Digital transformation is forcing companies to change their business models and adapt to the new market reality. What’s interesting about this is that it’s not the companies that are driving this change. Instead, this change is being driven by the customer.
Today, customers expect to do what they’re doing anytime, anywhere and in the format and on the device of their choosing. In order to keep up with this new kind of “always-connected” customer, your business must embrace technology to deliver an unmatched customer experience.
Buyer expectations and the advent of digital, connected devices and platforms are driving digital transformation in manufacturing. Now, manufacturing companies are being forced to move from mass production to customised production. As a result, manufacturers are pressured to create innovative, digitally enabled products with value-added services that deliver top-line revenue growth and bottom line cost savings.
While the majority of manufacturing companies acknowledge the importance of this transformation, only 5% of them are satisfied with their current digital strategies. The industry continues to evolve in response to the challenge of ensuring the right products are delivered at the right price to the right person.
For the purposes of this blog:
- the Third Industrial Revolution was 1970s to today – Electronics and IT led to greater automation.
- Industry 4.0 is today and into the near future – Sensor technology, interconnectivity and data analysis allow mass customisation, integration of value chains and greater efficiency.
What does this mean for my manufacturing business?
There is little doubt that UK manufacturing is under pressure to remain competitive.
We have to accept that the trend is towards greater integration of systems and processes, greater automation, and faster, more flexible working – it is the time frame for these changes that is the real debate. We must also accept that the take up of these new technologies will not be uniform, not least because new technologies tend to start off very expensive, and the preserve of the larger, well-resourced organisations.
Industry 4.0 will not only impact upon the business operation, it will impact on all areas of the business, finance included. As the operation moves towards greater flexibility, more rapid response times, shorter lead times, real-time monitoring, and increasing automation, it will not be acceptable to be producing accounts mid-way through the following accounting period, because by then it will be ‘ancient history’.
Traditional systems will not cope with the pace of change in the organisation, as separate databases and spreadsheets for capacity planning, material requirements planning, and inventory control, will leave the organisation in the slow lane, and about to be overtaken by faster, more efficient competitors.
In order for small firms to stay competitive in the face of these changes, integration of systems will be vital in order to provide accurate and, more importantly, instant data to react faster and more effectively to change. Manufacturers need to leave behind the practices and methods that defined the ‘Third Industrial Revolution’ and move towards a modern, responsive, and fully integrated system where cloud technologies and instant reporting can offer competitive advantage in a rapidly changing world.
Better Demand Planning
Manufacturing companies need to maintain the right balance of supply and demand to meet the needs of their customers on a daily basis, as well as being prepared for seasonal surges. The goal is to prevent out-of-stocks due to brisk sales and targeted promotions.
In the digital economy, there will be an opportunity of having the right tools. Predicting demand is about making the right choices, and that includes tools, processes, and partners. To succeed, companies need the right tools. With what tools are capable of today, companies are breaking free from the traditional time-series methods that have held back industry in recent years – paving the way for better planning, better cash flow and return on capital with less unnecessary inventory.
Manufacturers being disruptive
Have you heard of Uber or Netflix? These businesses were disruptive in their industry.
For manufacturers to find new ways to increase profitability they must become disruptive.
Disruption may seem like a negative term, but disruptive innovation is any constructive change that creates a new way of doing things and replaces the previous approach with an often groundbreaking, improved model. As data connectivity remains effective and efficient, the internet continues to disrupt the manufacturing industry by replacing old methods with improved efficiencies.
Blueprint for digital success
To move forward with Industry 4.0, acquiring and rolling out digital capabilities across your company is all-important. This process takes time, so in order to gain or retain first-mover advantage over your competitors, you will need top management commitment and significant implementation investments.
Industry 4.0 will be a massive opportunity for companies that fully understand what it means for how they do business.