The term “digital transformation” has been used for more than a decade to describe the process of using digital technologies to improve business performance. Today, companies are increasingly turning to digital transformation to maintain their competitive edge.
For manufacturers and distributors, the need to adopt new technology is driven by a need for greater efficiency, improved customer experiences, and real-time response to market demands. A recent post from IFS states, “The pace of technological change has left two thirds of manufacturers categorized as digital laggards, reliant on outdated tools and processes. Yet, most executives believe that their companies would not survive more than three years without investing in new technologies.”
Through adoption of systems such as advanced data analytics, cloud computing, artificial intelligence (AI) or the Internet of Things (IoT) a well-crafted digital transformation strategy is proving beneficial. In this post we’ll cover some digital transformation best practices for manufacturers and distributors starting their digital transformation journey.
Digital Transformation Checklist
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What is Digital Transformation?
Before we dive into some best practices, let’s review the nuts and bolts of what digital transformation entails. Essentially, digital transformation involves integration of digital technology into an area, or areas, of a business. In manufacturing or distribution, this could mean using tech to optimize the supply chain, enabling predictive maintenance for key equipment, or adding software like modern ERP, MES, or WMS to streamline processes and gain real-time data analytics for informed decision making.
But digital transformation isn’t just about using new technology. It’s also about shifting the culture and mindset of an organization to foster innovation, agility and better connection with customers. Often, digital transformation leads to new business models, opening up fresh revenue streams and new markets.
Digital transformation brings a variety of benefits including increased operational efficiency, improved customer experience, greater agility, more innovation, and data driven decision making and business strategies. But to achieve a successful outcome, it’s important to follow a structured approach to overcome challenges and maximize value from these technology investments.
Best Practices for Digital Transformation Initiatives
1. Establish a Clear Digital Strategy and Vision
Successful digital transformation depends on good planning. The first step is to build your roadmap. Keeping your end-goals in mind, align the technology with your larger objectives for the organization, ensuring that the systems you select will contribute to moving your business forward.
Take the time, upfront, to lay out the results you hope to achieve, whether greater efficiency, reduced downtime, better product quality or improved customer satisfaction. Then focus on the correct type of technology that can support those goals. For instance, if your goal is to improve customer engagement, focus on tools such as eCommerce platforms or CRM systems.
It’s important to note that digital transformation projects shouldn’t be enacted in a vacuum. More than only an IT project, it’s essential to involve stakeholders from departments across the company, as well as your company’s business leaders. Getting input from operations, IT, marketing, HR or others is key to aligning your digital strategy to the company’s needs, and the requirements of each effected department. Also, getting buy-in from the beginning will help ensure user adoption after go-live.
2. Prioritize Data-Driven Decision Making
Significant competitive advantage can be found in the ability to collect, analyze and act on data. Manufacturers and distributors can make better decisions, optimize operations processes and deliver excellent customer experiences by leveraging technology. But first, they must lay the groundwork for data infrastructure and tools when starting their digital transformation.
Rather than implementing siloed systems for various areas of the business, it’s helpful to invest in data infrastructure that can collect key information from across the business, including metrics on production lines, supply chain and warehouse operations KPIs, and customer interactions. Drawing from this large data set, the system can help identify trends which aide in decision making, while reducing redundant report building and encouraging collaboration.
Tools like business intelligence (BI) platforms and predictive analytics can provide valuable insights into your operations. For example, sensor data from machines can be analyzed to predict failure, reducing downtime and maintenance cost.
"Just 39% of manufacturing executives report that they have successfully scaled data-driven use cases beyond the production process of a single product."
3. Embrace Automation and Robotics
In the quest for efficiency, automation promises to be one of the most transformative elements of digital transformation. Technology like automated machinery, automated guided vehicles (AGVs), and robotic process automation (RPA) can replace manual tasks and streamline workflows to improve efficiency, accuracy and speed.
Another area of automation is machine learning. Machine learning allows machines to “learn” from data, identify patterns and trends and make predictions based on the data. When applied to the manufacturing environment, gains can be realized in quality control, production processes and predictive maintenance.
In a manufacturing environment, robotics and automated machinery used in the production line can increase throughput and reduce reliance on manual labor. For distributors, AGVs can move goods across large warehouses without human involvement, speeding up order fulfillment. Finally, digital tools like RPA systems can be used for data entry, invoicing and customer service, freeing up employees for higher-value tasks.
4. Integrate Cloud Computing for Scalability and Flexibility
Today, business doesn’t take place only in the office. Your data must be accessible from anywhere. That’s where cloud computing comes in. Cloud-based systems enable businesses to access data from anywhere, providing manufacturers and distributors the flexibility to respond in real-time.
Moving your key systems like ERP or CRM to the cloud provides real-time visibility into your operations, making it easier to track sales, production and inventory status. Plus, cloud systems offer the ability to analyze large amounts of data without needing expensive on-premise infrastructure.
One point to keep in mind though, is to take steps to ensure your data is secure. As you migrate to the cloud, you’ll want to add robust data security measures like encryption, multi-factor authentication and security audits to protect your information from cyber threats.
5. Enhance Supply Chain Visibility with IoT and Real-Time Tracking
Implementing IoT devices can be a game-changer for supply chain management. These devices provide real-time data about the location and condition of goods, machinery and other assets, helping companies monitor and optimize their supply chains and the flow of product throughout their operation, whether it’s in the warehouse or the factory.
Distributors and manufacturers can use IoT technology like Radio Frequency Identification (RFID) and GPS to track inventory movement. The data they provide also can help to optimize delivery routes and reduce fuel costs. In addition, sensors can provide data on the status of equipment and monitor performance to predict potential issues before they cause failure and unexpected downtime.
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6. Focus on Customer-Centric Digital Solutions
Shifting customer expectations require manufacturers and distributors to meet their requirements through updated systems which provide easy access to information, fast order fulfillment and more personalized experiences. Digital tools provide the adaptability to meet customers’ needs.
Aligning your eCommerce platform, customer service tools and inventory systems allow for a seamless customer experience, whether they’re contacting your company online, by phone or in person at your location. Modern CRM systems, often part of — or integrated to — an ERP, add visibility to customer data which can be used to offer customized products or tailored marketing messages to individual customer needs.
Digital technology can also give customers self-service options like customer portals or mobile apps. These options allow them to track their orders, manage returns and access product information, reducing the workload on customer service staff.
7. Invest in Talent and Change Management
Don’t forget the people side of new technologies. Many digital transformation projects bring major changes across the organization. You’ll need to clearly communicate the coming changes, the business reasons behind them, and invest in training to ensure full adoption and return on your investment.
A successful change management program reduces the risks of organizational change including cost overruns, lack of adoption, or resource shortages. Plus, proactively establishing change management ahead of your digital transformation efforts leads to increases in performance and morale, creating a more agile company capable of embracing change.
Get More Value from Your Digital Transformation
For manufacturing and distribution companies, digital transformation requires careful planning and collaboration across the organization. But by following digital transformation best practices like setting a clear strategy aligned to business goals, embracing automation, leveraging cloud computing systems and prioritizing real-time data collection and analysis, companies can gain significant benefits like streamlined business processes, greater efficiency and increased customer satisfaction.
While the benefits are numerous, digital initiatives can be complex. The expert team at Ultra Consultants has the experience to help you select and implement the right digital technology for your company. Unlock other consulting firms, Ultra knows that true business transformation stems from not just technology advancements, but also by implementing comprehensive business process improvement plans, data management and change management. Get more business value from your digital transformation with Ultra experts on your side. Request your free discovery call today.
