Digital Transformation in Manufacturing: Key Challenges and Trends

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Digital transformation is having a growing impact on manufacturing companies, their suppliers, their customers and every other player in the industry. Whether you sell precision machinery or building materials online, technology can help you in many ways! It supports manufacturers as they improve their operational efficiency, from product development all the way to the supply chain.

Advanced manufacturing technologies (robotics, nanotechnology, additive manufacturing and more) offer many benefits. They help companies evolve their business model and adapt faster to change, or even anticipate it before it happens. All of this is crucial for the manufacturing sector. In fact, according to a study by FEVAD (the French e-commerce federation) for the French retail trade magazine LSA, IT and artificial intelligence top the list of concerns for companies that sell online.

As digitalization keeps growing, how can manufacturing companies drive their digital transformation? What is at stake in this transformation? What obstacles do companies face? How can they overcome them? In this article, Synolia, an e-commerce agency, helps you answer all these questions.

Digital transformation in manufacturing: what does it mean?

Improving traditional manufacturing processes, products and the workforce with digital technologies (automation software, e-commerce, sensors, industrial robots and more): that is one way to define digital transformation in manufacturing. It is a transformation with several goals:

• Improve operational efficiency, reduce costs and maximize revenue.
• Improve the quality of industrial products. Improve the customer experience (for example, by streamlining the ordering process).
• Improve decision-making capabilities.
• Adapt quickly to changing customer and market demands to secure a competitive advantage.

The manufacturing sector is constantly evolving, driven by a volatile global, economic and political environment. Add to this the impact of the COVID-19 pandemic, which forced companies in the sector to adapt quickly.

Beyond these changes, we are also seeing many technological advances that promise to disrupt the sector (and are already disrupting it). Greater 5G network capacity, the rise of the IoT (Internet of Things), Industry 4.0, machine learning, data-driven predictive analytics: all these innovations are leaving their mark on manufacturing. This is what people now call “smart factories.”

While technological progress is in full swing, customer expectations keep rising, and this factor matters just as much for the manufacturing sector and its digital transformation. The boom in e-commerce, ERP platforms, manufacturing execution systems and CRM in manufacturing puts customer data in the spotlight more than ever. And poor customer experiences can no longer be ignored.

The challenges of digitalizing the manufacturing sector

As in any sector, many obstacles can hold manufacturers back in their digital transformation initiatives, starting with simply selling the idea to management and addressing concerns about the workforce.

Still, simply starting the conversation can give manufacturers a fresh look at their inefficiencies and the way they allocate resources. They can then begin to see the possibilities that new technologies open up. Let’s look at a few concrete examples:

• Any digital transformation initiative can put pressure on the existing information system and tech stack. It may require new update cycles, new processes, new APIs, or innovation in other areas of digital performance.
• Digitalization in manufacturing comes with a human cost: the workforce may feel disillusioned as the workplace context and its demands change. Employee reluctance and communication issues are also a major challenge.
• In a dynamic, cash-sensitive sector, manufacturers must be careful about budget and investment constraints. This can make them reluctant to stick to the plant’s digital transformation strategy.
• Tight schedules and many resource constraints make manufacturing operations complex. As a result, management often fears the negative effects on production before it even sees the benefits of digital transformation.

Get expert support!

Embarking on a digital transformation journey can be challenging, so going it alone is strongly discouraged. Many digital transformation consultants and consulting firms work with manufacturers to support them along the way. And countless digital transformation success stories show how companies have capitalized on smart manufacturing.

8 major digital transformation trends in manufacturing

Let’s now look at the main trends in digital transformation in manufacturing, and how each of them will help shape the future of the industry.

1. Industry 4.0

Industry 4.0 is a trend that describes the integration of traditional manufacturing, industrial plants and smart technologies into value chains and supply chains. Also known as the “fourth industrial revolution,” its main goal is to automate production processes, to the point where every process becomes automated and computer-controlled, in real time.

One example of Industry 4.0 technology is a machine with built-in sensors that interacts with another machine based on the data they receive through those sensors, with no human intervention at all. In the future, Industry 4.0 could blur the line between physical and virtual warehouses, freeing up staff for more effective collaboration.

2. IoT

One of the key technologies of Industry 4.0 is the Internet of Things (IoT). The concept refers to a network of interconnected physical objects that communicate based on computed data and on their environment, including data from outside sources. Adopting the IoT can lead to new functions, new insights, new services and new benefits for manufacturers.

The main IoT use cases involve operations, asset management and workforce management. For example, manufacturers can set up preventive maintenance programs with real-time monitoring. They can improve energy efficiency and working conditions through smart air management, risk management, worker productivity and more.

3. Machine learning

With the amount of data machines collect, it is easier than ever to use algorithms to quickly determine the best course of action among several options. Today’s machines have proven that quality is not just about efficiency: they can identify and anticipate more precisely the factors that will affect production, or the speed and quality of the assembly line.

Examples of machine learning include suggesting the best course of action to employees, forecasting wait times and shipping lead times, or modeling behavior patterns to prevent supply chain risks. Another example is artificial intelligence in e-commerce. When it is integrated across the entire supply chain, machine-generated data gives a better understanding of every aspect of the production process.

4. Robots

Tomorrow’s robots should not look very different from the ones we see in manufacturing today. The change will rather lie in their ability to learn from past behavior and to use pattern recognition to improve results. The number of connected devices, the ways they interact with one another and the volume of data are also expected to grow.

In a connected environment, new robotics technologies should keep innovating, especially in autonomous driving, dexterous handling, mobility and more. As robots become more autonomous, more flexible and more collaborative, they will be able to take on even more complex tasks, relieving employees of repetitive work and boosting productivity in plants.

5. B2B e-commerce

Today’s B2B e-commerce platforms must respond quickly to the needs of their buyers, who increasingly behave like B2C consumers. Delivering B2C-style experiences is hard when B2B requires custom payment flows, pricing rules, personalized product data and other complex functions to run in the background. Still, manufacturers such as France Air and Groupe Tini (BBA Emballage) are excellent case studies of digital transformation in manufacturing. They were able to digitally transform their warehouses by implementing OroCommerce.

Besides providing customers with the right product data, B2B e-commerce platforms can automatically sync data with the ERP and the WMS (warehouse management system). The goal: reduce inventory management effort and the risk of human error. Even more important, B2B e-commerce gives more flexibility to manufacturers that sell direct to consumers or through a B2B2C model, all without disrupting their existing channels.

6. Additive manufacturing

Along with robotics and smart systems, additive manufacturing, or 3D printing, is a key technology that opens up opportunities for industrial transformation. Additive manufacturing is a production method that uses 3D digital models. The goal: build parts layer by layer with a 3D printer. For complex objects (aircraft parts, some consumer goods such as jewelry, medical implants), 3D printing is often a more cost-effective manufacturing option than more traditional technologies.

Modern manufacturing companies are therefore building 3D printing into their digital strategy. The payoff: faster time to market for new products, higher profitability, support for operational improvements and more.

7. Digital twins

The digital twin concept holds great potential for optimizing the performance and maintenance of manufacturing systems. A digital twin is a digital representation of a real product, machine, process or system. It helps companies better understand, analyze and optimize their processes through real-time simulation.

For example, an operator can use a digital twin to find out why a part in a machine is malfunctioning or to predict a product’s lifespan. This continuous, real-time simulation helps improve product design and ensure equipment availability.

8. Augmented reality

Although augmented reality has taken off in consumer applications, the manufacturing sector is only just beginning to adopt it. Yet there is huge untapped potential for using augmented reality.

What draws manufacturers to augmented reality? First, it helps the workforce speed up the assembly process and make better decisions. With augmented reality glasses, workers can see data (assembly instructions or component serial numbers, for example) projected onto the actual part. This makes work easier and faster.

Examples of digital transformation in manufacturing

Digital transformation in manufacturing is about more than automating the assembly line, tracking inventory levels more closely or optimizing the supply chain. It involves a change of mindset and approach, and new ways of solving problems. Here are a few concrete examples of how manufacturers benefit from digital transformation strategies:

E-commerce

Selling to businesses is hard, and a platform that does not meet today’s B2B buyer needs can be counterproductive. Wastequip, one of the leading manufacturers of waste handling equipment in the US, started its digital transformation with a strategic goal: simplifying the ordering process for its customers. To do so, the company implemented a B2B e-commerce solution designed to deliver an easy-to-navigate site where customers can search for, order and track their purchases. Going digital through e-commerce was a success for Wastequip: it strengthened the company’s online presence, with an 8x increase in web traffic.

Related reading: France Air targets 30% annual growth with OroCommerce

Big data and data analytics

The impact of big data on manufacturing cannot be overstated. For example, NIST (the US National Institute of Standards and Technology) showed that General Electric increased its production capacity by 20% while cutting material consumption rates by 4%, through machine learning alone.

In another case, a California-based fruit supplier increased its output by 50% without hiring a single employee. What made the difference: an automation system including data-driven historical analysis, alarm notifications and other big data reporting capabilities.

IoT

With IoT backed by cloud systems such as Microsoft Azure, Tetra Pak was able to use real-time data to accurately predict when its dairy processing equipment needed maintenance.

Honeywell and Intel also built a connected worker prototype that merges sensor data with devices worn by workers.

Advanced manufacturing technologies

Innovative manufacturing methods such as additive manufacturing help manufacturers overcome the limits of traditional production methods. In the automotive industry, for example, Ford uses additive manufacturing to produce polymer replacement parts for its vehicles faster than traditional molding processes would allow.

The benefits of digital transformation in manufacturing

Digital technologies are evolving all around us, and manufacturing companies increasingly find themselves at a crossroads. Should they step up their digitalization efforts? Or stick with methods that have already proven themselves? One thing seems certain: digital transformation in manufacturing creates a lot of long-term value, while delivering many benefits.

Better use of data

Industrial digitalization is about optimizing the use of data in operations. Manufacturers can use data more effectively by feeding it into their B2B e-commerce, ERP, CRM, finance and warehousing systems, and more.

Improved processes

Digital transformation in manufacturing has the potential to revolutionize operations. For example, real-time information can help monitor, resolve and even predict situations. One direct benefit is an optimized machine lifecycle, which keeps operations error-free and avoids costly rework and downtime.

More innovation

Innovation breeds innovation. A digital transformation strategy in manufacturing paves the way for a holistic approach to optimization. For example, deploying automated smart factory capabilities in an ERP can improve business performance and the supply chain.

Smarter outsourcing

By introducing remote monitoring, troubleshooting and proactive maintenance, combined with data at their fingertips, manufacturers can prevent downtime and eliminate the risk of rushed decisions when solving a problem.

Customer focus

Manufacturers can deliver more value to their customers by launching a B2B e-commerce platform with separate portals for regions, brands or customers. They can also use sales data to accurately predict customer demand cycles, and adjust their production accordingly.

How can a manufacturer prepare for digital transformation?

Suppliers and distributors are increasingly exposed to new technologies, and they expect no less from manufacturers.

To keep up with the expectations of its partners and customers, the manufacturing sector has no choice but to embrace smart manufacturing. Adopting digital transformation technologies allows companies to lower operating costs, deliver better customer service and make operations more efficient.

How can Synolia and OroCommerce help you on your digital transformation journey?

Today, companies rely on their own complex processes to attract customers, grow sales and maintain every type of business relationship: quotes, contracts and ordering functions. Synolia and Oro are ideally positioned to help companies harness the power of digitalization in manufacturing.

Want to know more about how we can support you? Explore our OroCommerce case studies in manufacturing, or get in touch with our team!

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In short, digital transformation in manufacturing unlocks many opportunities, including personalization, efficiency, agility and automation.

However, any company pursuing a digital transformation strategy must never lose sight of the context in which it operates. Manufacturers should always remember that while digital transformation is inevitable, it should not be seen as a fix for a single area of the business. Building a digital transformation roadmap for production should be treated as a global, ongoing process to reach the top of your market, and stay there!

Article written by our partner Oro Inc. and adapted by Synolia.