Digital transformation is the way to go for large manufacturing companies who follow traditional business models and are facing fierce competition from the more agile and flexible start-ups that use emerging technologies for manufacturing.
While transformation is peppered with challenges and roadblocks, these are not insurmountable.
If you are considering digital transformation, here are 4 of the most significant challenges and ways to overcome them.
Rigidity and Resistance
The rigidity of the business model and resistance from the workforce hinder digital transformation.
Traditionally, each stage of manufacturing operated in isolation, often unaware of the changes occurring at other stages. Such lack of integration leads to heavy inventories, deadstock, wasted work-hours, and consequently wasted expenses.
Conversely, the Industry 4.0 business model is far more agile and flexible – being able to adapt to changing demands quickly. In fact, new business models are demand-oriented, assessing potential sales even before procurement.
This type of model requires three things for it to work:
- End-to-end integration of supply chain from supplier to consumer
- Efficiency and agility at each stage, including suppliers
- Open and speedy communication among stakeholders
Emerging technologies have made this possible.
Adopting new technologies, however, necessitates a complete overhaul of the business model and processes. Those working along the supply chain – right down to the supplier and the labor on the assembly line – must adapt to a new way of thinking and a new perspective.
Resistance comes from both labor and middle management. On the one hand, CXOs and VPs are unwilling to surrender control. On the other hand, employees and staff perceive change as a threat to their role and fear retrenchment.
How to Meet It
To overcome these insecurities, it is important to present the change positively and keep everyone informed about the progress. Employees may be given pay-hikes, fewer working hours, or both while the middle management may be encouraged to suggest ways in which the technology may be leveraged for their benefit.
Only the initiated few possess the skills required to implement and operate new technologies
Digital transformation means adopting new and emerging technology to make business processes more agile, efficient, and flexible. This does not merely entail investing in technology and equipment.
Businesses must also hire talent with knowledge about technology and equipment. Since the technology is new, the few that possess the knowledge about how to use it monopolize the HR market – hiking HR costs.
How to Meet It
While hiring people with knowledge about technology is inevitable, it is also an expensive process. It would be wiser to hire one or two individuals to train the existing workforce. Technology suppliers often have personnel who can train your existing workforce in the use of new technology.
They also have staff on-board for troubleshooting and fixing any issues. Striking a deal with your technology supplier can help reduce recruitment and training costs while at the same time allaying the fears and insecurities of the existing workforce.
Security of data – both personal and professional – has been a growing concern for decades.
As Industry 4.0 gains momentum, more and more equipment is connected through IoT. Robotics is reducing the need for labor, and AI and ML are taking over administrative tasks.
Many tasks are being performed by autonomous machines – often unsupervised. Loads of data is generated through all this, and keeping it all secure is a huge challenge given the need for extensive connectivity.
Indeed, employees and management alike are expressing concern over the privacy of personal data within the system. A single breach can potentially result in substantial losses – or worse, complete business collapse.
How to Meet It
While the threat is real and the concern genuine, it may be addressed by building a robust security system around the database. This can be done by strategic use of firewalls, anti-malware, and other software coupled with a security-first approach on the part of all users.
A security-first approach entails everything from changing passwords regularly and reporting even the slightest suspicious activity, to securing portable devices used for remote access.
In the face of tough completion – which is draining their resources – traditional manufacturing houses find it hard to raise capital for expensive technology
The roadblocks to digital transformation discussed above (and the antidotes) add up to significant investment. Traditional companies that are already facing tough competition from modern-day set-ups must raise the capital to invest in expensive technology and all that it entails.
Many already carry the burden of heavy debts, and indebting themselves further may not be an option. This is arguably the second most important reason for resistance to digital transformation – the first being resistance to change.
How to Meet It
On the one hand, emerging technology is inherently highly-priced, while on the other hand, budget constraints are real and binding. The way out of this catch-22 situation is to transform into phases.
This may be done in 2 ways:
- Digitizing individual processes one or two at a time before integration
- Leveraging technology to integrate the existing processes and gradually mechanizing each process
Whichever way you choose to go, it is advisable to plan carefully and implement gradually.
The present-day competitive landscape is the culmination of changing demands of the new generation and fast-paced technological development. In this scenario, long-standing manufacturing houses with traditional business models face tough competition.
If you are one among them, digital transformation is the way to go.
Heather Redding is a content manager for rent, hailing from Aurora. She loves to geek out writing about wearables, IoT and other hot tech trends. When she finds the time to detach from her keyboard, she enjoys her Kindle library and a hot coffee. Reach out to her on Twitter.