How to Advance Digital Transformation in the Industrial Manufacturing Industry

How to Advance Digital Transformation in the Industrial Manufacturing Industry

The mission of industrial manufacturers is no longer a simple one. Today, it’s about much more than making and delivering products. In the modern industrial manufacturing industry, manufacturers must be able to collaborate with customers through delivery and beyond — embracing the demand for assets that seamlessly support next-gen operations.

They are now reengineering processes and standards throughout the industry in an attempt to reach these goals, an effort seen as key to maintaining market position amidst the digital transformation.

The Manufacturers’ Key Areas of Focus

1. Customer-centricity

The industrial manufacturing industry has been product-centric for most of its history. In the era of digital transformation, however, the degree to which an enterprise meets customers’ demands will determine how successful it will be. A customer-centric model requires that industrial manufacturers transition production operations, for example, to modular configurations to enable more agile responses for each individual customer request. Customer-centricity, however, also requires new capabilities, such as achieving greater visibility into the experiences and value industrial manufacturers products and solutions provide customers. These enterprises need the ability to collect and analyze both operational and experiential data to build a 360-degree picture of the equipment in the customer’s environment and to continuously improve functionality, service, and value industrial manufacturers products deliver.

2. Smart products

Standalone assets that don’t integrate with a manufacturer’s digital ecosystem limit visibility and can create bottlenecks in production. The trend is toward smart equipment that is connected and can enable additional services such as predictive maintenance. IDC reports that by 2021, 90 percent of manufacturers will leverage real-time equipment performance data to diagnose issues and trigger service intervention to avoid downtime. In addition, IDC says by 2024, 50 percent of manufacturers are expected to use digital-twin ecosystems for insights into their operations and the ability to lower costs.

Additionally, edge computing with machine learning or other forms of artificial intelligence (AI) can give manufacturing equipment the ability to make decisions at the source of data and result in automated, more efficient operations.

3. Digital supply chain

Visibility into manufacturing processes is only a part of the vision for industrial manufacturers’ digitalization journey. It must also extend to the entire supply chain to access real-time logistics and supply chain data that enables efficient production. Connecting each partner in the supply chain provides greater agility when demand increases, smart inventory management, and production schedules that align with shipments.

4. Service-based models

Additional advantages of digital transformation are the new opportunities for industrial machinery and components manufacturers to launch innovative, service and outcome-based business models. Industrial manufacturers are using the data they collect from the smart products they create to offer value-added services. Forrester Consulting research commissioned by SAP revealed that 90 percent of large enterprises will generate revenue from Data as a Service by 2020, by selling raw data, derived metrics, insights, or recommendations. Moreover, some industrial manufacturers are moving from outright equipment sales to a pay-for-outcomes or Equipment-as-a-Service model in which manufacturers manage assets to ensure performance and outcomes.

Emerging Technologies Powering Industrial Manufacturers

To reimagine their businesses to meet new demands, industrial manufacturing enterprises are taking advantage of the capabilities emerging technologies can provide their operations and their customers. In addition to machine learning and AI which helps automate their processes, industrial manufacturers are continuing to extend their use of and value from Internet of Things (IoT) technology, through integration into their operations from production to supply chain management.

Conversational AI and augmented reality (AR) are benefitting companies and employees improving training on complex equipment, and assisting workers with maintenance or other tasks that are performed infrequently. This is increasingly important with an aging workforce.

Industrial manufacturing enterprises are also leveraging data platforms and advanced analytics to extract value from the volumes of data they collect from their equipment, providing real-time insights, informed business decisions, and improved customer outcomes.

Enterprises that can maximize the impact of these technologies to reach their goals of customer-centricity, delivering smart products, connecting the supply chain, and expanding their businesses with service-based models will more than weather current disruption — they’ll emerge as industry leaders.

Learn More

For a deeper dive into this topic, download the SAP white paper “The Intelligent Enterprise in the Experience Economy for Industrial Manufacturers.”

Download the white paper

written by Judy Cubiss, Director, Global Marketing Lead — Automotive and IM&C Industries

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