The iPhone turned 10 years old in 2017. Take a moment and think about what a standard cellphone looked like in 2007, before the iPhone. What did it look like in 1997? See how far we’ve come in just 20 years of tech improvements? For most people today, the mobile phone industry is the most visual representation of the impact of the Digital Transformation.
The Digital Transformation, with a capital D, has had a profound impact on many industries as cutting edge technologies redefine how nearly every part of our life, but lately no industry is benefitting more than manufacturing. The recent report Smart Factories: How Can Manufacturers Realize the Potential of a Digital Industrial Revolution shows that Industrial Manufacturing organizations are innovating new and exciting ways to create smart factories that improve key metrics across the board.
Bottom-line benefits of smart factories
In the manufacturing world, a lot of what is included in the idea of the Digital Transformation relates to what most call the Fourth Industrial Revolution. While named differently, the two share a same goal: future smart factories powered by connected machines and innovative technology. While the “future” is often mentioned, there are factories right now realizing the benefits of connecting more machines.
For example, according to the Smart Factories report, Industrial manufacturing organizations, more so than peers in the automotive, consumer goods, and aerospace & defense industries, have seen larger productivity gains from smart factories — somewhere to the tune of 20% more productive. The same goes for increases in quality: industrial manufacturing companies report 20% better quality products coming from their lines. That means more production while improving quality! That is the best example of having your cake and eating it too.
The impact of these smart factories cannot be understated either. When asked about operating profit projections in the next five years, even organizations that were beginners in the digital transformation estimated an increase in $14.7 million. Organizations with expertise in the digital transformation and smart factories estimated they could see nearly $42.7 million increase in profits in the next five years, almost doubling their current margins!
Digital maturity makes for a prepared future
The key to all of these increases in profits is for an organization to become more digitally mature, which contrary to its name, includes more than just a length of time. Digital maturity, according to the Smart Factories report is measured on two metrics:
- How far essential processes have been digitized and how much use of digital technologies like robotics, internet of things, and big data.
- How well the transformation is being managed to drive benefits including key aspects such as the manufacturer’s smart factory vision, governance, and the digital skills of its workforce.
A large amount of robots creating a mountain of data doesn’t make a factory digitally mature. There has to be an equal amount of use for that information toward driving bottom-line benefits for an organization to be considered a “digital master.”
Again, the industrial manufacturing sector also shows its strength in the amount of organizations that are achieving the digital transformation at a high level. A higher percentage, 14%, of Industrial Manufacturers are “digital masters” than any other industry. The next industry closest to achieving that level of digital maturity is Consumer Goods, where only 5% of the industry is rated at being a digital master.
Given how familiar industrial manufacturers are with the IIoT, industrial internet of things, this isn’t totally surprising, but it does go to show the trust these factories have in tomorrow’s technology. Being able to monitor and understand every aspect of their machines and production lines introduces a new set of levers to pull when trying to optimize their everyday processes. As more investments are made into these smart factories that make up the fourth industrial revolution, more industrial manufacturers will be able to realize the benefits that can follow.
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