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[Part 2]: Digital Transformation in Manufacturing: Defining the Digital Transformation Strategy and The Challenges Ahead

To achieve a successful implementation of the IoT in a manufacturing setting, a well-defined digital transformation strategy is obligatory.

May 14, 2019 by Shoaib

****If you haven’t read part 1 of this guide, find it here****

In part 1 of our guide to digital transformation in this Industry 4.0 era, we highlighted the advantages that this digital transformation is promising and also provided a list (and a brief) of the top 10 most valuable tech players (innovations/inventions/revolutions) that are driving this digital transformation.

In this part 2, however, we are interested in discussing how to achieve the real deal- The smart factory- discussing strategies and challenges. Instead of imagining the individual technologies driving the digital transformation (the tech that drives Industry 4.0), we delve into the strategies to achieve digital transformation, the challenges and what to do about it.

So, put a pause to everything else and let’s get to the details.

How does the smart factory really look like?

In a typical case, this would mean synchronizing and coordinating all the aspects of manufacturing such as machine, human and human-machine interaction to achieve the desired optimal output and at the same time, ensuring that sustainability of the system’s operation, as well as the people that make it work, is guaranteed.

The Digital Transformation Strategy

To achieve a successful implementation of the IoT in a manufacturing setting, a well-defined digital transformation is obligatory. And it’s not just a rushed strategy, it must be a comprehensive digital transformation strategy that targets all the core aspects of your business activities, right from development and production, to delivery, advanced quality control, and analysis.

For this to be attainable, a complete analysis or audit of the state of the company’s legacy system must be initiated to help unearth all potential challenges. Data must be collected wholesomely from the current machines, targeting both current and past states before the new systems are implemented.

The development possibilities that IoT offers manufacturing are so diverse that it easily gets confusing trying to figure out which direction to go. A clear strategy would provide focus to manufacturers, allowing them to concentrate on the key things that include the needs of the customer which should form the prime goal of the digitization process.

A Step-By-Step Digital Transformation Strategy

#1. Start by creating an Industry 4.0 Road Map

To get going, you’ll need to start with considering the current digitization status of the company and then set 5-year targets. To decide which goals take top priority, consider each goal’s ROI. Those with significant ROIs should sit at the top. The company’s leadership must be brought on board to ensure that everyone is in synch with everything.

#2. Decide upon projects that establish POC

Although rather experimental, this stage uses a variety of pilot projects in establishing the performance of diversely functional teams as well as finding out how agile the whole process is.

#3. Outline target functionality

From the outcomes of step 2, define which of the Industry 4.0 capabilities is likely to yield the most value for the company. By the time you are at this stage, you should be capable of outlining the abilities of your team whether they are up to the task in implementing the new technologies or if additional staff is needed.

#4. Learn how to tap the power of data analytics 

Data analysis forms a critical component of Industry 4.0 and without it, there’s no need for thinking about Industry 4.0. Once data is adequately analyzed, the outcome should be immediately used in the decision-making process.

Digital Transformation

#5. Approach the shift to digital transformation as a company

If you are going to succeed in this digitization change, bring everyone on board right from the top, with financial stakeholders and C-suite setting the tone. This shift is not a temporary one and everyone else in the company must be tuned to the same frequency.

#6. Develop as an integral part of your ecosystem

Keep a broader vision of where you are within your ecosystem even as you use IoT to provide your customers with better solutions. At this stage, it’s a good thing to share your knowledge with your partners as well as suppliers and be on the watch for new opportunities and avenues for further collaboration. This will help you offer even better quality and scope of your products and services to your customers.

The Challenges in the Digital Transformation Process

Of course, the roadmap to digitization does include challenges that need to be addressed. Luckily, a number of tools and services are already in place for manufacturers to use in tackling such challenges in the digitization process so that it can be predictable, structured and successful.

We’ve highlighted some of these challenges below.

#1. Budget limitations

It’s no secret that it requires a substantial investment to successfully lead a manufacturing facility through the digitization journey but the rewards are worth the toil, considering both the short and long-term benefits.

And as you go through this process, it’s important to remember that businesses are different and the way they approach their revenue and expense structuring is different. At the same time, you need to keep in mind that no two digitization programs should ever be copies of each other. Every factory or plant has different needs and so are the resources available for the transformation. Thus, planning and customization are important.

The flexible nature of IoT provides some relief in the implementation of the digital transformation. The fact that it’s not a one-size-fits-all type of tool allows manufacturers with limited budgets to think big initially and visualize the long-term picture and aim to reach for a justly valuable goal down the line.

And as soon as this visualization is complete, it’s time to show a proof-of-concept by seeking  a solid ROI. In essence, this means that because this is the first phase in the digitization process, the network collected data and the analytics and resultant actions prompted based on that data should form the most influential and important information in regards to that particular operation.

Provided these fundamental parameters are being utilized properly, then decisions on how the capabilities of the network can be expanded going into the future can be initiated.

#2. Insufficient relevant knowledge

Adopting this digitization program without building a team with adequate knowledge on how to take it forward will only prove pointless. To fully integrate IoT into manufacturing and reap the foregoing benefits, it’s imperative to invest in your employee’s knowledge.

If the combined level of expertise in your in-house team is inadequate, then it will be beneficial for the management to consider bringing on board new employees or hiring external consultants with adequate expertise to drive the digital transformation program into the future.

Also, the success of this whole process must not be left to one employee or department. It has to be approached as a team because it’s a shared goal.

#3. Rigid company structures

IIoT’s introduction to a manufacturing facility must not be viewed as just another improvement the company has achieved. Adopting IIoT into the manufacturing process is a complete paradigm shift that demands even the organization to considerably adjust or change for proper implementation to be realized.

And although the whole transformation may seem a really daunting undertaking, the outcomes will surely bring a lot of positive changes as the organization’s structure is re-organized and re-tested. This restructuring and re-testing create an opportunity for better placement of employees and other interesting improvements meant to better the organization.

For example, the organization can approach the whole transformation by forming a multi-disciplinary team consisting of product designers, engineers, services professionals, and data analysts to be primary agents steering the digital transformation.

In the above approach, the multi-disciplinary team will be responsible for incubating new technologies, implementing POCs and upon approval, roll out successful iterations to the company.

#4. Unbefitting development processes

Even as manufacturers roll out their digital transformation plans, it’s imperative for them to understand the numerous changes that their technology stack and development processes will undergo to fit in the more agile nature of the fourth industrial revolution (Industry 4.0).

As data forms the pillar of this transformation, forcing business rules to be restructured, changing how content is presented and even how the same is leveraged, the release cycles that were originally based on quarters or other unnecessarily lengthy and rigid schedules will have to be replaced.

This whole process represents a tremendous real change in manufacturing. The IoT development process will be forced to provide support for this transformation and aid in continuous product releases by utilizing feedback from users as data and subjecting the same to analytics to attain a high level of digital performance.

To achieve this milestone, updates will be utilized in making the data read and write accessible by adopting secure and robust APIs. This is not something that can be achieved in regards to core business systems using old tech that goes way more than 5 years old.

#5. Reluctance by Employee

Not all waves in the ocean take the same wavelength even if they are heading the same direction. Similarly, not everyone in the company is open to change. Sadly, most employees will resist changes in their work environment.

The digital disruption that is taking over manufacturing is proving to be a threat to many employees and they are likely to be slow to adopt it or even refuse it completely due to unfounded fears.

Though no one can really predict the future when it comes to technology, it’s needless to fear change, especially the kind that brings efficiency levels witnessed by Industry 4.0 technologies.

The executive management is expected to show the first commitment when it comes to digital transformation and then passes the same down the line. Having clear communication and transparency in the whole process will help lessen any possible friction. Also, it won’t hurt striving to get everyone around the company to be excited about the new digital transformation.

#6. Security is always a concern

It’s vital to consider cybersecurity when launching your digital transformation plans. You’ll need to investigate and identify points of vulnerabilities and a number of fail-safe mechanisms and defense layers installed to completely secure the system.

I’m ready to jump in! What next?

Because the customer is the most important person in business, launching your digital transformation must start with finding improvement opportunities in performance that will benefit the customer directly.

As such, the focus will then shift to areas such as operations, supply chains, engineering and support, the business model itself and customer service.

Below are more tips to help jumpstart your digital transformation and make it seamless.

  • Make sure you define your business objectives and have a clear strategy to achieve them
  • Consider staring with short-term projects that can deliver a quantifiable ROI
  • Utilize the cloud. Start with moving your applications and data to the cloud, and get your machine data to a local gateway
  • Prior to scaling up, test a single production line or asset
  • Get partners who are experts in digital technology to keep yourself abreast with the latest tech solutions and how to leverage them.

With all the hype (justifiable though) around digital transformation, you are still likely to meet companies who have completely decamped to this new wave of manufacturing and others who completely dormant.

To start off your digital transformation plan, ask yourself about:

  • Your view of current operations
  • Where you would want to be in the future.

And just like that, you are on your way to tapping the possibilities of Industry 4.0 and the power of digital transformation. If you need help at any point along the way as you jump ship, we are here to help you so that you can realize your goals. Talk to us today.

Author: Shoaib
Shoaib Chaudhary is an entrepreneur and influencer with over 13 years of experience in the technology industry. He’s influencing global leaders to exceed company goals while advancing social responsibility. Shoaib is a certified Salesforce Consultant and professional with years on helping businesses achieve their digital transformation goals.