Maggie Slowik (Senior Research Analyst, IDC Manufacturing Insights)

Today, discrete manufacturing might be undergoing the biggest transformation ever. Not only does the sector need to stay focused on traditional objectives, such as increasing uptime and throughput in the plant, and managing costs, but it must also create and offer more integrated products and services. Connected products are affecting many industries today, to a point where industry leaders that haven’t thought about this are being disrupted by competitors who are digitally-enabled. This implies that manufacturers need to become more focused on data management, as this is the area where most value-add is going to be.

On this journey, IDC sees companies struggling with two key challenges. On the one hand, 54% of manufacturers are facing a digital transformation deadlock as they are not able to progress with their digital transformation initiatives. On the other hand, only a small percentage — indeed 5% — are in the position to use IoT data to create new business models and additional revenues. This implies that most discrete manufacturers are not able to fully benefit from the transformation, and risk losing market share to those that can reap the advantages and opportunities of digital technologies faster.

But what exactly is the root cause of these challenges? According to IDC, it comes down to the failure to integrate new digital processes with existing operational processes. To overcome this, manufacturers need to consider a digital toolbox, which contain the following components:

A New Innovation Model

First, manufacturers should integrate their innovation model, whose purpose was to foster the creation and delivery on the market of digital products, with the new imperatives coming from the digital economy. And what exactly does this require? It means combining the traditional process-driven PLM model with a new model in which data is at the center and different business processes have ways to tap into this data. A key example of this is the digital twin.

Digital twins — essentially virtual lifelike representations — can be used to manage multiple aspects of a manufacturing business, including highly complex, customized products, and connected assets such as manufacturing plants or facilities and the assets within them. Digital twins are perpetually fed by data and processes from multitier supply chains, service plans, and execution, and the operating environment to ensure the most up-to-date view of the past, current, and future performance and condition of these products, assets, facilities, and plants.

Next-Gen Manufacturing

Leveraging next-generation smart manufacturing principles is another step along the digital transformation journey for discrete manufacturers. This requires the creation of data-infused, connected products that can “communicate” throughout their entire lifecycle. These features also enable greater transparency across assets and systems, as well as across manufacturers’ supplier networks (knowing where material is coming from). In fact, information is everywhere, from input to output.

But smart manufacturing also means augmenting the factory worker with smart machines and technologies. For instance, the worker could receive assembly instructions in real time using an augmented reality device, or work side-by-side with cobots on an assembly line.

The third attribute of smart manufacturing is that it is distributed, enabling a more efficient use of local resources. Current uses of distributed manufacturing include 3D printing, which is an attractive proposition for manufacturers as it enables innovation and quicker speed-to-market, with less wasted capacity. And yet, the idea is that all plants are still connected through a centralized, single factory.

The Thinking Supply Chain

Manufacturers will also need to invest in a digitally enhanced supply chain that leverages IoT and sensor data to provide real-time analytics that can serve as inputs for building a cognitive model. On top of that, deep learning modules can aid in the creation of cognitive modules that in turn would be the core of an automated supply chain. This concept of the cognitive supply chain allows organizations to proactively manage inventory by moving it closer to customer demand, which can ultimately reduce supply chain disruptions and therefore the overall cost of supply chain operations. The key sources of this data would be logistics operational systems, warehouse management systems, shipping manifests from OEMs, dealer management systems, and point-of-sale (POS) devices. The data collected will aid in creating supply chain models that account for the unstructured data in the form of environmental, seasonal, and economic factors by creating cognitive models that can predict the inventory and logistics requirements with a high degree of accuracy.

These initiatives are essential yet strategic tools in the digital toolbox for manufacturers that are looking to transform their value proposition from being product-focused to delivering information-based services. However, given their complexity, they require some time to deploy and come into full action.

In the short to medium term, technology buyers need to start with the more imminent tools from the toolbox, to keep paving the way along the digital transformation journey.

Stay focused on creating business value and invest in key digital transformation scenarios. Digital transformation (DX) is not ultimately about the technology but about the outcome, so change your thinking.

Integrate new technologies into your products and processes now. Technology investments, most notably in IoT, are a critical component of DX, with manufacturers that have invested already seeing advantages such as greater visibility into actual product/asset performance. Today’s investments are the stepping stones to future scenarios.

Build on your existing assets. Manufacturers will require their new and existing business applications to support new, advanced ways of operating that are built on top of new capabilities enabled by IoT. Take a holistic view of your assets and ensure your people are prepared for change, including cooperation between IT and the line of business.

The digital toolbox was the theme of the recent IDC Manufacturing Insights Executive Vendor Briefing in London. To learn more about future events, or our service, please contact us at