Digital transformation for manufacturing: back to basics

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Digital Transformation is one of the most highlighted buzzwords of this age (industry 4.0 age, we mean). But the concept can accept a lot of situations above its umbrella. Currently, digital transformation can be applied to a variety of things. The concept is broad and ends up being used by people, companies, governments, and organizations. An important report from PWC (with companies from 26 countries) shows a total of US$907 bn in annual digital investments – yearly.

But, let’s get started from the beginning.

What is digital transformation

Digital Transformation can be defined as a phenomenon that incorporates the use of digital technology to traditional problem-solving. Thus, it encompasses procedural changes in different spheres of society: this transformation modifies the paradigm of the use of technology, for example, in the following areas: government, economy, labor market, education, medicine, arts, science, global communication, among others. In addition, digital transformation has the capacity to increase integration between different sectors of society, being applied to issues related to public administration problems, for instance.

Digital evolution index (Harvard Busines Review)

The matter is so important that Harvard Business Review has created its own “Digital Evolution Index”. This index is presented in an article, which reflects on a “digital planet”, and how physical interactions – in the way we communicate, in social, political, commercial, media and entertainment changes – are being replaced by their digital models.

As part of a collaboration between the Flecher School at Tuflts University and Mastercard, this index of Digital Evolution was created, analyzing the state and scope of digital evolution in 60 countries. This evolution is the result of an interaction between four pillars, with about 170 indicators in them. These pillars were:

  • Supply Condition (related to structural aspects of technology).
  • Demand condition (how engaged consumers in the country concerned are with digital consumption practices).
  • Institutional Environment (advancement of legal systems in terms of technology and level of government digitalization).
  • Innovations and changes (concerning aspects that corroborate R&D practices).

Digital transformation inside modern companies

“In 2017, 70% of the Fortune 500 companies set up teams dedicated to digital transformation.”


Digital transformation could be defined as the attempt of companies and businesses to use technology and tools to innovate certain processes and products within the enterprise environment. In addition, they use methodologies and aspects of the so-called digital culture to include the business in the digital age.

Many different parts of the digital transformation culture can be applied within the reality of companies around the globe. The incorporation of the digital mindset in the company will necessarily be attributed to new operations. And all of them need to be treated with great care so that they do not become a negative experience for customers, employees, and producers.

The digitization of companies has passed not only by changing means and tools but also by changing the business model itself and covers practically all departments of a company, including those of production, logistics, administrative, commercial or human resources.

The truth is that the digital transformation represents an opportunity for companies to become more competitive in the market, more efficient in data analysis and more intelligent in the way they relate to the customer. And if some realized this a few years ago, others a relatively short time ago.

Agile methodologies aim at the adoption of automated processes among different sectors of the company for the fast, safe and positive production of applications and services, which will reduce not only the costs, time and experience of the user, but also of the executing company itself.

And all this starts with people, leadership and management…

The first step is to understand what digital transformation is, its link with innovation and its importance for today’s business. After that, it is important to set up a strategy to put this methodology into practice, which must necessarily involve the implementation of technological tools and instruments in the company.

Great managers should always be informed and not be afraid of being updated and reinvent themselves. With the new management policies (digital mindset), it is also expected a greater motivation of the team, which sees in leadership a modern and open-minded.

Digital transformation for manufacturing

In manufacturing, Digital Transformation is about integrating technologies into all areas of business, improving how they operate and deliver value. But the concept isn’t as mystical and unreachable as some consultants, gurus, and moguls sell in meetings or talks. Adopting new practices is possible for every company, as soon as they understand how this cultural shift can enhance organizations’ results and profit with small changes. Going further, Digital Transformation in the industry can embrace the application of Digitalization technologies, in order to impact the entire value chain, in the dimensions of Technology, Processes, and People.

Let’s keep it simple: the digital transformation in the manufacturing industry concerns the use of a set of technologies that allow machines and humans to work collaboratively and production lines to be agile.

And one thing is for sure: Data and analytics are intrinsic to the digitization process, being a great first step to companies that don’t know how to start on this concept. But it’s not only regarding collecting and reporting. It’s about making your business more efficient and superior to your competitors with trustworthy evidence. 

Best use cases and benefits for digital transformation for manufacturing:

  • Operational efficiency gains in product production, logistics, among others;
  • Foster innovation through fast and accurate capture, sorting and analysis of internal and external (market, social network) data to predict patterns of consumer behavior, for example;
  • Better use of resources (inputs, tools, machinery, etc.);
  • More motivation of employees, who have their day-to-day work more intelligent and functional
  • Improve process integration through a combination of intelligent systems and applications;
  • More speed to respond to market demands and perceive the movement of the competition etc.

In many sectors, the concept of digital transformation and Industry 4.0 is the interconnection of the entire value chain (Information + People + Equipment) networked, using Artificial Intelligence for decision making in Industry.

The Basic Digitalization is the next step. Those are technologies that are within any context of digitization, which is the Internet of Things (IoT), Cyber Security, Cloud Computing and Big Data.

More possibilities and use cases of Digital Transformation in the manufacturing industry:

  • Transformation and Aggregation
  • Manufactures components or assemblies
  • Build a final product or by-product
  • Production based on times and movements
  • Special products are expensive or unfeasible
  • Is sensitive to external supply
  • It’s based on pulled production
  • Produces lots for a niche customer

Digital transformation and Industry 4.0 concepts can be also a great asset to help manufacturers to get more relevant data on their production process. Using sensors and a “production analytics software“, companies can track their manufacturing efficiency, scrap rates, downtime reasons and differences between shifts and production order.

In the end, digital transformation needs to embrace specific areas and goals. Our main advice for that is aware of some frameworks to help you get the best of these initiatives. The first step is: always think about people. They are the core of any change!

In summary, always look for:

  • User experience – whatever your digital transformation is, always deploy user-friendly solutions. That’s a key factor;
  • Data availabilityenable your teams to get visualization access to their important data. And do not forget to implement your project across multiple platforms (mobile, desktop, tablet).
  • Flexibility – in terms of architecture, technical and commercial perspectives, across the board for operational efficiency;
  • Collaboration – sharing knowledge and training.  Collaboration between IT and OT, and between maintenance and engineering, for instance;
  • Real-time decision making and operation capability – sensors installed on machines help us make decisions quickly and safely (for instance);
  • Keep your mind open to the cloud – of course, you can have on-premises solutions, but this makes you need a team of specialists, available 24/7. Most SaaS software or tech solutions companies use tech giants like Amazon Web Services, RackSpace, Google Cloud, Alibaba Cloud, and Microsoft Azure to enable your safe, agile and smooth digital transformation projects. They are born for this and have SLA (committed within) contracts. So, be cool and just focus on your core business.