In 2020, digital transformation in the manufacturing industry was valued at $263.9 billion USD. This figure is anticipated to reach $767.8 billion USD by 2026. As business leaders in manufacturing, you probably already know all about how DX on your production line can improve your machinery, drive your production rates and refine your overall output.
But what about your day-to-day, run-the-biz systems? How can digital transformation in manufacturing also benefit your wider company operations and employee performance? How can you utilize DX in manufacturing to craft a more meaningful and engaging employee experience, and what other bonuses may you discover along the way?
At Blink, we know a thing or two about transforming the employee experience through the right digital tools and technologies. So with this guide, we are providing you with a comprehensive introduction to the key benefits of digital transformation in manufacturing and why it's essential for your organization right now, with a core focus on the digital employee experience and how you can transform it in your business.
What is digital transformation (DX) in manufacturing?
Digital transformation (DX) in manufacturing is the process of implementing new digital technologies to improve and refine processes in a manufacturing organization. This typically involves a range of procedures, from improving communication and collaboration to adopting new manufacturing methods, or automating tasks.
A digital transformation strategy works to improve the overall efficiency, productivity and profitability of a manufacturing organization by integrating new digital technologies – such as employee engagement tools, Industry 4.0, big data analytics, cloud computing, Internet of Things (IoT), artificial intelligence (AI) and augmented reality (AR) – into company processes.
And while we all know that production machinery and tech makes up a huge part of your company processes, it’s important to see the wider picture, too. DX can actually have a significant impact on the behind the scenes operations of your business, including how you communicate and engage with employees, distribute knowledge and connect teams, recruit new talent, and even support the wider community.
By undergoing DX in all areas of your business and integrating stronger digital employee experience strategies for your workforce, you can in fact unlock a range of surprising benefits for your organization.
Main goals of manufacturing digital transformation
"It's not possible to pick just a short list of technologies and declare them to be the next big thing. Any innovation project is always a combination of different technologies and thoroughly designed processes aiming to achieve business goals."
Max Ivannikov
But what are some of the main goals that manufacturers are focusing on for their digital transformation initiatives? As this industry whitepaper discusses, the main goals of manufacturing digital transformation can be segregated into four broader areas:
- Cost reduction: Leveraging digital technologies to reduce costs in areas such as supply chain management, employee performance, production planning and inventory control.
- Competitive advantage: Utilizing digital technologies to gain a competitive edge in the market, such as through improved customer/employee experience, product customization and data-driven decision making.
- Agility: Increasing flexibility and adaptability in the face of changing market demands, such as through improved supply chain visibility, predictive maintenance and agile business processes.
- New business models: This could include refreshing manufacturing processes, investing in digital technology to improve processes company-wide, and otherwise finding new revenue streams through digital transformation initiatives.
Common roadblocks to DX in manufacturing
Some common challenges organizations see when undertaking DX in manufacturing include:
- Competitive market: In a highly competitive market, your current digital capabilities and processes may not be enough to stay ahead. And with the swift upturn in DX investments in the market, it can be difficult to keep up with competitors who are already rapidly integrating new digital technologies. While you might feel on the back foot, it's important to remember that digital transformation is a long-term investment, and there are always opportunities for growth and sustainable improvement.
- Distributed workforce: It can be difficult to know where to begin with digital transformation, especially for manufacturers who have a distributed workforce and may not have a clear understanding of the specific needs and pain points of their frontline employees. This can make implementing new processes, rolling out communications and combating employee attrition particularly challenging. We'll dive deeper into how to enable DX by empowering your frontline workers later in this post.
- Costs and fees: Adopting new digital technologies and processes can be a costly investment, and there may also be additional fees for training and implementing these changes company-wide. It's important to conduct thorough ROI analysis and carefully weigh the potential long-term benefits against the initial costs.
- Resistance to change: Change can be difficult, especially for employees who have been working in a certain way for many years. This is why it's important to have clear communication and a strong employee engagement system in place to help employees transition and adapt to the new digital technologies and processes.
Enabling DX by empowering the frontline
As we mentioned, a distributed workforce and lack of visibility into the specific pain points and needs on the frontline can make DX a challenge for manufacturing organizations. But by focusing on empowering your frontline workers, you can not only improve their experience and enable better communication, but also gather valuable insights to inform your digital transformation efforts.
One way to do this is through a mobile-first approach, providing frontline employees with devices and applications that allow them to easily access the information and communication they need, wherever they are on the factory floor. This not only improves productivity, but also allows for better data collection and analysis to inform DX initiatives.
Another key aspect is giving your frontline employees a voice in the digital transformation process, through tactics like regular check-ins and surveys, as well as dedicated onboarding and training programs. By actively seeking their input and understanding their specific needs, they will feel more engaged and empowered in the DX journey.
Frontline specific tech like Blink's employee app allows for better communication, feedback and overall engagement with your frontline workers. This helps to address common DX challenges such as unclear frontline needs and resistance to change, while also improving productivity and efficiency on the manufacturing floor.
With real-time employee engagement analytics, manufacturers can also track the impact, employee satisfaction and ROI of their digital transformation initiatives, supporting cost reduction efforts and decision making.
One great example to illustrate this is our work with JFE. When Canadian manufacturing company JFE approached us, their frontline workforce was disconnected due to outdated technology and communications, and they were facing large shortages in the labor market.
We overhauled their current technology and communications processes with a real-time communication solution by offering channels to funnel information, the ability to communicate with their operating teams through chats and a central hub to give employees access to company information in one place.
As a result, JFE was able to improve their recruitment processes, employee engagement, satisfaction and, crucially, its workers’ safety. With our help, they took the company from 300 to over 450 employees, and were able to promote initiatives in both recruiting and retaining staff to make them a more attractive employer to staff and new recruits.
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Interested in seeing how Blink's employee app can support your manufacturing digital transformation efforts? Schedule a free demo today.
6 unforeseen benefits of DX in manufacturing
So, you already know the production benefits of implementing DX in your business, but what about the benefits of DX solutions for the back of house? Here are 6 key benefits of DX in manufacturing that you just might have overlooked in the past.
1. Reduce staff turnover & recruit the right talent
More than 90% of manufacturing leaders believe that DX is important for their success, IDC states. They go on to predict that global DX spend among companies in discrete or process manufacturing industries will total more than $816 billion in 2025.
Hiring and retaining the right people in a competitive market can be a challenge for manufacturers, but DX can help. And with the IDC statistics above, it's more important than ever for manufacturers to keep up with digital transformation efforts in order to stay competitive in the recruitment market and attract top talent.
Adopting new technologies can make a company more attractive to potential employees and improve employee satisfaction and retention. It allows you to modernize, stay competitive and attract the right employees even when competitors are vying for the same pool of skilled workers with high DX spend.
In addition, frontline-specific tech can boost your employer value proposition as a manufacturer. You listen to how the frontline thinks and feels, allowing you to build trust with the entire workforce and reduce churn.
2. Improve worker health & safety
According to the Workplace Safety Index 2020, workplace injuries are a key driver of loss for U.S. businesses, costing more than $1 billion per week and $59 billion annually.
As we mentioned before, the rise of Industry 4.0 in the manufacturing industry has seen various manufacturers investing in new digital technologies to automate, modernize and enhance the entire process.
And with losses like these reported in the WSI, the key aspect of this modernization in the manufacturing industry is safety. By improving traditional manufacturing processes, boosting direct communication and implementing predictive maintenance, manufacturers can improve worker health and safety at the workplace.
With a frontline app like Blink, manufacturers can also gather direct employee feedback on safety concerns and act on them quickly, as well as offer training materials, policies, procedures and updates to ensure a safe work environment.
Additionally, with research showing that engaged workers are more aware of their surroundings and best practices around safety and are more likely to take steps to protect their co-workers, by investing in and driving employee engagement throughout your company, you can improve worker health and safety as a whole.
By promoting a culture where employees feel comfortable to speak up about concerns or risks, actively participate in risk management and adhere to policies and procedures, manufacturers can see a decrease in injury rates and overall improvement in the health and safety of their workforce.
3. Increase your bottom line
The latest data suggests that digital transformation investment for manufacturing companies increases business value. Gartner reports that 36% of manufacturing enterprises realize above-average business value from IT spending in digitalization at a reasonable cost when compared with peers.
Opportunities for driving profit and increasing your bottom line don’t only come from your production line. Keeping the wider picture of DX in mind, you can utilize digital tools to drive business value through improving your run-the-business functions (like finance or human resources)
DX in an organization’s HR function, in particular, have shown increased employee engagement and statistics show that highly engaged organizations benefit from:
- 18% higher sales
- 23% difference in profitability
- 43% difference in turnover.
With employee engagement tools that provide streamlined workflows, real-time frontline communication and intelligence, seamless scheduling and product updates in addition to new production tech like IoT and augmented reality, manufacturers can cut down on extra expenses and improve the overall efficiency of all their operations.
This ultimately drives up profits and revenue and increases business value, with your teams performing at their best by using the latest and greatest technology solutions.
4. Boost Employee Engagement
The digital transformation process can also boost employee engagement. Adopting new, modern technologies can make employees feel more valued and appreciated, improving job satisfaction and retention rates.
Currently, Gallup data notes that industrial manufacturers haven't quite caught up to other industries in terms of adopting digital tools to improve employee engagement, with only 25% of manufacturing employees stating they felt engaged at work.
DX offers new ways for frontline employees to communicate with each other and leadership, improving transparency and overall communication in the workplace – a key component of employee engagement.
With frontline-specific tech designed to engage employees like manufacturers, you can gather key employee feedback and act on it to improve processes and enhance overall employee engagement.
Further, according to the Chron, employee satisfaction is a reliable predictor of employee retention, meaning you can reduce churn and cut recruitment costs at the same time by improving the engagement your employees have with their digital tools.
Simplified, improved communications and streamlined, intuitive workflows means DX can enhance employee satisfaction levels for frontline workers, in turn, boosting their levels of engagement with their new tech and your employee retention rates.
And with the distinct improvement in profitability, sales and turnover that engaged teams provide as we highlighted above, it’s clear that investing in employee engagement initiatives is worth it from an ROI perspective.
5. Improve employee productivity
It’s obvious how traditional digital transformation solutions help improve quality on the production line. But did you know that implementing DX to improve your employees’ engagement can also lead to huge productivity boosts?
In the manufacturing sector, DX is not only about staying competitive or cutting costs – it's also about supporting your current employees; finding innovative ways to drive their motivation and productivity for a better overall business performance.
TechNative tells us that businesses must embrace innovative digital tools to make the employee experience seamless and personalized, creating a stronger emotional connection to the day-to-day experience of work.
Adopting new digital solutions, like frontline intelligence, predictive analytics and real-time communication solutions, allows you to foster connection with your frontline employees and act on their feedback to streamline day-to-day tasks. As such, your employees will feel better supported to be productive and efficient in their roles, and can produce their best work.
These employee technologies also offer product updates that keep everyone aligned with company goals, as well as streamlined workflows and schedules, reducing miscommunications and errors and allowing for maximum productivity.
So, not only does investing in digital transformation for your frontline workforce improve their overall job satisfaction, it also leads to a significant increase in motivation, productivity and output. It’s a win-win!
6. Build a positive brand reputation
In today’s day and age, it’s no secret that a company’s reputation is everything. In fact, the World Economic Forum has stated that a company's reputation can account for a quarter of its market value. Additionally, 87% of executives believe that reputational risks are more pressing than any other strategic risks.
As the digital transformation movement continues to evolve, your reputation as a manufacturing leader hinges on how well you adopt and use technology for success. Investing in new digital solutions for your frontline workforce is not only beneficial for your employees and your bottom line, but also for building a positive brand reputation.
By boosting employee engagement, satisfaction and productivity with technology, you’re not only improving the experience for those within your company, but also for your potential new hires and even your customers. With employees better equipped to provide top-notch service and meet customer demands efficiently, you can create a more positive customer experience and, ultimately, attract new business.
On top of that, adopting digital solutions for your frontline workforce also demonstrates your commitment to innovation and staying ahead of the competition in the manufacturing industry. It shows potential employees, investors, partners and customers that you’re dedicated to improving processes and creating a successful future for your company.
4 DX in manufacturing tips
Create a DX roadmap
According to LTI’s whitepaper:
"Business leaders must move away from industry stereotypes, understand technologies, and help firms ride this wave with a competitive advantage by developing a successful transformation roadmap."
A DX roadmap, or digital transformation roadmap, is a plan that outlines the specific steps and timeframes for the adoption of new technologies to achieve your DX goals. This roadmap may be long and contain a number of different steps, but this allows you to stagger your digital transformation initiatives over time, prioritizing the areas that align with your current goals and business requirements.
To create your DX roadmap, you first need to understand the current state of your business. Your KPIs from above will come in handy here. Without knowing your starting point, it is impossible to map out a clear path to your goals. Therefore, knowing where you currently are is essential.
Your DX roadmap should outline key objectives, success metrics, technology investments, roles and responsibilities, and timelines. Begin implementing new technologies, methods, and processes one step at a time, starting with those that will have the biggest impact on your desired goals. And don’t forget to measure and evaluate your progress regularly to ensure you stay on track.
Remember the bigger picture
Remember, digital transformation is a long-term investment, with long-term value. Digital transformation is changing the way people do business.
Great digital leaders sift through the latest technologies to identify which ones will have the biggest impact on their business, and then prioritize those implementations. Keep in mind that digital transformation is not just about adopting new technology, but also about changing processes and culture for maximum efficiency and success.
And even with the relevant new technologies and industry trends to guide your digital transformation, you want to be uniquely positioned from your competitors. So, it's vital that you consider the wider market picture and how your DX transformation fits into it.
Consider your USPs. Can you provide a swift turnaround time based on your unique manufacturing technologies or streamlined business processes? Do you provide a second-to-none customer service journey because your customer-facing employees are always in direct contact with your frontline? You want these to be considered when mapping out your DX journey.
Set, monitor and measure your core transformation goals
To undergo digital transformation in any industry, you need to know your transformation goals. According to Asana, the best way to understand if your digital transformation strategy worked is by monitoring your business success metrics.
For the manufacturing industry, these success metrics might include employee engagement rates, retention of clients or employees, a reduction in accidents and errors, increased efficiency in production, and sustainable business growth.
Make sure to align these goals with your business key performance indicators (KPIs), as this will ensure that the entire company is on the same page about what constitutes success for the digital transformation. Plus, it's important to regularly track and measure your progress towards these goals, adjusting as needed.
To do this, look for DX solutions that allow you to access Frontline Intelligence, providing you with key metrics, analytics and insights into your employee engagement, satisfaction and even retention rates. With handy tools like this included in your DX roadmap, you are set up for success in achieving your core transformation goals.
Communicate well and often
As Mckinsey recommends for those undergoing digital transformation in the manufacturing industry:
“Communicate well and often. Establish an effective engagement plan and regular communication with critical senior stakeholders, site leaders, and a cross-functional core team.”
In short, communication is crucial for the success of your digital transformation. Keep all stakeholders, from top executives to frontline employees, in the loop about your DX roadmap and progress towards goals. This will ensure that everyone knows their role in the transformation and can work together towards success.
And don't forget to communicate with your employees! Driving employee engagement and buy-in for the digital transformation is crucial. They will be the ones driving and implementing these changes, so it's important that they understand the benefits and their role in making them happen.
Effective communication can also help with any potential resistance to change from employees. By keeping them informed and involved with easy-to-use, two-way conversations, you can work towards getting them on board with the transformation.
Accelerate your digital transformation today…
It's clear that leaders in the sector must prioritize DX efforts to ensure they're keeping up with competitors and improving overall satisfaction among their workforce.
From minimizing the time spent switching between apps and logins, to sending real-time communications and vital updates, DX allows manufacturers to improve the employee experience in a modern, digital way, and boost their bottom line in the process.
Engineer a better employee experience for your manufacturing workforce today with our frontline employee engagement app.
Designed specifically for industries like the manufacturing industry where workforces don’t have 24/7 access to a computer, or even a company email account, our platform is here to transform how you do business. Our app rethinks outdated frontline tech and offers a modern, digital solution for your frontline employee engagement.
Request a free demo today to see how Blink can transform your manufacturing business.
Digital transformation in manufacturing: FAQs
How does the digital employee experience relate to DX in manufacturing?
As mentioned above, investing in DX for your frontline employees can greatly improve their overall experience at work – from boosted engagement to improved communication and streamlined processes. By prioritizing the employee experience during your DX efforts, you can see significant improvements in employee retention and satisfaction, creating more value for your organization as a whole.
What will the next transformation in manufacturing be led by digital?
With Industry 4.0 already widespread, and the adoption of new digital technologies by manufacturers, the manufacturing industry is already being transformed by digital. This includes a focus on improving processes through data analysis and automation, as well as enhancing communication and collaboration within the workplace.
Why is digital transformation important in manufacturing?
By streamlining the manufacturing process, digital transformation is vital to manufacturers. Other reasons digital transformation is essential in manufacturing include the potential for:
- Improved communication and collaboration between teams and departments
- Enhanced data analysis for improved decision making
- Greater visibility for supply chain management
- Increased efficiency through automation
- Improved product quality with predictive maintenance.
