Digital Transformation in Manufacturing, or Digital Manufacturing for short, is a matter of survival now for manufacturing concerns. Manufacturing companies desirous of survival have no choice but to hop on the Digital Transformation bandwagon, rapidly.
Business Transformation of any kind is not an easy endeavor. Change Management of Digital Manufacturing is typically more difficult than any Change or Transformation Program that an organization may undertake.
Forming a strategy to leverage digital technologies is the 1st step in transforming a manufacturing concern towards Digital Manufacturing. Bigger challenges are faced in strategy execution.
For Transformation execution to be effective, CEOs must reconsider almost everything about the way their companies work; for instance, establish new Business Models, reorganize their Organizational Design, and also rethink their Leadership style.
Specifically, there are 3 key pillars of Digital Manufacturing execution that need careful consideration for the Transformation to be successful:
- Business Model over Technology
- Independence of Digital Operations
- CEO-driven Digital Transformation
Let us consider the key pillars a little more in detail.
Business Model over Technology
Shifting from old technology to new is easier than changing the Business Model of any concern, especially a manufacturing concern. Customarily, manufacturers sell machinery, hand out software as complementary, and offer after sales repair and maintenance service for the machinery.
For Digital Transformation to be truly successful, the whole way of doing business has to change. Manufacturers have to look at what they are selling i.e., outcome instead of a product. What is important is manufacturers should be willing to do away with existing Business Models to create and capture new value.
Value creation is achievable in many ways using industrial Internet of Things (IoT) by manufacturers. All of the avenues for value creation should be used in parallel so as to gain the largest impact.
Value created through Digital Manufacturing can be captured in 2 ways:
- Software as a Service and Subscriptions/Licenses
- Offering Success as a Service
Independence of Digital Operations
Digital operations can create a meaningful impact only when they are independent of the main business. Independence is important but so is proper linkage with the industrial business.
Initially, understanding regarding value provided by Digital operations may be very limited in the manufacturing business therefore cooperation may be inhibited. Finding ways to link Digital operations with the manufacturing business must cater to the requirement of understanding how the machines work.
Resistance from the manufacturing business is expected when the 2 forces combine, especially when the Digital operations grow. Delineating who handles customer relationship and all factors associated with it, is also a question that may spring up in cooperation between manufacturing and digital operations.
Ways to obtain gains from linking vertical business and the horizontal digital function must be found.
CEO-driven Digital Transformation
Sponsor of the Digital Manufacturing initiative has to be the CEO. Only the CEO has the influence to decide the divergences between the old manufacturing business and the new digital business.
CEOs have to drive the Digital Manufacturing shift. Leading from the front to make everyone understand that Digital Transformation is a very serious and important endeavor.
CEOs must have the will and resolve to challenge incumbency, obliviousness, and existing state of affairs. While remaining firm on the strategic direction, CEOs must be flexible enough to experiment, learn, and adjust course.
Interested in learning more about Digital Manufacturing? You can download an editable PowerPoint on Digital Manufacturing here on the Flevy documents marketplace.
Do You Find Value in This Framework?
You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library. FlevyPro is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:
“My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today’s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”
– Bill Branson, Founder at Strategic Business Architects
“As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”
– David Coloma, Consulting Area Manager at Cynertia Consulting
“FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight – it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”
– Roderick Cameron, Founding Partner at SGFE Ltd