Digital transformation has been one of the key industry themes for several years, but recently it has become a major strategic priority for most organizations. As an impact of the pandemic, and the operational and IT weaknesses that were brought into sharp focus as a result,
digital transformation of legacy systems and processes is now seen as a critical and urgent requirement.
Indeed, many industry analysts and pundits suggest that we may see
decades of innovation in this area occur over the next five years. But what is the situation like currently and what does the future hold?
Digital Transformation in Manufacturing
While we are seeing more and more manufacturers invest in digital transformation initiatives, the reason for them doing so is shifting. As I mentioned in my
Forecasting blog recently, “Before the pandemic, digital transformation was almost entirely focused on business performance outcomes—improvements in efficiency and productivity, for example—and the impact those have on the bottom line. In other words, the motives were mostly framed around commercial benefits.”
However, during the heart of the sweeping (and seemingly never-ending) COVID crisis, the driving force behind digital transformation in manufacturing swiftly changed to
risk mitigation—either from an operational or a strategic perspective. The questions we were asking were things like: Is an organization able to withstand significant disruption across the supply chain and cope with volatility in demand or logistics? Or is an organization flexible and agile enough to respond to uncertainty—when changes were occurring on a weekly, if not daily, basis? And is an organization able to cope with large numbers of workforce absences due to illness, self-isolation, or other related causes, as well as remote (offsite or off-shopfloor) working requirements, yet still managing to maximize output? Let’s not forget that manufacturing is not considered an industry that is particularly “geared towards” working remotely.
While both the operational and strategic drivers remain important and valid cases for digital transformation, another is beginning to move front and center in 2022—and that is
sustainability.
Sustainability Means “Going Green”
With the 2021 United Nations Climate Change Conference having recently taken place in early November, it is abundantly clear that the actions needed to mitigate climate change are now becoming a serious priority among world leaders. While the event made climate change headlines around the world, we must not lose sight of other environmental imperatives such as the growing impatience towards waste, ecological damage, and the overuse of precious natural resources caused by consumerism and industrialization.
We only must bear witness to the images of wanton deforestation, polluted rivers, and growing piles of plastic waste around the world to realize that society is heading rapidly towards a rebellion in our collective attitude toward such catastrophes, and industry is going to be squarely in the crosshairs.
Manufacturers should therefore be acutely aware by now that the spotlight will be on them. Blame will be directed at them, not only through the lenses of governments, but also by consumers and society at large. Now should be the time that every manufacturer (from global brand icons to small single plant operations) recognizes that sustainable manufacturing operations are critical to their future success and brand reputation.
Sustainability Within Manufacturing
The past 18 months have seen manufacturers experience a period of uncertainty, with the pandemic laying bare the widespread fragility of supply and demand chains. With inflation beginning to rise sharply, more uncertainty and volatility is surely on the horizon.
It’s undeniable that coverage on climate change has been dominating television news and newspaper front pages in recent times. This has resulted in both consumers and brands paying more attention to the environmental impact of products and services. The rise of social media has made it easier for consumers to express their concerns of those industries and companies deemed guilty of environmental irresponsibility, with some activists even organizing boycotts against organizations in extreme circumstances.
This pressure towards responsible and sustainable manufacturing is only going to grow; it will therefore become increasingly important for organizations to be transparent in their responses to this issue.
Having a productive and efficient production system has always been an important aspect of manufacturing operations, with the aim being to secure profits, growth, and stakeholder value. However, if a product does not meet the correct specifications, then it goes to scrap, waste, or for rework. While many manufacturers recognize that has a negative impact on performance, the resources that go into making that product in the first place are also wasted—whether human resources, machinery/tool wear, energy, or natural resources/raw materials.
While this approach to quality is important to ensure that organizations continue to operate well and keep their customers happy, the manufacturing mindset must evolve to also understand how that waste is impacting the overall environmental footprint of their operations. Efficiency and productivity in manufacturing are now more about corporate, social, and environmental responsibility than just business performance.
Acting Now Enables Manufacturers to Reap Future Rewards
While our global leaders are having discussions about, and setting goals for, reducing the impact of environmental implications, the same cannot be said about the manufacturing industry. A recent survey revealed that at least 20% of manufacturers are operating without some sort of sustainability policy. Manufacturers often point to cost and time as barriers to achieve a more sustainable operation—however, with the right technology, that sustainability is possible.
To make an impact, manufactures must rethink not only how they design their products, but also how they design, manage, and monitor their end-to-end production processes. By optimizing their production processes to minimize waste and maximize efficiency and productivity, manufacturers will also contribute significantly to the mitigation of any negative environmental repercussions.
Manufacturers must use the available technology to their advantage. During the pandemic, factories all around the globe were closed, or at reduced capacity, due to lockdown restrictions. This provided time for manufacturers to invest in their digital transformation initiatives. Those that chose to invest did so because they knew it would enhance operations and increase efficiency, which in the long run would increase profits.
This same technology can and should now be used to make sustainable operational decisions. Utilizing new technologies will enable manufacturers to unravel the complexity in their processes and give them sufficient visibility to ensure that they can comfortably make strategic decisions at every level of their operations.
Profit No Longer First and Foremost for Digital Transformation Strategies
Digital transformation has become a major theme in manufacturing today, especially for companies with outdated shop-floor operations where legacy processes continue to dominate.
The push for optimizing manufacturing efficiency and productivity should no longer center solely around performance and profit, but should also include sustainability efforts—(and I would argue) with sustainable practices being at the forefront of any manufacturer’s digital transformation strategy.
So, what does the future hold? In the coming months and years, climate change and environmental responsibility are not going to fade away; these topics will become increasingly more prevalent and more urgent…and talked about more. The most important (and first) step for manufacturers to take when addressing these topics is to change the way they operate.
Another critical step for manufacturers is to reframe how digital transformation and smart manufacturing are perceived—through the lens of sustainability.
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