In today’s increasingly digital world, businesses of all shapes and sizes have felt compelled to investigate new technologies to stay ahead and catch up with competitors. Successful transformations lead to higher profits, faster processes, and happier clients.
What is digital transformation in manufacturing and distribution?
Digital transformation in manufacturing is a business strategy that uses digital technologies to shift how business processes are handled. This development approach allows for the creation of new business models and opportunities.
Why does digital transformation matter?
Digital transformation is changing the nature of the manufacturing industry at a rapid pace. Any business that delays its digital transformation journey is bound to fall into obsolescence quickly.
Digital technologies have been specifically designed to improve the way tasks are handled. For example, a cloud-based EDI solution can attain 24/7 visibility on transactions from any place with an Internet connection. Artificial intelligence capacities such as machine learning and automation change how data is transferred, searched and archived.
The need for digital transformation in manufacturing and distribution
Digital transformation is much more than a business strategy. It has become an indispensable requirement to keep up with the competition in the digital age. A company that doesn’t take digital transformation trends seriously is fighting an uphill battle against all the other businesses that do. In today’s global markets, achieving digital transformation success is the most efficient way to stay competitive.
The impact of digital transformation on manufacturing
To gauge the impact of digital transformation in manufacturing, one must consider the potential benefits of digital transformation initiatives. Successful digital transformations can improve productivity, safety, efficiency, revenue, and sustainability.
A company with a solid digital transformation strategy can fulfill customer expectations by reducing costs and improving customer reach. Digital technologies help satisfy customer demand more accurately and help businesses be more precise with their operations.
For example, a digital transformation effort can lead to a company being able to purchase raw materials or stock automatically when it needs to and thus simplify supply chain operations. Instead of sitting around in storage, inventory can rapidly travel from manufacturing to customers’ hands.
Examples of manufacturing digitalization in 2023
IoT sensors
Industrial IoT sensors are capable of measuring and monitoring production line processes. These devices can be used in manufacturing plants to guarantee the safety of the workforce as well as the good standing of machinery. An IoT sensor will communicate to maintenance staff whenever a piece of equipment needs repair, keeping the production process safe and efficient.
The information made available by IoT sensors includes:
- The amount of oxygen in an area
- The temperature of an object or process
- The changes in humidity and air pressure
- The energy consumption
Big Data
Big data and analytics are game changers for improving customer service, inventory management, and product development. The accurate gathering and analysis of data allow companies to identify trends in their business operations. This way, corrective or supportive action can be taken exactly when it is more advantageous.
Artificial intelligence, automation, and machine learning
For manufacturing companies, artificial intelligence means an overall productivity improvement. Smart systems can take care of many mundane and repetitive processes that would otherwise require valuable time and manpower. AI is capable of taking care of repetitive tasks without constant supervision and safeguards these operations from human error. AI can keep a constant eye on quality control and reduces waste.
Specialized business operation management tools
Digital processes such as cloud-based enterprise resource planning (ERP) empower businesses with various management tools. A manufacturing leader who supplies their workforce with ERP systems makes it easier for employees to collaborate on projects.
Moreover, employees can access data relevant to their tasks when they are not at their desks. For instance, a maintenance team can take to the field knowing the information they need to make repairs will be readily available on location.
With an ERP platform, inventory can be tracked in real-time. This means that a business can always re-stock when it needs to. In addition, information on current stock levels can be better communicated to customers and partners, making it easier for them to purchase when inventory becomes available.
Additive manufacturing
Also known as additive layer manufacturing or 3D printing, additive manufacturing is a computer-controlled process designed to create three-dimensional objects in layers. It is one of the most transformative technologies in recent years, allowing companies to innovate in previously unattainable ways. 3D printing takes digital data designed on a computer and converts it into a real-life object. It can also be used to create the parts that make up a product.
Predictive maintenance
Predictive maintenance monitors equipment and machinery for any signs of decay. When implemented, the system will notify users whenever parts need to be replaced or if the equipment is at risk of breaking down.
This methodology can also provide valuable insights that can increase operational efficiency during strategic decision-making. A digital transformation project focused on predictive maintenance is crucial in various industries, such as the automotive, oil, gas, construction, and pharmaceutical industries.
Augmented reality (AR) and virtual reality (VR)
While VR and AR are commonly used interchangeably, they refer to different technologies. Augmented reality (AR) uses computer-generated information to enhance a user’s surroundings, while virtual reality (VR) refers to 100% virtual environments accessed through technology.
Implementing AR and VR into company processes can help workers complete their daily activities more efficiently. For example, instructions for tasks can be delivered straight to mobile devices, and camera features can be used in tandem with AI to provide workers with real-time information about the task at hand.
Digital transformation topics to consider in 2023 for manufacturing and distribution companies
Centralizing your data
Choosing the right system
While an MRP (Manufacturing Requirements Planning) system can serve as an excellent start to solve inefficient inventory management, it offers limited abilities as it mainly focuses on helping you ensure the availability of raw materials.
With an ERP (Enterprise Resource Planning) system, manufacturing and distribution companies can still use the features of an MRP but in the form of a module. So, instead of working in a standalone system, you will be working in an integrated system, where more users can efficiently perform their tasks and collaborate.
In 2018, 95% of businesses found that ERP implementation led to business process improvement. With careful planning and a trusting provider, an ERP implementation can reduce inefficiencies that cost your organization a lot of money and save you time by providing more accurate data, increased visibility, and customization opportunities. Your ERP system can grow with you as your business grows and meet the need for faster, reliable data exchange.
Cloud vs. on-premise
With many companies migrating to the cloud, you might wonder if it’s the right move for you too. Cloud is great for scaling businesses and saves IT teams time and money. Besides switching to a simpler interface, users can access their data anytime and anywhere they’d like without worrying about maintenance.
Since the system will be hosted off-site, companies can rely on vendors to create backups or implement new updates and added security. So, if you are ready to work in a larger, more flexible environment, it might be time to store your data in the cloud.
ERP modules and additional apps
ERP systems can help you gain insights from various departments of your business all in one place through modules that can easily be integrated into your system. Your ERP can include business, finance, human resources, manufacturing, and supply chain modules where you can access more helpful information to help you manage your business.
Choose modules that align with your business goals by focusing on the most critical issues to make the most out of your ERP system and avoid overspending.
Depending on your needs, you can further improve your operations by connecting with other applications, such as warehouse management systems like Produmex or WySis, or integrating co-packing solutions offered by companies like Nulogy.
Leverage third-party providers to help with growth
Don’t try to do everything
It’s challenging to succeed in supply chain automation by yourself, so you shouldn’t be afraid to ask for help. By outsourcing specific tasks to a third-party provider, you can avoid wasting time or money due to a lack of experience and let an external team apply their expertise as an extension to your business.
For example, Weber Logistics outlined the following reasons companies might want to work with a 3PL:
- Inability to scale operations
- Difficulty keeping up with requirements
- Insufficient warehouse space
- Need to stay on top of technology
- Expansion of product lines
Specialization is the key
To help you achieve your goals, work with companies that specialize in your industry. Since these companies have access to more specialized technology and networks, their solutions can help you perform better and faster.
Whether you are looking for a company specializing in procurement, order fulfillment, warehousing, or transportation, you should always take your time to choose someone who is an expert in your field to ensure you can sustain a long relationship.
Data centers and consultants
In today’s world, where you deal with more data, choosing the best place to store your data is essential in ensuring business continuity. If you are considering upgrading your existing physical data center, you can follow the same path as many small and large businesses now using cloud storage at a low cost.
By partnering with a third-party data center, you can save on the costs of building a data center and benefit from increased connectivity, flexibility, and security. You may also migrate slowly – you can keep some data on-premise by adopting a hybrid solution.
Consultancy companies can guide you in the right direction if you want to explore more ways to make positive changes to your supply chain operations. These consultants can analyze your current processes and refer you to third-party companies that can further empower your business and help you build a robust ecosystem.
Streamlining your entire supply chain
EDI & API integrations
If you are entering data manually, you might already know how small errors can quickly add up and cost your organization lots of time and money. As your company grows, you may notice that your processes can no longer support the needs of your business like they used to.
EDI and API integrations with various supply chain partners in your community can make it easier for you to track and exchange data (e.g. 850 PO, 855 POA, 856 ASN, and many more) so you can spend more time focusing on creating better experiences for your customers.
Supply chain partner relationships
Without effective collaboration between you and your partners, your supply chain can seem like it’s falling apart. As you expand your ecosystem and adopt new technologies, partners should continue working together to adopt solutions that benefit the supply chain to do business more efficiently.
By integrating your supply chain partners into your goals, you will not only improve your relationships but also have access to more analytics, which can help predict and maintain your supply chain.
Choose wisely
Digital transformations aren’t always easy to accomplish or navigate. It is a collaborative process that requires patience and effort from everyone involved. The key here is not only to select the best software or solution but to find companies that can support you and help you get through the changes with your best interests at heart.
Look for people who respect your values so you can communicate and collaborate pain-free.
Finally, you want to meet your needs because this is your time for transformation!
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