6 Steps Every Manufacturer Must Take to Develop a Digital Transformation Strategy Successfully
If you haven't considered going digital in your manufacturing operations, it's probably just a matter of time until you do. Since digital technologies are making historic changes across industries, it has become impossible to avoid digital transformation. Organizations have little choice but to evolve and adopt these technologies, or they stand the risk of not surviving the future.
Top digital transformation trends in manufacturing indicate that only 24 percent of manufacturers have a digital transformation strategy. Over one third believe it will take them at least two years to achieve a successful transformation. Undoubtedly, most manufacturers have a long way to go, and not seeing a clear path to digitalization is their biggest challenge.
Although digital transformation will be unique for every manufacturer, there are common steps that all of them should consider as they start down the path toward digital transformation. Here are six of them:
1. Determine what a digital transformation will mean for your company
One of the most perplexing aspects of digital transformation is the lack of a universal definition. That makes sense since every manufacturer has a customer base with unique needs, and there are many technological advancements to consider. With this in mind, the first step in your digital transformation is to determine what it means for your organization.
Think about the challenges you face, your competition, industry, how long you've been in business, your value chain , and any other factors and variables affecting your company. You can specify what you want to achieve and what digital transformation will mean for your organization using that information.
2. Assess your present state
You can't map out your digital path without a starting point, so after you have established why you should move to digital, you need to take stock of what digital capabilities you currently have. A current-state analysis can help you:
· Assess the company's culture
· Appraise your workers' skill sets
· Outline your processes, operations, organizational structure, and individual roles
· Address opportunities and pain points
It sounds like an obvious starting point, but many companies believe they can migrate their existing technologies to a new platform without considering their current state. However, an up-to-date assessment gives them the required information to make calculated decisions concerning their digital processes and resources. Deploying technologies should be targeted to solve specific problems where solving them generates a clear return on investment (ROI).
3. Get buy-in from the top downwards for your pilot
Before you begin the digital transformation, key stakeholders in the organization must be on the same page. Going digital can be a massive project that impacts every part of the business and requires buy-in and unity for the transformation to be successful.
However, you don’t have to “eat that elephant” all at once. The easiest way to get buy in from leadership is to start with a targeted problem you’re trying to solve, show the projected ROI of solving it, and then initiate a pilot to prove this out. Once you’ve proven you can solve issues and positively impact the company’s bottom line as a result, getting buy-in to secure funding and scale your digital solutions beyond the initial pilot becomes much easier.
4. Secure the funding
After everyone agrees, it's time to crunch the numbers. Remember that digital transformation is an ongoing way of doing business and will affect all areas of the organization, including all departments, employees, suppliers, and customers. Depending on how many funds the company can allocate to the transformation, you may want to follow the adage: think big, start small, move fast.
Your budget will help you determine your strategy as you move forward. Some manufacturers take a portfolio approach to fund digital transformation by individually evaluating departments and business units, breaking down the transformation plan into bite-sized chunks. They then identify priorities and allocate their resources accordingly.
5. Create a practical roadmap
Once you have company-wide buy-in and funding to scale beyond your initial pilot, you need to look at your digital transformation plan and create a practical roadmap allowing for rapid return on investment (ROI). Your digitization could solve a targeted problem by getting more or getting better data about production disruptions, clarifying which are the costliest, and prioritizing them.
By targeting a specific problem, you can use technology to solve it, measure the ROI, and use that success to get additional buy-in to scale the solution across the entire organization. Scaling proven solutions across the enterprise is where the positive impact starts to ramp up. Also, remember that a roadmap must be flexible and evolve with your company's changing priorities.
6. Prepare the entire business and start the transformation
Part of the buy-in step should be communicating the benefits of a digital transformation for everyone in the company. As you begin the transformation in earnest, reiterate these benefits and follow up with proper training to prepare staff for digital transformation.
If you have not adequately communicated the value of a digital transformation, the organization will not be ready for it. Ensure that all employees understand the structure and plan, and then set up the necessary training to prepare them. The next step is to start implementing the digital transformation and remain committed.
The guiding principle of digital transformation is - if you're not online, you will be invisible. In other words, digital transformation is not a choice but an opportunity to escape from your comfort zone, reinvent yourself, and become competitive within a technologically innovative environment.
Author: Eric Whitley has 30 years of experience in manufacturing, holding positions such as Total Productive Maintenance Champion for Autoliv ASP, an automotive safety system supplier that specializes in airbags and restraint systems. He is also an expert in lean and smart manufacturing practices and technologies. Over the years, Eric has worked with all sectors of industry including Food, Timber, Construction, Chemical and Automotive to name a few.
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