Digital transformation has been a synonym for modernization across many industries for some time. And while the components are common knowledge, how these capabilities can be applied effectively to manufacturing operations is not as well known.
In this post, we will give you a high-level breakdown of what a manufacturing digital transformation entails, the value it provides, and how to use Hitachi Solutions’ capabilities to get there. Read on to take the first step toward your own digital “industrial revolution.”
What is Digital Transformation in Manufacturing?
Manufacturing digital transformation has evolved and taken on new titles, such Industry 4.0 and Smart Manufacturing. Regardless of the name, the concept is the same: according to Buzztify, “manufacturing digital transformation leverages a balanced combination of traditional manufacturing techniques and recent technologies such as the Industrial Internet of Things (IIoT), cloud computing, data analytics, and machine learning to create an end-to-end digital ecosystem by digitizing critical physical assets along the entire value chain.”
Understanding Industry 4.0 & Manufacturing Digital Transformation
Industry 4.0 and digital industrial or manufacturing transformation go hand-in-hand. Industry 4.0 refers to the fourth industrial revolution, which is largely fueled by digital technologies that enable widespread automation, and data analytics that pull information from the data being generated.
Using the same technologies and functions as manufacturing digital transformation — the Internet of Things (IoT), artificial intelligence, big data and analytics, cloud computing, cybersecurity, and simulations — Industry 4.0 is being applied to manufacturing in:
- The growth of automation and data technologies powered by the IoT, the cloud, advanced computers, robotics, and people.
- The seamless integration of software, equipment, and people that increases the speed, reliability, and flow of information between all systems of a manufacturer.
- The rise of the Product-as-a-Service (PaaS) business model, where manufacturers can achieve more stable profit margins and helpful insights by offering output- or outcome-based service packages.
Hitachi Solutions Digital Compass: The Tools for Manufacturing Digital Transformation
Digital transformation is no small undertaking, but with the right partner who has the experience and expertise, it can be made as painless and seamless as possible. At Hitachi Solutions, we have been helping organizations of all kinds complete their digital transformation in a way that fits their operation and their industry.
Digital Compass refers to the technology solutions required for a manufacturing digital transformation that help you transform your business into a truly data-driven operation. The Hitachi Solutions-powered manufacturing digital transformation is centered around six core innovation tracks: Information and Insights, Unified Business Operations, Differentiated Experiences, Organizational Productivity, Modern Infrastructure, and Enhanced Capabilities. When we use technology to optimize these six pillars, we can most effectively help manufacturers:
- Understand digital maturity and readiness
- Identify challenges and focus priorities
- Assess, strategize, and plan
- Rapidly execute with positive outcomes
Information and Insights: The core success in a manufacturing digital transformation is finding and using data in meaningful ways. To maximize information and insights, manufacturers need a scalable data solution that can adapt to their needs by providing managed and optimized resources, automatically scaling for data growth, delivering world class security to protect the data, and producing predictive analytics that deliver value. Success comes from implementing a modern data environment that can support and leverage machine learning, big data analytics, natural language processing, and other advanced capabilities.
Unified Business Operations: A modern manufacturing operation is connected and automated from top to bottom. Cutting edge CRM, ERP, and customer and field service programs enable the organization to optimize key functions using data to drive decision making. In a mature digital organization, these technologies will support the following:
- ERP: Handles finance, operations, project services, talent management, and point of sale and provides organizations the tools they need to connect and manage internal operations in a unified, integrated environment.
- CRM: Improves relationship management, centralizes customer data, acts on insights from the data, and provides more responsive and personalized marketing and customer service.
- Customer & Field Service: Provides personalized, proactive, and predictive experiences to elevate customer service, drive productivity for your customers’ operations, and improve loyalty.
Differentiated Experiences: The customer and user experience is critical in overall satisfaction and building sustained loyalty. With manufacturing digital transformation, businesses can utilize the latest technology to provide superior service and experiences for customers, distributors, suppliers, and employees. Deploying multiple digital touchpoints and self-service options using a consistent interface is key, delivering a superior level of experience to your customers and differentiating your brand from the competition.
Organizational Productivity: Employees have expectations when it comes to their own work experience. Creating a modern workplace means implementing technology to give your employees the tools they need to do their jobs and do them well. Connected environments, intelligent dashboards, and a unified digital experience allows employees to collaborate and communicate as efficiently as possible.
Modern Infrastructure: The power behind your Industry 4.0/manufacturing digital transformation is that these capabilities are all enabled through the Cloud. As you might guess, this calls for implementing a robust cloud infrastructure that is able to support and scale with you. Modernization replaces your legacy applications, data, and infrastructure with the cloud services that are secure, managed, and optimized for your needs.
Enhanced Capabilities: The technology associated with a modern manufacturing infrastructure will empower your development team to be more agile, productive, and innovative. Companies who build with the latest software development tools and techniques, manage their technology initiatives across functional teams, and create an agile environment achieve higher developer velocity and, ultimately, experience improved performance and market leadership.
Value of Manufacturing Digital Transformation
The value of transforming your manufacturing operations can be found in many places. Yes, you can and should expect a return on your investment, but to get a holistic picture of the value of digital transformation, ask yourself: “Why am I updating my operations?” Odds are there are many reasons and many stakeholders who will benefit — therein lies the value.
To understand the many ways a manufacturing operation benefits from digital transformation, it helps to understand how different groups will utilize these new technologies and enhanced capabilities.
Business Owners/Shareholders — Business owners see value in increased revenues, profits, and capital efficiency.
- Earnings growth: Directly influenced by improvements in day-to-day operations of a company, optimized using digital capabilities to increase efficiencies. Using advanced data analytics, manufacturers can identify areas where they can enhance value through improved operations, resulting in less waste and more earnings.
- Capital efficiency: Data from the manufacturing floor can also identify working capital opportunities. Manufacturers can more accurately predict demand and forecast upcoming production schedules, driving down inventories and making operations as efficient as possible.
Employees — Employee engagement drives the company’s success. When armed with the right digital tools, your employees will have everything they need to do their jobs well. When manufacturers invest in their operations, they are taking the steps necessary to keep employees engaged, motivated, and purpose driven. What’s more, when employees use programs that make their jobs easier, it also makes them more productive.
Customers — Digital transformation shouldn’t just improve your back-end operations; it can also revolutionize your customer service capabilities. This technology allows manufactures to provide the optimal customer experience, with improved communication, personalized offerings, and self-service capabilities. And with greater insight into customer behavior, manufacturers can continue to improve based on real customer opinions and feedback.
Product as a Service
Also known as servitization, PaaS is providing customers with options to purchase a desired result, rather than just a traditional physical product. While the “product” provided may require the use of a physical device, it could just as easily require access to an application or a cloud-based service.
Like other “as a service” models, the end user doesn’t necessarily “own” the actual product, but instead subscribes to the right to make use of it. Often this subscription model will include additional benefits, such as technical support and maintenance provided by the manufacturer. Customers may also choose to return the products after they’re finished, at which point the manufacturer could “rent” that product to another customer or repurpose it.
What makes PaaS possible is IoT technology that can be linked directly to the customer’s own systems. Low-cost sensors, embedded controllers, and wireless communication combine remote monitoring with data analysis to allow for features like predictive maintenance and real-time reports – benefits that can help reduce downtime and free up resources for customers.
Other customer benefits include:
- A shift from large capital expenses of product purchases into smaller operating expenses over time.
- A reduction of risk of product failure, as the manufacturer can take on the responsibility for maintenance.
- The capability to optimize the use of the product through detailed status reports.
- Ongoing support, including upgrades, which can quickly replace obsolete equipment.
For manufacturers, one of the main benefits comes from a long-term engagement with customers, which delivers a more consistent revenue stream, which in turn creates a more sustainable business model. Additional benefits for manufacturers include:
- Better insight into how products are being used, which can help manufacturers quickly address issue and more easily develop best practices.
- Automatic feedback on variables like product reliability and performance, which can provide guidance for potential updates or feature enhancements.
- The utilization of data analytics to measure performance metrics, delivering insights on what additional services could enhance customer value and provide new revenue opportunities.
Manufacturers that offer PaaS for their customers have more to consider than just product and plant efficiency – they’ll need to consider whether they’re providing differentiated services to their customers. While customer satisfaction was always a concern, now manufacturers need to consider how they can develop and utilize customer-facing metrics when they undertake their digital transformation.
Optimizing Digital Transformation & Smart Maintenance
The tools and tech that come with a digital transformation will undoubtedly help manufacturers automate, optimize, and maximize their operations. However, manufacturing only makes money when the machines are running. The biggest enemy of any manufacturing organization is unexpected downtime, but smart maintenance has made it possible to predict, plan for, and even avoid unexpected downtime.
The same connected systems that allow for automated operations— think IIoT —also empower manufacturers with the data needed for proactive maintenance and informed decisions around machine upgrades. According to Ali Aksut, the worldwide lead for Dynamics 365 supply chain and manufacturing at Microsoft, “Smart maintenance uses telemetry and sensor data from equipment to align and optimize maintenance schedules in conjunction with productions schedules….as a result, you don’t cause self-inflicted disruptions in your own supply chain, you minimize equipment downtime and maximize its availability, and you can ramp up production without any issues.”
In its application, smart maintenance leverages wireless IIoT devices with an end-to-end supply chain management application that uses artificial intelligence and machine learning to remotely monitor, analyze, and assess equipment performance. Using the data from these resources, manufacturers can proactively provide maintenance to machinery at the first sign of a problem and avoid downtime. This ultimately enhances equipment productivity, performance, and efficiency.
Smart maintenance, IIoT, and manufacturing digital transformation all start with the same things: an expert partner and industry-leading technology solutions. At Hitachi Solutions, we have been providing both to our manufacturing customers for years. We understand that digital transformation is never one-size-fits all, so we will take the time to learn about your organization and your people to ensure the smoothest transition possible. To learn more about manufacturing digital transformation, speak to the experts at Hitachi Solutions.