Strategic digitalization in manufacturing: Why muddling through is not cutting it anymore

Many companies need help adapting their processes to the digital world. But while transforming into a fully digital enterprise can be quite a challenge, it also comes with tremendous benefits – especially for manufacturing companies, who often remain resistant to change. In addition to increasing operational efficiency and reducing costs by automating manual tasks, digitizing production processes can improve product quality and shorter time-to-market cycles. The IT consulting firm CNT Management Consulting explains the challenges in the digital transformation process and illustrates the benefits of “manufacturing as a service”.

Atlanta; March 20, 2023. A look at the constant fluctuation of the world’s top-selling companies shows that even once-solid business models might no longer work. In a fast-moving economy, it is inevitable to join the digital transformation, which involves integrating digital technology into all aspects of business operations, often referred to as digital enterprise. Alexander Paulus, Managing Director of CNT Management Consulting in Atlanta, explains: “At its core, a digital enterprise is an organization which seeks to use digital technologies to improve efficiency and create value throughout its operations.” According to the expert, this includes everything from automating processes to leveraging analytics and Artificial Intelligence to make better decisions in less time. Companies even have to rethink how work gets done: “By digitizing operations and integrating data across multiple systems, organizations can gain valuable insights into their processes, products, customers, and invent new business models”, Paulus adds.

High skepticism, great opportunities

Manufacturing companies, in particular, were skeptical for a long time regarding the complete digitization of their organization. Yet it is precisely those companies that can immensely profit from digital transformation. Besides increasing operational efficiency and reducing costs by automating manual tasks, digitizing production processes can improve product quality and shorten time-to-market cycles. Furthermore, with connected devices feeding data back into the system in real-time, production teams can quickly respond when issues arise or changes need to be made. Manufacturers can also gain deeper insights into customer demand trends by integrating analytics capabilities into their systems. Paulus elaborates: “By connecting their digital enterprise to the world around them, including other digital enterprises, manufacturing companies can improve their supply chain resilience and agility as well as gain insights on their sustainability metrics.” With successful implementation, experts now like to call this “manufacturing as a service.”

Digitized supply chain for maximum flexibility

Complete digitization of the supply chain can result in numerous competitive advantages. For example, manufacturing companies have real-time visibility into their inventory levels, production schedules, and shipping status. Moreover, it enables manufacturers to collaborate more effectively with suppliers, partners, and customers by sharing real-time data.“ While the increased visibility allows companies to make better decisions and respond quickly to changes in demand or supply, the improved collaboration results in better coordination and faster problem-solving”, Paulus points out. Additionally, a fully digitalized supply chain can reduce costs by automating manual processes and eliminating paper-based transactions. Also, it is more resilient to disruptions such as natural disasters or geopolitical events because it enables manufacturers to identify alternative sources of raw materials or transportation routes quickly. Last but not least, it allows companies to provide a better customer experience through improved delivery times, order accuracy, and product quality.

Tough challenges pay off

Despite the many known benefits, the process of a fully digitized enterprise also presents various challenges. Digitalization expert Paulus often experiences resistance to change: “One of the biggest challenges of digital transformation is getting employees to buy into new processes and technologies.” This resistance can slow down or even derail transformation initiatives. It can be helpful to have external consultancy from companies like CNT, who backed change management in their implementation methodology as one overarching pillar of a digital transformation project. Other challenges include integrating multiple systems, platforms, and tools, which can be complex and time-consuming, leading to delays and inefficiencies. Some companies also need help with data quality issues, Paulus emphasizes: “Digital transformation relies heavily on data, but poor data quality can result in inaccurate insights and decisions. Robust data management practices are an inevitable requirement to ensure high-quality data.” Ultimately, the financial aspect always plays a part as well. Implementing new technologies can be expensive, especially if there are unexpected costs associated with integration, training, or maintenance. To avoid cost overruns, CNT Management Consulting starts by assessing the overall digitalization strategy and a roadmap of all projects needed to implement the future system landscape according to the customer’s needs. Paulus concludes: “Even though digital transformation certainly poses some challenges, the process is paying off.”