Digital Transformation for Small to Mid-Market Manufacturers and Supply Chains
Digital technology has transformed our economy
Every time you track a delivery, stream a movie or map your Uber driver, you are harnessing digital technology that was unimaginable 20 years ago. Digital transformation is revolutionizing nearly every industry — including small to mid-market manufacturers who are getting on board.
Four key technology drivers
Four technologies are driving digital transformation for manufacturers:
ONE: Real-time enterprise
Call centers, finance, supply chain, logistics, and manufacturing all need data to make in-the-moment decisions to operate successfully. Hour-to-hour and minute-to-minute, work orders, parts lists, shipping schedules, and invoices all flow from a stream of information as it updates the real-time enterprise.
The ability to capture data at the point of creation, analyze it and act on it creates a huge competitive differentiator in a fast-paced digital world.
TWO: Cloud, interconnectivity, and mobile
The mobile internet unleashed a second driver of change. Suddenly, nearly every aspect of our lives could be managed through apps. The combination of mobile bandwidth, cloud data, and interconnectivity among services put desktop power into our pockets. Coupled with the cloud, data processes are decoupled from corporate offices, desktops, or geographic locations.
THREE: Artificial Intelligence
Traditional data tools that were used to sort, calculate, and report suddenly had a new talent: Learning. Artificial intelligence has given our machines interpretive skills. AI lets applications accrue knowledge over time and robotics to do more than tightly programmed tasks.
FOUR: 3D Modeling/Additive Manufacturing
With traditional manufacturing, parts are machined from larger blocks of material — like a sculptor carving stone. In additive manufacturing, parts are made by digitally guiding layers of material to form the finished part. Digital designs now bypass traditional manufacturing processes and go straight into production from 3D digital models. Prototypes, small complex parts, and medical devices are among the applications.
The fourth Industrial Revolution is here
These four technology drivers have ushered in a Fourth Industrial Revolution (4IR).
The four Industrial Revolutions are characterized as:
-
- Steam & Water Wheels,
- Mass Production,
- Electronics and Computers.
- The Fourth Industrial Revolution has compressed our sense of time and space through Big Data.
4IR is reshaping how manufacturing and supply chains interconnect across industries and sectors.
At the core of 4IR is perfecting the digital experience.
The Millennial takeover
As the largest living generation, by 2025 Millennials will account for 75 percent of the American workforce and will assume leadership positions across all industries.
Born between 1981 and 1996, Millennials have witnessed tremendous technological change, from home computers, dial-up internet, the dot-com boom, to broadband, and now ubiquitous Wi-Fi. They feel at home with the Internet of Things, cloud computing, self-driving vehicles, smartphones, smart houses, and smart everything.
They are driving the experience economy. For example, they expect to order living room shutters from the manufacturer by viewing virtual shutters on their living room windows through augmented reality,
What does this mean for manufacturers?
The technology adoption curve describes how different people accept innovative products and technologies from innovators to laggards. Small to mid-market manufacturers are falling behind.
Smaller manufacturers did not choose to be laggards, but they often lack the in-house skills needed to compete in 4IR, including analytics, programming, and IT strategy. Many companies are running operational software without cloud connectivity. They likely run a mix of off-the-shelf software that results in gaps between systems, software silos, and business bottlenecks.
Small to mid-market manufacturers lack a CIO approach. Instead of a unifying IT strategy, multiple leadership teams approach problems tactically. Without a technology vision, digital transformation does not command a central, strategic role.
Software challenges for manufacturers
The small to mid-market sector can’t afford custom-tailored enterprise systems that mirror their business processes – often called a “digital twin” of their physical operations. Off-the-shelf ERP systems were never fully intended to meet the needs of manufacturers. For one thing, ERP systems are geared to general business and lack the flexibility to create a digital twin that can manage operations from end to end.
The workaround is to cobble a collection of spreadsheets, business software, and cloud-based apps into a functioning solution to run the business. “If it ain’t broke, don’t fix it” is a default response to the speed of change. Inevitably, these mix-and-match systems hit a wall from a lack of scalability, interconnectivity, and end-to-end visibility.
Digital transformation: Next Steps
Use technology to create a competitive advantage
- Example: Self-service customer service
Unify ERP, CRM, financial and operational systems
- Integrate multiple applications to function as an integrated business process platform
- Connect every person, system, and operational process
Eliminate business bottlenecks
- Give customers and vendors access to real-time accurate data
- Avoid errors in quoting and configuration
Establish a culture of continuous improvement
- Move from projects with deliverables to a culture of continuous improvement and iterations
- Create a business strategy that responds to ongoing change in the marketplace
The accelerating pace of digital transformation
Digital transformation has grown at a logarithmic pace since the first mobile phone in 1979. By the end of the 1980s, the World Wide Web emerged, and in 1999, the BlackBerry. Eight years later, in 2007, Steve Jobs kickstarted the digital transformation of our lives with the iPhone which moved us away from desktop computers to the mobile internet. Today, 85 percent of the world’s population has a smartphone – fully connected from Mongolia to the Saharan desert.
This wave of digital disruption reached its tipping point in 2017 when nearly every industry began to reshape its business model with new digital processes and products that could do more for less, faster.
Digital transformation has not slowed down. To remain competitive, small-to-medium manufacturers must realign their technology, business models, and company culture to remain relevant amid the pace of change.
Unify your ERP, CRM, financial and operational systems to function
as an integrated business process platform.
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