturing enterprises, especially in the UK, must walk a tightrope with their budget and cannot afford to operate at the reduced profit – or even temporary loss – that in-house restructuring entails. When businesses live or die on their ability to minimise disruption, deliberately undertaking the extensive disruption that can follow from a poorly planned or rushed digitalisation can make any form of digital transformation a hard sell to senior management. [vi]
Managed services in the supply chain
Manufacturing enterprises face one significant obstacle on the path to digital transformation. Implementing the infrastructure changes necessary to take advantage of digital manufacturing requires heavy investment of both time and capital. It also requires extensive knowledge of not just the business’ individual needs, but specialist knowledge in IT, technology and cyber security. With the economic tension facing many manufacturers, the risk of slowing production for any length of time or allocating floorspace and budget to the digital aspects of business can feel prohibitive.
Manufacturers are being put between a rock and a hard place. There is no choice but to innovate and update in order to stay competitive, but enterprises can’t afford to pause or reduce production in order to implement the changes they need. Managed service providers – MSPs - offer a lifeline in these circumstances, as well as being a natural fit for the manufacturing industry.
It is vital for manufacturers to focus their time and resources on their core competency. An MSP allows for a cost-effective solution, bringing specialist knowledge of cyber trends, experience with digital transformation and dedicated support to any enterprise. It offers greater flexibility to respond to changes in the market, while allowing the enterprise to stay focused on production. OGL has been working with many manufacturing organisations, like Made in the Midlands, to help optimise and revitalise technology. [vii]
The UK government has recently invested £53 million into research centres dedicated to developing technology in manufacturing industries. With the government’s stated goal to make smarter, more competitive manufacturing a priority for enterprises of all sizes, it has never been a better time for businesses to modernise and become as technologically competitive as possible. [viii]
A good, experienced MSP with a responsive support network is the most streamlined and non-destructive way to achieve this. Make sure to take a look at OGL’s material on digital transformation for more information, and get in touch for any advice on how digital transformation can fit within your organisation. [ix]
References
[i] https://www.ogl.co.uk/hesitant-to-digitalise
[ii] https://www.ogl.co.uk/motivai
[iii] https://www.idc.com/getdoc.jsp?containerId=prUS46967420
[iv] https://www.manufacturing.net/home/article/13184256/manufacturers-lack-supply-chain-visibility
[v] https://www.raeng.org.uk/publications/responses/closing-the-stem-skills-gap
[vi] https://www.ogl.co.uk/SOTreport2020
[vii] https://www.ogl.co.uk/ogl-becomes-patron-partner-to-made-in-the-midla
[viii] https://www.ogl.co.uk/software-solutions
[ix] https://www.ogl.co.uk/digital-transformation-for-wholesalers