While manufacturers aspire to digitally transform their operations, many lack the data-centric foundation required to support this digital shift and face an uphill battle with legacy systems. Here’s how to push past this constraint to realize digital dividends.
The Difference Between Digital Thrivers and Digital Survivors in Manufacturing
Tom Franceski | DocStar
In today’s highly competitive manufacturing environment where customers have lots of choices, only the operationally exceptional manufacturer will thrive. Most manufacturers today recognize the need for digital transformation, and the need to connect machines, processes and systems on the shop floor– a.k.a “the connected factory,” but there’s another side to digital transformation that manufacturers must embrace. This comprises digitizing front- and back-office operations to optimize work flow and connect personnel, processes and data.
Front-office operations can be thought of as the rudder steering the manufacturing ship; these include functions such as sales and customer service, which govern demand pipeline to ensure the livelihood of the manufacturing organization. Back-office operations are akin to the engine room – guiding the organization to steam along and continue to produce via processes that often reside entirely outside of the manufacturing floor. These functions include accounting and human resources.
Digital transformation in front- and back-office manufacturing operations is about supporting more cost-effective, more intelligent and more efficient operations, while improving scale and agility to support a better, faster or improved customer experience. It’s also about leveraging human capital in the best possible way to deliver value added benefits to the organization and its customers. What’s more, it’s about streamlining and simplifying processes around mission-critical manufacturing requirements, such as change order management, traceability, quality and compliance.
According to IDC, worldwide spending on digital transformation technologies is projected to be more than $1.2 trillion in 2017, an increase of 17.8 percent over 2016. IDC expects DX spending to maintain this pace with a compound annual growth rate (CAGR) of 17.9 percent over the 2015-2020 forecast period, reaching $2.0 trillion in 2020.
"Changing competitive landscapes and consumerism are disrupting businesses and creating an imperative to invest in digital transformation, unleashing the power of information across the enterprise and thereby improving the customer experience, operational efficiencies, and optimizing the workforce," says Eileen Smith, program director in IDC's Customer Insights & Analysis Group. According to Smith, discrete and process manufacturers are contributing nearly 30 percent of the afore-mentioned spending on digital transformation in 2017.
Developing these digital proficiencies goes a long way toward fueling growth. A recent study showed companies that successfully make the digital shift have 16% higher revenues, generate 26% more profit and see 12% greater market valuations. Bain & Company found the most digitally mature companies are eight times more likely to gain market share than companies deemed the least digitally mature.
Digital transformation is also about making manufacturers more customer-centric. A lost customer can mean millions of dollars in lost sales. Additionally, as organizations align their offerings to meet a wider array of needs and requirements throughout the customer journey, this creates opportunities to capture greater revenues and competitive differentiation. But as they branch out to serve a broader range of customer needs, and get closer to the end consumer, customer experience becomes more critical.
The only way to survive business disruption will be to digitally transform business processes and information. This, according to IDC, will separate “Digital Thrivers” vs. “Digital Survivors.” What are the characteristics of Digital Thrivers? IDC says Thrivers:
Surface information from siloed business systems, to deliver it to the right individuals, informing the right processes, at the right time.
Create the foundation for the real-time connected enterprise, ready to synthesize new data streams from the Smart Factory floor.
Create a single source of truth for product and service quality data and making it easier to analyze the data for business insights.
Increase visibility of product performance and service activity in the field to support after-market service and generation of new revenue streams.
Increasing mobile access to CRM, contract management, and sales order management applications for customer-centricity.
Unfortunately, many manufacturers lack the data-centric foundation required to support this digital shift and face an uphill battle with legacy systems. Many manufacturers have existing legacy systems and technologies that do not provide the functionality, integration and upgrade capabilities required to support the move to a truly digital organization. For many manufacturers, digital transformation may mean struggling with digital debt that can stymie business growth potential. Defined, digital debt embodies itself in IT cost burdens, due to decisions made with legacy technology years ago, but also in terms of unsupported old releases, or isolated systems that may hold a business back from its full potential.
Enterprise Content Management (ECM) empowers organizations to move past the limitations of their legacy systems to surface the right information to the right individuals at the right time to support the tasks at hand. It is a key technology that enables manufacturers to simplify the management of volumes of information, digitalize operations, and accelerate business velocity.
Securely managing business documentation and automating these processes via ECM improves productivity and streamlines compliance, enabling organizations to provide a better, easier experience for users.
Used in conjunction with manufacturers’ existing business systems, ECM creates a complete process automation and optimization solution involving both document/paper and non-document centric processes to support improved efficiency and decision making by making information and task flow incredibly accessible. Leveraging ECM cloud-based solutions, which can free manufacturers from up-front IT costs and management headaches associated with on-premises systems, has become an increasingly attractive option for businesses with distributed workforces that need anywhere, anytime access to information.
ECM helps manufacturers address a broad range of business requirements, providing a data-centric foundation for digital transformation:
Ensure one version of the truth – Organizations can guarantee file integrity with time and date stamps and version control so they can always be assured of accuracy when uploading, retrieving and attaching documents to objects/tables (sales orders, purchase orders, parts, etc.).
Satisfy document archival requirements – Organizations can automatically archive documents (such as invoices, sales orders, purchase orders, etc.) for best-practice audit trail documentation. They can also manage document retention to comply with regulatory retention policies.
Collaborate with customers and suppliers – Making business processes transparent and/or open to engagement from customers and suppliers supports improved satisfaction and stronger relationships and loyalty.
Streamline and scale business operations – Digitization and process automation helps organizations experience newfound efficiencies to accomplish more with fewer resources, support the virtualization of work and provide the foundation for growth.
As manufacturers’ work to automate processes to improve capacity and reduce waste on the shop floor, ECM can help front- and back-office to operate at peak performance through improved efficiency and customer-centricity, and become more flexible, adaptable and empowered to grow and thrive.
About Tom Franceski
Tom Franceski is vice president and general manager of DocStar – (www.docstar.com) – a division of Epicor Software Corporation. DocStar proven business process automation technology and workflow expertise empowers organizations to operate at peak performance, navigate change, and grow.
The content & opinions in this article are the author’s and do not necessarily represent the views of ManufacturingTomorrow
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