The Road to Digital Transformation for Small- to Mid-Size Manufacturers
Greg Gorbach dwells on what should small- to mid-size manufacturers consider when developing a digital transformation strategy.
ARC Advisory Group
To support substantial changes in products and services as well as for a series of transformational changes in their business, engineering and design, and production systems.
Small and mid-size manufacturing companies are showing an increasing interest in digital transformation. Most organisations have recognised that transformation is necessary – and many have some kind of digital transformation program under way. Digital transformation-related innovation is happening across all industries and among companies of all sizes.
This is not surprising, since many potentially disruptive digital technologies have emerged in recent years, carrying with them the implied promise of significant change. Many of these technologies have moved beyond hype and, while not quite yet mainstream, use cases, practices, and solutions are becoming known and available.
We have only begun to glimpse the potential value to our businesses. In some cases, we can also see alarming potential marketplace threats. This is particularly true in discrete manufacturing industries like automotive, aerospace, and heavy machinery, where connectivity and autonomous operation are already changing the dynamics of competition. Clearly, this widespread digital transformation will continue to accelerate and evolve for some time. It’s equally clear that every organisation will need to innovate and adapt.
How can organisations determine which technologies and techniques to consider, which to prioritise, and which to reject? When developing a digital transformation strategy, small to mid-size manufacturers should consider targets and outcomes, technologies, change and impacts, and management issues. Many manufacturing companies are already reinventing their business processes and relationships and remaking legacy IT systems for business, engineering, supply chain, and manufacturing operations based on modern software systems, artificial intelligence, and connected things. And they are developing creative new ways to collaborate with and support customers.
In the short term, the main challenge of digital transformation is determining how to balance and prioritise the many organisational areas and systems that will all need to be reworked because of the disruptive challenges that are being felt top to bottom. Small-to-mid-size manufacturers with limited resources must decide budgets and program details to support substantial changes in products and services as well as for a series of transformational changes in their business, engineering and design, and production systems.
Every leading company in the industrial sector has an active digital transformation initiative under way enabled by current and emerging disruptive technologies. The impetus is twofold: the prospect of re-making business models to be more responsive to customers; and becoming more innovative and adaptable in the face of an increasingly digitised, fast-changing competitive ecosystem.
ARC Advisory Group has recently published a number of research reports and blog posts on related topics that readers may find helpful. These include:
• Digital Transformation Strategies for Aerospace and Defense Manufacturing
The digital transformation of the A&D manufacturing sector is well under way. With advanced connectivity of machines and equipment, together with machine learning and new service offerings, manufacturing companies in this sector are reinventing their processes, customer relationships, and business models. This represents an opportunity for these companies to differentiate themselves and compete effectively, but also a risk of quickly declining opportunities should they fail to embrace digitisation.
• Digital Twins Support Supply Chain Optimisation
“Digital twin” describes a computerised (or digital) version of a physical asset or process. The digital twin contains a sensor or sensors that collects data to feed the asset model. These concepts have implications for complex production scheduling.
• Intelligent Multi-agent Control for Customised Products
While in the past, consumer goods manufacturing lines were geared to cost-effective mass production, the current trend is toward product individualisation down to single, customised units. This is a challenge for the production equipment and the associated automation systems, requiring completely new approaches.
• Cobots and Other Industrial Assist Robots are in Demand
Cobots and other industrial assist robots (IARs) are piquing manufacturers' interest as they continue their quest to improve operating efficiencies and productivity. This is particularly so with smaller-to-mid-sized organisations, who are too often looking for ways to compete effectively with limited resources.
• Digital Transformation Strategies for the Machinery Manufacturing Sector
The digital transformation of the industrial sector is under way. With advanced connectivity of machines and equipment, together with machine learning and new service offerings, machine manufacturing companies are reinventing their processes, customer relationships, and business models. This represents an opportunity for these companies to differentiate themselves and compete effectively, but also a risk of quickly declining opportunities should they fail to embrace digitisation.
• Improving Manufacturing Production, Quality, and Reliability
Although traditional decision support systems have provided visualisation improvements, many still lack other key capabilities. In this digital age, modern solutions must address the full spectrum of analytics challenges from data connection though visualisation.
• Maximising Digital Transformation with Augmented and Virtual Reality
Augmented reality (AR) and virtual reality (VR) technology offer unique capabilities for engineers, operators, and technicians and are changing the way companies design, manufacture, operate, and maintain their products and assets.
• GM Integrates Predictive Maintenance with EAM to Reduce Costs and Improve Uptime
EAM and PdM applications significantly reduce both maintenance costs and capital expenditures, while also lowering dreaded unplanned downtime. This GM case story explains how this large company executes these applications across 140 sites using IBM Maximo and IBM Maximo Asset Health Insights.
• Digital Transformation Strategies for the Automotive Sector
How does digital transformation manifest itself in manufacturing companies in the automotive sector? These companies are reinventing their business processes and relationships and remaking legacy IT systems for business, engineering, supply chain, and manufacturing operations. They are innovating with modern software systems, artificial intelligence, and connectivity. And they are racing to develop creative new ways to collaborate with and support customers.
• Digital Transformation Strategies
Industrial and municipal leaders have become increasingly interested in digital transformation. Most organisations recognise that they need to do something about it and many have some kind of transformation program under way. We see this across all industries and among companies of all sizes. This is not surprising, since many potentially disruptive digital technologies have emerged in recent years, carrying with them the implied promise of significant change.
An Invitation to Join the Digital Transformation Council
If you’re not already a member, ARC encourages technology users to join the Digital Transformation Council. Users at organisations such as chemical companies, food & beverage companies, municipalities, utilities, oil and gas companies, automotive companies, mining companies, metals companies, and other similar organisations are welcome. The Council, created at the request of ARC’s end user clients, is a member-driven community for professionals who want to keep abreast of the many emerging technologies and business trends, learn from others on similar journeys, and leverage trends and technologies to successfully transform and grow their businesses. Join at DigitalTransformationCouncil.com
He is Vice President, Digitization and IoT, ARC Advisory Group, Boston. Greg spearheads ARC's transformative technologies for industry initiatives, including Analytics and Big Data, Cloud Computing, Mobility, and Industrial Internet of Things.