A Guide to Digital Transformation in Manufacturing

Written By: Will Hastings
  • 11/30/2021
  • Read Time : 4 min
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Digital Transformation (DX) is a broad business strategy, applicable across all industries, to solve traditional business challenges and create new disruptive opportunities using digital technology. Even within a single industry or a single company, these strategies can take very different forms depending on the functions being transformed and the challenges and opportunities being addressed.

Digital transformation in manufacturing is the application of technology to maximize revenue, reduce cost, improve quality, and increase flexibility. Use cases range from asset optimization to workforce productivity to speed to industrialization.

Why Manufacturers Need Digital Transformation

In order to remain competitive, digital transformation for manufacturers is a necessity. IDC predicts that in 2025 global DX spend among companies in discrete or process manufacturing industries will total more than $816 billion. Forrester Consulting found that more than 90% of manufacturing leaders believe that DX is important for their success. Clearly there is a lot at stake and developing a DX strategy is critical to capturing the most value.

The tremendous range of opportunities for digital transformation in manufacturing is both a blessing and a curse. On the one hand, for whatever challenges you may be facing there is likely a solution out there to address it. But manufacturers are never faced with just one challenge – if only things were that simple. Instead, manufacturers are faced with dozens of challenges, multiplied across product lines. A typical manufacturing organization may therefore have many DX initiatives running in parallel to address numerous challenges. Such initiatives are usually driven by a scattergun, technology-driven approach. Ultimately, this results in resources being misdirected and just a small set of initiatives driving true transformation. Instead, companies must employ a laser-focused approach, prescribed by PTC, that emphasize impact, speed, and scale.

Manufacturers that have successfully adopted DX strategies are simply more efficient than their competition. That efficiency may be generated by greater worker productivity, asset uptime, or better cross-organizational collaboration, or a myriad of other digital transformation opportunities. Ultimately, regardless of how efficiency is gained, it can be leveraged to increase revenue and/or reduce costs. These improved business level metrics in turn allow companies to be more agile in their markets, deliver better results to their customers, and garner more positive attention from investors.

For manufacturers looking to develop or to mature their digital transformation strategy, PTC has a simple yet effective three-part framework for delivering successful outcomes.

Achieving Transformation with Impact, Speed, and Scale

The first step is to remember that, regardless of the many different challenges you may face and the many different solutions on the market, there are fundamentally four objectives for manufacturers that haven’t changed – maximize revenue, reduce cost, improve quality, and increase flexibility. With those objectives firmly in mind, repeat after me: Impact, speed, scale. These are the three key success factors for delivering transformational outcomes and must be tied to at least one of the objectives. Here’s how:

Impact – Focus your resources on the most important constraints to drive P&L. Based on the dynamics of your industry and strategic roadmap, determine which of the fundamental goals – revenue, cost, quality, or flexibility, are most important to improve upon. Identify opportunities that are most likely to impact these goals in order of their criticality to your business.

Speed – With impactful opportunities identified, your attention should turn to speed and scale. Concerning speed, quick wins can make or break a good initiative by building positive momentum early on. A quick win will generate team buy-in and can be leveraged for greater executive support. This rapid time to initial value is best achieved with proven off-the-shelf solutions.

Scale – Although the final part of this trifecta, scalability must be considered early on. No initiative should take place that doesn’t have a comprehensive and actionable scaling plan. If a project is slow to scale it is more likely to lose support and die on the vine. If it cannot scale, then it is by definition not delivering transformational value. The most reliable way to build a scalable plan is to model it after approaches that have already proven to be successful. The key here is finding repeatable use cases, that check off the high impact requirement, and can be deployed with off-the-shelf solutions. It’s all coming together.

Final Thoughts

A recent PTC survey found that there is a stark difference between the companies that succeed in digital transformation and those that do not. Companies that meet ROI goals expectations, beat them by an average of 50 percent; those that fail, miss expectations by an average of 30%.

This insight underscores the requirement for not just digital transformation, but strategic digital transformation for manufacturing organizations. Our Impact, Speed, and Value framework helps guide your digital transformation efforts, allowing your organization to create a foundation on which to build digital transformation success.

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Tags:
  • Industrial Internet of Things
  • ThingWorx
  • Vuforia
  • Windchill
  • Industrial Equipment
  • Digital Transformation
  • Industry 4

About the Author

Will Hastings

Will Hastings is a research analyst manager on PTC’s Corporate Marketing team providing thought leadership on technologies, trends, markets, and other topics. Previously Will was a senior analyst for ARC Advisory Group, where he conducted PLM and additive manufacturing research. Prior to ARC Advisory Group, Will was a lead mechanical design engineer for product development programs at Sensata Technologies.