Digital Transformation • April 5, 2022

Rethinking Digital Transformation: More Than a Smart Factory

iBase-t Experts

It can be surprising to learn that when it comes to digital transformation, European countries like Germany and the U.K. are lagging behind the U.S. and China, the global leaders. As I noted in my last post, it’s especially surprising because so many European companies were early adopters of digital product design and smart factories.

There are many reasons for this delay, but one is a lack of commitment to true digital transformation. For example, an IDG survey found that 36% of UK organizations were focusing on maximizing returns from existing IT infrastructure, rather than undertaking new digital initiatives. While that’s a minority, it’s still a big number. 

If the goal of digital transformation is not simply to automate what you have, then what is it? I’d say the goal is to create a manufacturing enterprise that is agile, resilient, quick, and well-informed. It’s one that is able to draw on resources as needed to accomplish tasks, while reducing risk and optimizing profits and business opportunities—doing it from shop floor to top floor

Along these lines, this article will be of interest as it addresses an important question that manufacturers must be able to answer every day, Are You Having a Good Day?

Achieving this is far more than an IT or OT project. It’s a rethinking of how you do business, and that’s where many manufacturers fall short. As McKinsey states, “companies often fail to modify business processes or optimize IIoT solutions to enable broader application, leaving significant value on the table.”

Here are four factors that manufacturers should be rethinking as they move beyond smart factories and toward true digital transformation.


“The impact of Industry 4.0 has been enormous, as digital changes to operational activities drive performance gain now—and over the next five years.” MPI Group, “Industry 4.0 Drives Productivity— and Profitability— for Manufacturers

1. Mastering Information

Data from manufacturing and design can be used for more than improving designs and factory efficiencies. With the help of the IIoT, the Cloud, and data analytics, it can be used to inform executives of today’s numbers in real-time—and how different decisions will impact tomorrow’s numbers. It can provide insights and reveal opportunities in operations, processes, suppliers, or materials that improve your financial performance. It can even be monetized, not only internally by saving money, but externally by offering digital products and services. 

For example, Three UK, the fourth-largest telecoms provider in the United Kingdom, is rolling out 5G to explore new data monetization opportunities to deal with the changing field of competition. “You’ve got to understand how you’re going to compete in the future and how the nature of the industry’s competition is going to change because of digitization,” says Gillian Tomlinson, Director of Data and Analytics for the company.

2. Improving Processes

Digital transformation is about improving both the products and the processes behind them. Manufacturers are using Industry 4.0 technology like data analytics, manufacturing intelligence, and digital twins to continuously examine and model processes across the product lifecycle. Manufacturing data can be integrated with ERP and supplier information to understand the impact of process changes on the workforce, financials, and production goals. Manufacturers who are truly transforming don’t just automate the factory, they evolve their processes and everything related to them.

All these benefits are amplified in complex discrete manufacturing environments such as aerospace and defense, where there are sometimes thousands of parts to manage and track across a global organization.

3. Changing the Organization

Organizational change could be considered the most important part of digital transformation. Without it, technology spending is just that. The goal of organizational change should be to empower workers and upgrade the tools at their disposal at every level of the organization, from line worker to CEO. This may require rethinking what an enterprise is. A digital enterprise extends beyond the four walls to suppliers and customers and may include the ability to participate in the emerging digital ecosystem where enterprises are fluid, not fixed. This approach certainly fits with the trend of remote workers and the shortage of skilled employees in many industries.

4. Shifting the Culture

Changing an organization “on paper” is one thing but doing it, in reality, is quite another. The fact is, we’re talking about people, not organizational diagrams, and people usually resist changes when the old way seems to work. Change is hard, even when it’s good. Yet without a real buy-in from management and an understanding of how planning and execution systems benefit everyone, digital transformation will not yield all the benefits it could, and it might even fall short.

To accomplish meaningful change, organizations need the right leaders to drive the transformation and provide a unified vision for the business. In a survey by MIT Sloan Management Review, 88% of respondents agreed that having digitally savvy leaders was important “to their organization’s ability to win in the future”. 

Cultural change is so important and challenging. The people in your company will be the key to whether your digital plan succeeds or not.

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Based on a survey of 250 discrete manufacturers, this research study, conducted by Tech-Clarity, establishes a "state of the market" for MBE adoption.