Industrial digitalization: The next frontier of manufacturing

Industrial digitalization: The next frontier of manufacturing

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November 9, 2022

Table of contents

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Industrial digitalization streamlines manufacturing processes with technology and earns the company high returns

Key takeaways:

  • Industrial digitalization transforms industry processes by integrating digital technology into the company’s existing workflow
  • Companies that spent a small amount on digitalization initiatives are closer to digital transformation and have earned high returns on their investments
  • Digital transformation impacts business processes, business models, industrial domains, as well as company and customer experiences

The manufacturing industry has undergone two major technological shifts since the late 1970s; Industry 3.0 (the process of automation using information systems such as computers), and post-2010 Industry 4.0 (the era of digitalization of manufacturing). While the former revolutionized industrial processes, the latter will change how large scale manufacturers operate internally and interact with customers.

The manufacturing industry has undergone two major technological shifts since the late 1970s; Industry 3.0 and post-2010 Industry 4.0

So, what is industrial digitalization?

Industrial digitalization involves using digital technologies like Artificial Intelligence (AI), Machine Learning (ML), Augmented Reality (AR), and more to streamline industry workflows across the board, from manufacturing to closing sales.

For manufacturers, this enables;

  • Real-time visibility of the production line with insights into inefficiencies
  • Automation of manual processes like documentation
  • Inventory management, maintaining material flow, and overstock reduction
  • Automatic, real-time data entry and data management

The PwC Digital Factory Transformation Survey from 2022 even showed that companies spending as little as 3% of their net revenue on digital solutions saw up to double-digit investment returns.

What are the main areas of digital transformation?

Areas of digital transformation

Digital transformation creates a lasting impact in 4 major areas for companies implementing it.

Firstly, digital transformation alters company processes. It automates routine manual tasks with AI and machine learning, reducing the number of workers and labor costs. Even a one-time investment in digital transformation improves the overall efficiency of processes.

For instance, integrating AR technology into warehousing can help companies predict the space required to store stock far better than manual processes. In 2020, retailers lost over $626 billion to overstocking. Had they digitalized their processes with the help of AR tech companies like Enhance, they could have easily avoided this loss to their bottom line.

Besides, when companies alter their processes through digital transformation, they also use their existing resources better.

With automation, workers are freed from the need to do repetitive, time-consuming tasks, freeing up time to engage in more productive activities that require human oversight. Alternatively, organizations could implement technology to take over new business operations. Either way, digital transformation allows organizations to adapt and innovate their existing business model to better allocate human resources.

Implementing new digital technology can also allow companies to expand into different industries. Take the case of Amazon. The company broadened its scope from a digital marketplace to a cloud computing service provider by investing in technologies like cloud servers. And it successfully garnered over $19.7 billion in the second quarter of 2022 alone. Few companies made the foray into digital transformation as early as Amazon, and fewer still have been as successful.

Digital transformation also impacts company culture. It integrates the available data, promotes transparency, and improves shareability. All of this allows employees to better understand the organization's working and upskill themselves.

How to start industrial digitalization?

Digital transformation of the manufacturing industry through industrial digitalization is the way ahead. Globally, industrial companies are already investing $1.1 trillion towards it. So, it only makes sense to learn how the process works;

  • Step 1: Focus on the data: Most companies store data in separate repositories to manage it better. Doing this reduces both shareability and transparency. So, before implementing industrial digitalization tech, organizations must make sure they break down such data silos. This way, they can quickly implement the technology after purchasing it.
  • Step 2: Optimize for quick returns on investment: Once companies invest in the tech, they can focus on implementing it. They should start using it in areas that will show quick results. This not only provides a quick win but also helps with employee buy-in.
  • Step 3: Build a roadmap: After the initial success of the new system, organizations should plan on how to integrate the technology into more areas of work. They can start by performing a gap analysis and building a roadmap. Then they can also survey employees or potential customers, understand their views on digitalization, and craft a plan that not only furthers the business but ensures the implementation passes without hurdles and with maximum buy-in.

How Howden improved their customer experience through industrial digitalization

Howden, an industrial solutions provider, wanted to provide their customers with a collaborative customer experience and increase the number of long-term service agreements (LTSAs). They also wanted their consumers to get a glimpse of the service process while providing insight into their equipment. So, they decided to implement AR tech into their buyer journey.

To help potential buyers understand the servicing process, Howden enlisted the services of a Mixed Reality (MR) service provider. They used IoT (Internet of Things) technology to deliver the experience to their customers.

The MR experience showed prospective consumers the equipment, its working, the operating conditions, and the performance of the equipment. It also showed them how to identify various parts of the device and solutions to simple repairs.

Buyers got a clear overview of Howden's products, thanks to immersive MR. And Howden's salespeople saved hundreds of hours explaining machinery repair to potential buyers.

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