Manufacturing is on the verge of a Fourth Industrial Revolution. Digital tech adoption has soared in the past few years. Still, while many businesses have heard that digital transformation in manufacturing is important, the reasons can get lost in the noise.

Digital transformation has become a buzzword in many circles, making it difficult to separate hype from reality. However, many tangible benefits of digital transformation exist in the industry, and before long, those that don’t capitalize on them may fall behind. Understanding this movement and what it offers is crucial for future success.

What is Digital Transformation in Manufacturing?

It helps first to understand what exactly digital transformation in manufacturing means. At its most general level, it uses digital technologies to change and improve processes, cultures, and experiences. It goes beyond adopting a few digital tools to apply new tech across the entire organization, often reimagining how you approach a problem or workflow.

This typically involves the Internet of Things (IoT), automation, and data analytics in manufacturing. These technologies are popular too, with 79% of global manufacturers implementing advanced analytics and 73% rolling out IoT systems as of late 2020. Edge computing, 3D printing, 5G networks, and blockchain also drive digital transformation.

Full transformation reshapes workflows and strategies around these technologies instead of simply adding them to older processes. This transition will take time and a considerable investment, but it can yield impressive results.

Benefits of Digital Transformation

Many manufacturers have heard that digital transformation can benefit them, but exactly how may be less clear. With that in mind, here’s a closer look at five of the leading benefits of digital transformation.

1. Higher Productivity

The most straightforward advantage of digital transformation in manufacturing is higher productivity. Manufacturing involves many repetitive processes, which humans aren’t well-suited for, as they get distracted and bored, leading to errors and poor efficiency. Automated systems, by contrast, excel in these roles.

Many manufacturers already use automation to improve production line efficiency, but digital transformation also extends these benefits to office work. Studies show that 76% of office employees spend up to three hours a day on data entry, and 83% spend the same amount fixing errors. Consequently, automating these tasks through robotic process automation (RPA) can result in considerable time savings.

Employees can focus more on value-adding work as RPA and similar technologies automate back-office tasks. These gains, coupled with physical automation on the production floor, substantially improve overall productivity.

2. Lower Operating Costs

Digital transformation can also lower ongoing expenses. Automation will naturally reduce costs through higher productivity, but IoT is one of the most impactful technologies in this area.

IoT sensors can monitor machine health indicators in real-time, alerting workers when they predict that they’ll need maintenance. You can then tend to the equipment before larger issues develop, simultaneously preventing costly breakdowns and unnecessary scheduled upkeep stops. These predictive maintenance approaches can save 30%-40% over reactive methods.

Similarly, IoT devices like smart thermostats can adjust operations according to real-time data analytics to use as little energy as possible. These differences may appear marginal initially, but they’ll amount to considerable savings. You can also look at data usage trends to see which areas waste the most, informing improvements.

3. Resolved Labor Challenges

Another benefit of digital transformation is how it mitigates ongoing labor shortages. Experts predict that current challenges may leave 2.1 million manufacturing jobs unfilled between now and 2030. Embracing digital tools can help offset this.

Automation on factory floors and in the office reduces manual workloads, making it easier to remain productive despite smaller workforces. IoT connectivity takes things further, letting robots communicate with one another. These machines can then adapt to developing situations in other parts of the workflow, achieving similar flexibility to more manual environments.

Digital transformation could also help attract and retain new talent. RPA tools could parse job sites, applications, and resumes to find and recommend ideal candidates. Similar software could then automate parts of the onboarding process, helping get new hires up to speed faster while reducing training and HR workloads.

4. Resilient Supply Chains

Supply chain resilience is another leading concern that digital transformation in manufacturing addresses. Flexibility requires visibility, and digital solutions are key to achieving the transparency necessary.

Implementing IoT tracking solutions across the supply chain is the first step. These devices provide real-time updates on product or part locations, conditions, and other factors. You can then run this information through predictive analytics engines that determine when and where disruptions may arise, informing quick, effective reactions.

Cloud data platforms and communication tools will help keep all parties on the same page. Using all these tools together will make it far easier to see and react to potential disruptions, mitigating shortages and delays. This visibility also helps identify and stop supply chain theft, which costs $30 billion in lost revenue annually.

5. Ongoing Improvements

Embracing digital transformation will enable ongoing improvements. There is always room to get better, and the insight you gain from digital tools can help you recognize and address those areas.

IoT devices will provide enough data over time to establish benchmarking goals or identify common disruptions or inefficiencies. Digital twins of the facility can simulate how various changes would affect workflows, highlighting which approaches are best. Alternatively, predictive analytics could recommend changes.

You can monitor IoT data to monitor the changes’ impact. You can then either make similar upgrades elsewhere to expand on the improvements or try another strategy if they fall short of expectations. Digital data platforms can help streamline this decision-making process by keeping relevant information in one place.

Digital Transformation is Critical for Manufacturers Today

These five areas aren’t the only benefits of digital transformation, but they’re enough to make it a worthwhile investment for any manufacturer. It’ll become increasingly crucial to make the shift as more companies recognize these advantages and embrace the technology. Before long, digital transformation will be a necessity if manufacturers hope to remain competitive in the industry. Recognizing these benefits and acting on them early can help you excel now and in the future.