We’re living through an age of continuing complexity in manufacturing. Customers are demanding smarter, configurable products and manufacturers are scrambling to introduce the intelligent production environments required to manufacture them.
Digital manufacturing–and the transformation culture required to benefit from it–is the only path through this new business landscape.
For digital leaders, digital manufacturing promises fully automated production, greater resilience in the face of global shocks, and a stake in digital supply networks. For slow-movers, it spells digital obsolescence as they fall behind an advancing pack of competitors and new entrants.
Here’s what you’ll find in this article:
- How Digital Manufacturing Solves For Manufacturing Complexity
- What Is Digital Manufacturing?
- 7 Factors Driving Complexity In Manufacturing (And How Digital Manufacturing Can Help)
- How to Navigate Unprecedented Complexity with a Digital Transformation
How Digital Manufacturing Solves For Manufacturing Complexity
Manufacturers are facing unprecedented complexity and must embrace digital manufacturing to evolve. Companies mired in legacy infrastructure with data scattered throughout the value chain are falling further behind competitors that have access to the transparent, concise, networked data required to make faster, better decisions.
Increased complexity is widening the “innovation gap” between companies that have embraced digital manufacturing and those taking a wait-and-see approach. The more slowly manufacturers respond to the digital disruption surrounding them, the harder it will be–and the more money they will have to invest–to catch up. That is if they haven’t run out of time already.
What Is Digital Manufacturing?
Digital manufacturing is an integrated approach to manufacturing centered around computer systems. It impacts every aspect of manufacturing, from services and supply chains to products and processes.
Digital manufacturing involves the application of digital technologies such as the Internet of Things (IoT), advanced robotics, and the analytics of big data. In simple terms, digital manufacturing is focused on using data collection and automation to supercharge manufacturing efficiency and output, resulting in increased product margins and revenue.
Digital manufacturing can be broken down into three main areas:
i) The Product Lifecycle: The product lifecycle, from engineering design to sourcing, production, and service, is augmented and connected via a digital thread (a stream of data that flows bidirectionally through each stage). Executives can connect to the digital thread to view and manage the entire product lifecycle from a single dashboard.
ii) The Smart Factory: Smart factories are intelligent and automated, reducing staffing costs and downtime. They use smart machines and sensors that self-monitor, analyze, optimize, diagnose, and solve problems automatically (predictive maintenance) without the need for human intervention. Assets can be fixed and replaced just before they fail, lowering costs and eliminating downtime.
iii) Value Chain Management: The application of digital technologies and big data analytics to automate, analyze, improve, and ultimately add greater value to the products sold to customers. Digital manufacturing gives manufacturers a competitive edge that increases sales. According to research from Deloitte, digitally mature companies are about three times more likely than lower-maturity companies to report annual net revenue growth and net profit margins.
Don’t forget: Although computer systems lie at the heart of digital manufacturing, successful digital manufacturing projects focus on business problems rather than technologies themselves. In the words of Rehana Khanam: “The key question is not “how can we use this new technology?”, but “how can we create additional value?”.
7 Factors Driving Complexity In Manufacturing (And How Digital Manufacturing Can Help)
We’ve identified seven factors driving complexity across manufacturing industries and contributing to the “innovation gap” between digitally mature and immature businesses. For each, we suggest how digital manufacturing can help overcome these challenges.
1. New Customer Expectations
Customers want to buy smarter, connected, sustainable products and services with functionality driven by software. What’s more, they expect products to be tailored to their needs, produced in small batch sizes and shipped more-or-less immediately.
Making and delivering defect-free products on time is no longer enough. Customers are spoilt for choice when it comes to suppliers, and only manufacturers that undergo extensive digital transformation can meet their demands.
Digital manufacturing supports flexible manufacturing processes that conform to changing customer preferences. Manufacturers can use big data analytics to see the world through the lens of the customer and tweak their products and buying experiences accordingly. Meanwhile, technologies like 3D product configuration and additive manufacturing enable customization at scale with reduced engineering and development time.
2. Accelerating Technological Change and AI
With its ability to ingest data and apply it to algorithms that optimize operations, artificial intelligence might be the single most significant technology revolution of our times. The Stanford Artificial Intelligence Laboratory Director, Andrew Ng, calls AI “the new electricity”–such is its transformative potential.
We’re at the precipice of an AI paradigm shift. Companies that are quick to embrace digital manufacturing are leading the industry in sales and profitability. Companies slow to embrace digital manufacturing will no longer be able to compete. Advanced analytics tools for processing and analyzing big manufacturing data provide a massive competitive advantage in efficiency, product quality, and customer experience.
3. Increased Global Competition
Global access to advanced technologies has removed the barriers that once prevented new entrants from competing with their mature counterparts. Today, a company in Mumbai or Beijing can enter a technical product market, compete, and win market share in a fraction of the time it would have taken in the 2000s.
It’s hard to stand out from the crowd in competitive industries where multiple manufacturers are selling the same product. One answer is to focus on intelligent deliverables.
Digital manufacturing lets companies differentiate their products by offering features like integrated predictive maintenance and advanced analytics tools, helping to support their customer’s own digital objectives.
4. Increased Regulatory Oversight
Digital manufacturing has reshaped distribution at a time when regulators are adopting more innovative, leaner ways of monitoring and enforcing regulations on manufacturing and logistics. Operating globally means juggling regulatory oversight in multiple countries, compounding the complexity.
On the one hand, digital manufacturing introduces regulatory challenges, but on the other, it helps manufacturers climb the mountain of compliance as they expand into new regulated markets. Advanced analytics and machine learning help institutions detect conduct risk by gathering and analyzing data from diverse sources and preventing breaches ahead of time.
5. Digital Supply Networks
Traditional, linear supply chains are steadily breaking down into dynamic networks that provide unprecedented speed, flexibility, accuracy, and efficiency. Imagine providing customers with multiple “logistics menus” and letting them design their own customized experiences. Well, that’s already happening.
Digital supply networks are “always-on,” visible, and self-optimizing. Whether an OEM, a partner, or a Tier-N supplier, digital manufacturing means having a stake in digital networks that provide faster ramp-up to production, reduced time to market, and better adaptation to global and local market changes.
75% of companies have adopted productivity-enhancing technologies since the start of the pandemic. Remote working, remote sales transactions, and online purchasing have forced the rapid adoption of advanced technologies in operations, collaboration, and decision-making.
Manufacturers that embrace digital manufacturing and transformation are infinitely more flexible. They can introduce new software solutions and make quick changes to production processes, equipment, and suppliers that make them resilient against future economic shocks.
Criminals are taking advantage of digital adoption and changes to our online behavior to carry out espionage, data theft, ransomware attacks, and industrial sabotage. Cybercrime is the greatest threat to business continuity of our time.
Digital manufacturing has played a role in magnifying cybercrime risk, but it’s the only way to shore up our cyber defenses. Manufacturers that transition to the cloud can “outsource” responsibility for cybersecurity to SaaS companies that eat, sleep, and breathe network security.
How to Navigate Unprecedented Complexity with a Digital Transformation
What is digital manufacturing? It’s a digital approach to manufacturing that drives agility and innovation in the face of mounting complexity and change.
New digital technologies like the IoT, big data, and AI supercharge manufacturing efficiency by removing non-value-added activities and automating time-consuming, labor-intensive tasks.
Digital manufacturing enables manufacturers to deliver innovative products in innovative ways by leveraging digital value chains that slow-moving traditional manufacturers can’t access. That’s why companies leading with digital transformation are seeing nearly twice the revenue growth of digital laggards.