When you think about digital transformation in manufacturing, smart factories, and industry 4.0 come to mind. Yet despite this, manufacturing has fallen behind the service sector in the use of tech. Hype and investment cost can put smaller firms off, yet IoT, Cloud and Automation are the most commonly adopted technologies. Using this tech can reduce cost, increase speed, and improve quality.
Rogan Hounsell-Roberts was a founder of a successful scale-up; has helped organisations across many sectors achieve success; a founder of KR5 Consulting; and passionate to help ambitious business leaders succeed.
For smaller manufacturing firms, some have digital transformation on their radar but no plans; others might not know what it’s all about; and a few think it’s only for bigger players. Yet, according to The Annual Manufacturing Report 2019, the majority see the value. Interestingly, the survey showed that 77% believe it will improve design & production; and 74% that it will benefit internal processes. So, what’s the sticking point?
Why is Manufacturing lagging in digital transformation
Clearly bigger players in manufacturing have made significant investments in digital transformation to reduce cost and increase speed to market. Yet while recognising there is potential, smaller businesses are concerned that the investment is too much. There’s also hype, which small firms look to avoid. Then there’s lack of clarity or awareness. For example, some are unaware that ERP systems are part of smart factories.
Despite the noise about smart factories, manufacturing has fallen behind the service sector in adopting tech. That means there are opportunities to improve. Studies have shown that manufacturers that have used digital to transform their business have a higher than average productivity. There are several examples of revised business models that help firms stand out and win new customers.
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So, let’s look at the three most adopted digital technologies in manufacturing.
Internet of Things (IoT)
IoT is the top digital technology adopted in UK manufacturing. Sensors and controls have existed since the dawn of manufacturing, yet some are basic and others costly. Therefore, sensors are more limited. In the past, sensors and controls have been in closed loops with limited data sharing. For example, a thermostat used to control heating.
The Internet of Things (IoT) opens up supply of sensors and controls and uses the internet for communication. That means cheaper sensors, more innovation in the marketplace, and improved data gathering. For example, you can use IoT sensors for:
What does that mean for manufacturing? If you can track assets, you can reduce inventory. Anticipating a machine fault, means you can plan maintenance. If you can spot a quality issue, you can reduce waste. Furthermore, if you have finer control and monitoring, you can deliver customisation.
The next most popular digital transformation in manufacturing is using Cloud. However, understanding how this started helps us understand why this is helps manufacturers.
Before 2000, when internet speeds were slow, firms would buy computers. These would sit under your desk, in the corner of the office, or in a machine room. It wasn’t uncommon to have staff to fix faults and make sure it all ran smoothly. When computers got older, you’d replace them with something better and faster. So, there was a cost of upgrading, running, and maintaining all the computers in the office.
As internet speeds improved in the early 2000s, you could buy computing on-demand. That meant:
- only pay for what you use.
- easily dial it up or down as needed.
- no need to buy expensive computers.
- No need to fix and maintain them.
This was the birth of cloud computing. It also had other benefits such as you could access it on the move, anywhere in the world, and it was available 24/7. Then there was another revolution. Software companies could avoid the excessive cost of helping customers buy the right equipment, install, and configure software. That meant they could sell their solutions to a bigger market of smaller businesses by reducing their costs. For example, ERP and CRM suddenly became accessible to smaller firms. As cloud is available 24/7 and connected via the internet, it’s an enabler. For example, mobile devices such as scanners, IoT and connecting with the supply chain.
Digital & Automation
The last in our top three of digital transformation in manufacturing is in using automation.
We all know that automation is a big part of manufacturing history. Yet digital has transformed the industry in multiple ways. It’s impacted design, production, and processes. Mass production involved fixed machines that took time to set-up. Now computer-controlled robots can easily create different batches of products.
There’s also automation of processes. That could be anything from order entry right through to processing invoices. It’s all about streamlining, reducing cost, and speeding up the process.
There’s a constant need to assess the use of technology to stay ahead of the competition. Digital transformation in manufacturing is an ongoing activity, not a one-off project. Without the right tools and techniques this would be a burden for most small businesses. Fortunately, with our expertise and know how, you can benefit from regular assessment and effective use of technology.
KR5 Consulting helps senior leaders to transform & refine their business for profitable growth. We work closely with leaders to assist them in their Digital Transformation; refining their Business System; and applying Digital Technology.
If you’d like to explore the ideas in this article further or need help and advice, please contact Rogan at firstname.lastname@example.org – to arrange an informal chat.
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