By Dr. Ye HUANG and Oliver ARAFAT
In this series, we explore the challenges and goals, core solutions and core products facing manufacturers on their journey to digital transformation.
To be successful in the digital age, manufacturers must adapt to new innovative processes. But the journey to digital transformation comes with its set of challenges.
The digital era has created new models for companies of all sizes and industries to adopt. But many companies rely on a “winner takes all” approach, forcing them to act, build, test, and re-asses over and over in short iterations. It is even more difficult for companies that were established before the digital age to embrace new, technological processes. The issue for many is that they have cultivated traditional methods that are passed down year after year, which make them hard to break.
Encouraging companies to transition to new technologies is a complex task. It requires self-criticism, performance analyses, managing huge amounts of information, retraining teams, to name a few daunting actions. All which have an impact on time and resources. What's clear is that digital transformation impacts all areas of a company.
To break out of the silos that build up for so many years, often decades, teams need to coordinate and collaborate like never before, so the journey to digitalization is smooth and benefits everyone.
Besides the challenges mentioned, digitalization and globalization pose very specific demands on today's manufacturers.
As one of the largest economies in the world, China is one of the most important markets for many manufacturers, both for production sites and selling products. However, entering the Chinese market is not straightforward. For international companies, it poses high standards on legal and compliance, which affect both IT and business strategy.
A second challenge is global IT infrastructure connectivity. Whilst value chains and supply chains are globalized, IT systems need to be able to operate globally as well. To do so, China must be included. This creates very specific requirements and capabilities on any IT infrastructure.
Thirdly, today's manufacturing companies face a variety of compound pressures outside their organizations. These stem from increased competition due to globalization, regulatory pressures on energy-efficiency, and emission-reduction targets.
A direct consequence of today's market landscape means manufacturers must be able to forecast demands for products, control inventory, and continuously improve efficiency at manufacturing plants, as well as account for product individualization.
Manufacturers who make the transition to (cloud-)technologies have faced many challenges. But there are also vast opportunities for growth. Successful manufacturing companies who are able to adapt to new digital innovations are destined to become data- and AI-driven companies.
The primary objective for manufacturing companies is to produce as many goods as possible in the most cost-effective way – and at the highest quality. This has to be achieved whilst going through a monumental transformative shift. No easy ask.
Companies converting from pure manufacturing companies to AI- and Data-Driven companies extend (and often redefine) their existing business models into the digital age of predictive maintenance, cyber-physical systems, and smart-and-cognitive analytics.
In doing so, these companies follow an orchestrated set of strategic targets:
There are a number of ways these companies reduce waste, decrease costs, and boost efficiency. They cut back on energy usage, opt for recycled materials, and embrace green, eco-friendly practices. Selecting eco-friendly IT vendors help achieve these efficiencies.
To achieve the full synergy potential of a company, companies must implement vast restructuring and approaches to modernization. This includes standardizing very large legacy IT systems, whilst breaking up data silos. This will foster the entire knowledge and data within a company and attract new digital native talents.
Instead of settling for outdated, limited legacy software and systems, companies will need to make the most of new technologies in order to succeed long-term. New technologies will allow them to be at the forefront of change and meet evolving client expectations.
To remain agile, manufacturers need to have access to detailed business intelligence. Availability for real-time data on production line efficiencies or cash flow, for example, could prove critical when it comes to making key strategic decisions.
As manufacturers develop global products, they need to be deployed and sold in regional markets – each one with its distinct regulations and laws. Different market conditions and needs must also be considered, as well as eco-systems that may affect end-to-end product delivery in multiple ways. These include time to market, costs, and features. Therefore, it becomes imperative for global manufacturing companies to implement a multi-vendor and best-of-breed strategy that is tailored to the local market needs and conditions.
Manufacturers are increasingly looking at new ways to monetize new business models. They achieve this by leveraging their existing customer-base and hardware-assets for two reasons.
Firstly, to achieve continuous revenue streams instead of a one-time transaction. And secondly, to get better insights of the hardware and service utilization and usage patterns. This continuously improves their products according to their customer needs.
It is clear the road to digital transformation for manufacturing companies is not a straightforward one. Many aspects must be considered to ensure teams are given the best tools to operate, and processes are properly digitized. Following clear and strategic targets makes the transition much more manageable, and will lead to success in the digital era.
To find out more about how your manufacturing business can succeed in the digital era, download Multinational Corporation (MNC) Manufacturing Industry whitepaper today.
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