Are manufacturers 10-15 years behind other industries in their digital transformation?

Digital transformation: Why are things slow to move forward in manufacturing

The manufacturing industry has been slow to move forward, especially from an ecosystem-wide and enterprise-wide digital transformation perspective.

Digital transformation: Why are things slow to move forward in manufacturing?

Manufacturing is obviously a very broad industry where giant multinationals and smaller manufacturers coexist; there are also industrial manufacturers in this ecosystem who cater to both industrial partners and businesses manufacturing goods with a much closer relationship and interaction with the end user.

Like most industries, the manufacturing industry is highly diverse and different aspects of it are moving forward at different speeds. So, on the one hand, digital transformation strategy has been missing in general and initiatives have been largely ad hoc – on the other, things are transforming but in certain areas only. However, as we’ll discuss, a holistic picture view on things is missing, and digital transformation goals are still looked at in a traditional and isolated way by most manufacturing businesses.

Furthermore, and from a traditional perspective, manufacturing companies find it difficult to think outside of “firefighting mode” – i.e. they typically react to problems rather than anticipate them and come up with innovative solutions to prevent them altogether.

This is one of the main reasons manufacturing businesses have not been able to chalk out long-term digital strategy approaches to major issues, and instead, come up with ‘quick fixes’ to keep up with productivity.

A survey done by a manufacturing software platform provider in early 2022 revealed some very interesting insights on the state of digital transformation in the manufacturing sector:

  • Only 24% of manufacturing businesses have a digital transformation strategy in place.
  • The pandemic forced 18% of manufacturers to speed up their digital transformation initiatives; 35% had no choice but to slow down the implementation, probably due to a lack of preparedness, while 47% were either unaffected or didn’t do anything at all – most likely because 42% manufacturers hadn’t even started the digital transformation process yet.
  • At least 30% of manufacturers plan to invest more in digital transformation this year but that is yet to be seen.
  • One of the most common challenges faced by manufacturing businesses to embracing digital transformation is lack of vision or a clear path, as well as a general lack of funds and problems and/or reluctance to shift away from legacy systems.
  • Nearly 50% manufacturers resort to consultants to help understand what digital transformation is all about and how it may impact their business.
  • At least 34% of manufacturers say that they will need a minimum of over 2 years to achieve any kind of success in digital transformation, while in contrast, only 10% said that they can achieve that success in 6 months or less.
  • Most manufacturers see the positive effects of digital transformation only from an ROI or reduced labour costs perspective.

Final thoughts

Successful digital transformation is very much possible for manufacturing companies across all scales and sub-sectors.

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ENDS