Preparing for digital transformation in five steps

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The UK manufacturing sector has recently overcome many of its previously gloomy forecasts, achieving its fastest rate of growth since 2008, raising output significantly in the process, and igniting a considerable degree of optimism from manufacturers and economists alike. Yet, some UK businesses are still struggling to compete with global production powerhouses, such as those in China.

One of the secrets to long-term success and reaching full production capacity can be found in incorporating innovative technology into production methods. Recent findings from the MIT Centre for Business show that companies that have embraced digital transformation are 26 percent more profitable than their average industry competitors and enjoy a 12 percent higher market valuation.

However, digital transformation can be an incredibly complex process. With that in mind, here are five key steps companies need to take to prepare for a successful digital transformation journey.   

1. Choose the right digital transformation strategies to meet your goals

A massive 96 percent of companies see digital transformation as important or critical to their development. However, businesses should avoid investing in new technology for the sake of it, or because they feel they should. It is essential that businesses identify where technology change is needed most and meet that need.  

Businesses should start by assessing their overall business goals and identify what objectives it wants to achieve in the short, medium, and long-term. The next step is assessing what technology will help achieve those goals. For example, it might be that the primary focus is to expand into new markets quickly, in which case it might be sensible to hold off on an investment into AI technology and instead focus on a solid cloud infrastructure that can support mission-critical processes from multiple locations.   

2. Invest wisely in technology

Digital transformation means different things to different businesses, and heavy spending alone is not going to guarantee success. The Aberdeen Group has identified three digitalisation technologies that have the potential to impact operations–the Internet of Things (IoT), because of its ability to provide operational intelligence, the cloud, for its scalability, and big data analytics, which can transform data into predictive and actionable insights.  

But there’s no one size fits all solution. According to research, 19 percent of manufacturers are planning to invest in inventory management, 18 percent in cloud, big data and customer relationship management, and 17 percent are planning a mobile technology implementation.   

There are multiple options, and businesses must ensure that they are investing in the technologies that are right for them. While one company may see immediate benefits from implementing cloud infrastructure, a manufacturer operating out of just one facility might want to look at other options first. For example, a firm instead see more immediate ROI from keeping data on-premises, but implementing an ERP solution that uses big data to track orders against stock and supply chain information in real-time. However, if a company chooses right, its ERP strategy should be flexible enough to accommodate growth and an eventual move into the cloud.

3. Convince your stakeholders

After identifying how digital transformation can support business goals, now is the time to bring stakeholders on board–because successful digital transformation strategies change how businesses work. They impact people’s jobs, how they complete tasks, and also how they work together.

Unfortunately, for many businesses, engaging with stakeholders is easier said than done. According to a recent Interoute study, 51 percent of UK IT leaders struggle to get executive sign-off on their transformation strategies.   

However, staff from the boardroom and beyond need to feel they have a personal and professional stake in the changes being made. Helping them understand the reason for the business’s investment will make it easier to overcome any potential resistance to new processes. This is particularly important when digital technologies are being implemented to automate tasks that are otherwise completed by staff members, or when it might not be immediately obvious how an investment will deliver ROI. 

4. Use data to enhance business decision-making

Businesses today are collecting more data than ever, but simply amassing vast amounts of information as a result of digital transformation is not enough. The key lies in being able to use insights effectively, to guide change or identify new revenue streams.

The latest data analytics suites can provide businesses with crucial information about customer trends and predictions, or information about how products are performing. Some businesses are already using this sort of data, to turn insights into action.  

For example, UK manufacturer of fasteners and latches, Southco, has optimised the assembly line in its smart factory in Worcester. Intelligence from the Epicor Mattec MES system demonstrated the business was only benefiting from 20 percent utilisation of its static assembly lines. Many products were previously only assembled on their own ‘exclusive’ assembly benches. However, once it was highlighted that in some cases a bench would only be used for eight hours a month, Southco deployed semi-automated plug and play assembly machines which are now used for multi-assembly tasks. This has pushed average bench utilisation up to 60 percent. 

5. Constantly re-evaluate your digital transformation strategy

Companies must understand that digital transformation is a journey that is never complete. New technologies are being launched all the time—from robots that complete tasks on the production line quicker than humans, to machines that can fix equipment problems without intervention. All of these bring with them multiple possibilities for UK manufacturers.  

As Charles Darwin once said, “It is not the strongest or the most intelligent who will survive but those who can best manage change”. This applies to more than just the natural world. It is just as true for manufacturers in the current UK economy. 

It’s important for businesses to constantly adapt their digital transformation strategy to new possibilities, reassess their journey, and question the rate of digital change—does it match up to customer expectations? How does it stack up against business goals? If these change, perhaps the businesses’ technology should too. 

Industry 4.0 technologies, as well as enterprise resource planning (ERP) solutions, are helping to streamline supply chains, automate production lines and equip manufacturers with the intelligent data they need to react to today’s consumer demands. If UK business are to continue challenging the world’s production leaders, they must invest in advanced technologies. Ultimately, these will help them to drive manufacturing efficiencies and get set for growth. 

Terri Hiskey, Vice President of Product Marketing at Epicor Software 

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