What the “Digital Transformation” Means for Manufacturers

The manufacturing industry’s digital transformation has many names. Some call it a revolution. Others, Industry 4.0. My personal favorite? The

4 min. read

The manufacturing industry’s digital transformation has many names. Some call it a revolution. Others, Industry 4.0. My personal favorite? The smart factory. No matter how you brand the idea, though, the question stays the same: What are we talking about, exactly?

In the broadest sense, manufacturing’s digital transformation refers to the adoption and integration of new technologies to increase efficiency, drive growth and open new sources of revenue. From shop-floor operations to front-office systems, it’s an aging industry’s rebirth in the modern era.

More practically speaking, it all boils down to data: Gathering it in new ways, analyzing it, sharing it. As McKinsey points out, “manufacturing generates more data than any other sector of the economy, [yet] few companies are harnessing it.” Meanwhile, other industries are collecting as much information as they can in an effort to constantly innovate. It’s time for manufacturers to catch up and take advantage of newly available opportunities — a few of which we’ve outlined below.

3 opportunities created by the manufacturing industry’s digital transformation:

#1: The Internet of Things

What kinds of objects produce collectable data? If you were to close your eyes and picture your answer, you’d probably see a laptop, a phone, maybe a tablet. We take it for granted that developers gather information about how we use their products to source new ideas and make improvements to existing ones.

As the Internet of Things continues to expand, however, the list of data-generating objects grows longer. Today, everything from your car to your refrigerator collects data and sends it back to its maker, thanks to smart sensors. For manufacturers, this is an absolutely enormous development.

Why? First off, it means those in charge of the shop floor can better monitor the company’s own machinery and anticipate costly malfunctions before they happen. Of equal or greater importance, however, is the ability to monitor the very goods you sell. If you’re able to immediately notify a customer of a maintenance issue before a costly breakdown occurs, you’ll save them an immense amount of time and money — and that’s the kind of world-class service that earns repeat business.

Of course, this ability to monitor performance also creates the chance for a new revenue stream: If you know exactly when one of your products needs repairing, who better to repair it than your company? Obviously, there’s a significant investment involved in hiring and training an entire service crew, but the results could be worth it.


#2: Customer Interactions

Manufacturing isn’t usually thought of as the most customization-friendly industry. Factories produce a smaller number of uniform products or parts at scale, and that’s just the way it is. Right?

Anymore, that’s not so true. Better data leads to sharper insights, which in turn pave the way for greater efficiencies. An optimized shop floor is capable of making a more diverse range of products. Of course, without better ways to interact with customers, you can’t be sure that diversity will translate to sales growth. That’s why technologies that enable and capture those interactions are so important.

Social media, marketing automation, customer support software — each of these can give you visibility into what customers actually want. Through social media, they can simply tell you what it is they’re looking for. With marketing automation, you can see what kinds of content they do and don’t respond to. And with customer support software, you can see where their greatest issues lie. The information you gather through channels like these can save your company from whiffing on a key market demand and at the same time prevent you from overproducing a particular product iteration.

#3: Data-Driven Decision Making

If the previous sections didn’t hint at it strongly enough, I’ll just say it: The right data is the most effective element in executive-level decision making. Without it, how can you even guess which way to pivot your business? And yes, for many, a pivot is necessary: Since 1990, smaller and mid-sized manufacturing firms have suffered through negative growth.

Integrated CRM and ERP systems give you access to comprehensive cross-functional data that’s easy to manipulate and draw conclusions from. Need a report breaking down closed-won opportunities by sales channel? You got it. A dashboard showing sales figures or available materials for different products? Easily customizable. Most importantly, you can track metrics like these over time and use what you learn to make necessary decisions. If a particular sales channel consistently underperforms, for instance, you can feel confident in your choice to cut it from your business plan.

Without the platforms that provide this kind of data, you’re left making pivotal moves at least partially in the dark — not an ideal situation.

If you’d like to learn more about the possibilities of manufacturing’s digital future, let us know. We’d love to talk through some ways technology could help modernize your company and drive new growth.