In the business context, transformation refers to a significant change or shift in how a company operates or delivers value to its customers.

The term “digital transformation” refers to using technology to change the business model fundamentally. It is not just about implementing new technology but rather about rethinking and redefining the business to take full advantage of the opportunities presented by digital technologies.

The role of digital transformation in manufacturing operations

In manufacturing specifically, digital transformation is not just about automating the factory floor with robotics, but optimizing the entire supply chain, improving product development, and creating a more responsive and personalized customer experience. It’s a holistic approach encompassing people, processes, and technologies to fundamentally change the way the manufacturing organization operates. It requires a deep understanding of the technologies that are available and how they can be used to achieve specific business goals.

Technology can be the driving force behind digital transformations, but it’s the business transformation that ultimately delivers value.

Indeed, it can be argued that digital transformation is more of a business transformation powered by technology. But the expression has come to stay, and what is relevant is how companies act upon it.

What should be the tactics companies should follow to adopt technology?

Ultimately, the best approach will depend on the company’s specific circumstances, goals, and risk appetite. However, there are some general principles that can guide the process.

The iterative approach

A conservative approach, also known as an iterative approach, typically involves starting with a small pilot project to test a technology before committing to a larger implementation. It allows companies to gain experience and build internal expertise before making a larger investment.

An iterative approach can also be useful for projects where there is uncertainty about the ROI of a technology or how it will fit into the existing operations. By starting small and measuring the results, companies can gain a better understanding of the benefits and costs of the technology and make more informed decisions about future investments.

This approach allows for a gradual adaptation, but it may take longer to see the benefits, and the impact may not be as significant. On top of that, there is a high risk of creating technology silos.

The disruptive approach

A more disruptive approach, on the other hand, involves taking a bolder stance, and implementing technology at a large scale, potentially overhauling the entire business process. This approach is more suitable for companies that are looking to gain a competitive edge by using technology. It’s more of a “big bang” approach, and it’s more likely to require more resources and a more significant change management effort.

The balanced approach

Several industry experts argue that the best option is a balanced approach, combining both. By designing a disruptive vision for the business and value chain powered by technology, companies can build a long-term roadmap for implementing the changes in waves and, therefore, adopt an iterative approach in the short term.

What is currently driving digital transformation and what will be driving it in the future?

The last years of the manufacturing industry indicate that the most common drivers for undergoing digital transformation are:

The increasing availability and affordability of digital technologies

As digital technologies such as cloud computing, artificial intelligence, and the Internet of Things (IoT) become more widely available and affordable, more organizations are adopting them, and this may happen within a digital transformation program or single projects.

The growing importance of customer experience

As customers become increasingly digitally savvy, organizations are using digital technologies to improve the customer experience and stay competitive. This may involve the use of online stores, mobile apps, personalized recommendations, online tracking, etc.

The pressure to reduce costs

Digital technologies can help organizations to streamline processes and reduce costs, making digital transformation an attractive option for businesses looking to improve their bottom line.

The continued development and adoption of new technologies

As new technologies such as quantum computing and 5G become more widely available, they are likely to drive further digital transformation.

The increasing importance of data

As the amount of data generated continues to grow, organizations will need to adopt digital technologies to effectively manage and analyze that data.

The growing importance of sustainability

As consumers and regulators place a greater emphasis on environmentally friendly practices, organizations are likely to use digital technologies to improve sustainability and reduce their environmental impact.

Will automation and digital takeover jobs?

Automation and digital technologies have the potential to significantly impact the workforce in the manufacturing industry. Automation and advanced technologies can increase efficiency and productivity and lead to cost savings for companies. But it also brings the concern of job displacement.

However, it’s important to note that automation and digital technologies are not necessarily going to “take over” jobs but rather change the nature of work and how it’s performed.

For example, automation can help to reduce the need for human workers in certain repetitive or dangerous tasks, but it’s worth noting that humans will still play an important role in the manufacturing process. Humans bring a level of flexibility, creativity, problem-solving, and decision-making capabilities that technology can’t replicate yet. Furthermore, for tasks that require a level of dexterity, or tasks where decisions need to be made on the spot, human cognition and judgment are still needed. Companies and workers must embrace the change and upskill themselves to stay relevant in the industry.

Are lean and KAIZEN™ methodologies going to be replaced by digital technologies?

Lean manufacturing is a set of principles and techniques that focus on minimizing waste and maximizing efficiency in manufacturing operations. KAIZEN™, as a broader concept, meaning change for the better, is a proven approach to creating continuous improvement every day in all areas of an organization, and with the involvement of everyone. These concepts are timeless and broad enough to fit different contexts, so they are impossible to replace.

The role of technology in implementing lean principles

Technology can play a key role in the implementation of lean principles, but it’s not the driver of the improvements, it’s the people and the culture of the organization.

It is in this context that we talk about Smart Operations, which is the convergence between the 4th Industrial Revolution and the operational excellence of the Toyota Production System, just-in-time lean.

It turns out that nowadays, the most evolved companies look at this as a system of layers. The 1st layer is the company’s culture, the culture of continuous improvement, teams with a problem-solving mindset, and leadership following a structured strategy planning and execution process.

Then in a layer, let’s say of evolution, of sophistication, we have the architecture of the processes. The process architecture is based on the Toyota Production System. Therefore, in an end-to-end transformation of the supply chain, and not just production, from the customer’s order to the supplier delivering it to the factory and the factory delivering it to the customer.

On top of this layer, we have flexible automation. Once we have a good architecture, we can start thinking about AGVs, collaborative robots, drones, RPAs, etc.

The next layer of digital transformation is connectivity. At this point, companies connect the shop floor to the Internet with smart sensorization. This is where the great evolution is lying, the ability to capture and store an infinitely greater volume of data.

In the last layer, we have Artificial Intelligence, the ability to analyze this data, generate insights, and make more effective decisions using advanced analytics techniques.

Will the adoption of digital in industrial operations be an enabler for the next leap in competitiveness?

The adoption of digital technologies is, for sure, an enabler for the next leap in competitiveness for manufacturers, but it’s a multifaceted approach involving technology, people, processes, and culture. It requires a holistic approach and a clear strategy to fully realize the potential and achieve the desired level of competitiveness in the digital era.