Manufacturers are being revolutionized by digital technologies. Digitalization is the use of digital technologies and data in order to create revenue, improve business, replace and transform processes, and create a new environment for digital business. Digitalization is integrated into all aspects of our life, and the manufacturing industry is no different. Digitalization is enabling end consumers to be more empowered, creating transparency with suppliers, enabling flexible business models with more customer-focused business processes, enhancing security, and at the same time, allowing for better analysis.
Impact on Customers
Customers are what keep your business going whether you are selling directly to a consumer or are selling to another business. Customers are demanding lower cost and higher quality than ever before. They are using mobile devices and social media to voice their opinions on products in such a way that a less than a great review can lead potential customers to turn to competitors. The voice of customers is empowering them to affect the flow of new customers into your business. It is important to optimize this media to the benefit of your business by sharing, retweeting, and reposting positive reviews from customers.
Transparency for Ease of Fulfillment
Digitalization is also helping manufacturers create transparency with suppliers. Having a real-time system that your suppliers can access helps them to ensure that they can deliver the right configuration of materials at the right time. It is also important to have real-time visibility into the suppliers’ fulfillment process so that you can respond proactively to issues with an order before it hinders production. Digitalization makes this sharing of information easier than ever before.
Rise in Flexibility
Business models are also shifting and becoming more flexible due to digitalization. 3D printing is one way digitalization is transforming business models. It allows manufacturers to have increased customization of products with fewer added costs. A manufacturer that offered limited customization at extra fees can now offer a wide range of customization with 3D printing at a nominal fee. This allows manufacturers to be more competitive and expand existing business models with little effort.
Ability to Customize
With the expansion of customized orders, it is equally as important to have the production ability to manufacture them. To do this, the manufacturing process needs to be synchronized to accommodate custom orders in a centralized production process as opposed to using different production equipment for each custom order. Digitalization allows manufacturers to create flexible production lines and processes that can respond to each custom order by including streamlined processes and new equipment like 3D printers. Without a doubt, all equipment will be networked together in the near future. This will create faster production time, lower costs, and an increased quantity of products.
Digitalization can also be used to create enhanced cybersecurity. Cyber theft is the fastest growing crime, and it is important to make sure your business is protected. Data breaches happen to businesses of all shapes and sizes. Manufacturing generates more data than any other sector of the economy, making it extremely susceptible to hackers. Intellectual assets need to be secured just as much, if not more, than physical assets. The use of digitalization can help detect and identify breaches in security by identifying unauthorized connected devices to their networks.
Many large manufacturers can use data analytics to get an overview of how the company is doing. This allows the company to optimize factory operations and boost equipment utilization while reducing energy consumption and ultimately cutting costs. Factory managers are able to see every stage of the manufacturing process in real time. The information is then sent to project managers to help them anticipate demand and maintenance needs.
Looking Towards the Future
The digital revolution is seeping into all industries. The manufacturing sector is not immune to the disruption of digitalization. The digital impact will lead some companies to success and will leave competitors that cannot keep up in the dust. It is important to embrace the benefits that digitalization has to offer for your company! Speak to MKS&H today to learn how embracing digitalization can benefit your business!
Article Contributed by Stephanie Reid, CPA
About MKS&H: McLean, Koehler, Sparks & Hammond (MKS&H) is a professional service firm with offices in Hunt Valley and Frederick. MKS&H helps owners and organizational leaders become more successful by putting complex financial data into truly meaningful context. But deeper than dollars and data, our focus is on developing an understanding of you, your culture and your business goals. This approach enables our clients to achieve their greatest potential.