New research involving 200 U.S. manufacturers shows the progress that is being made by the U.S. manufacturing sector to turn digital.

The study, which was conducted by Longitude Research for Siemens, looked at digitization progress in numerous areas, including data, connectivity, integration and security.

As part of the study, researchers spoke to a variety of industries and found manufacturers fall into two defined categories when it comes to digitization: efficiency experts and revenue re-inventors.

The report also shows how manufacturers aren’t just concentrating on one type of digital technology. Instead, they are adopting a host of solutions such as cloud computing and the Internet of Things as their use of digitization expands.

What Else Does the Report Tell Us?

As mentioned in the introduction, the report established there are two main categories of manufacturers: Efficiency experts and revenue reinventors.

Efficiency experts are adopting digital technology quickly, with a focus on virtual training, artificial intelligence and connected sensors, the report shows. Their primary motivation for introducing new technology was improved employee safety, uptime and efficiency.

Revenue re-inventors use digitization to create new markets and take their businesses in a new direction. They also “identify themselves as both financially and digitally ahead of their peers”, according to the report.

However, the report also shows slow progress in digitization among some manufacturers.

Why the Slow Progress?

Commenting on the research, Raj Batra, President, Siemens Digital Factory Division, U.S. said:

“It’s probably not surprising to see mid-sized companies delay in embracing new technologies, but even Fortune 500 companies sometimes hesitate based on various barriers,

“Companies are aware that digitalization is driving industry forward and that it is essential in long-term strategy and planning to remain competitive in a global economy. Innovation and technology is available today that will enable a digital path to success.”

However, there are several reasons why manufacturers are naturally reluctant to make the change. One of the top concerns voiced by company representatives was worries over cybersecurity, and according to research, they’ve a right to be worried.

A study by Deloitte and the Manufacturers Alliance for Productivity and Innovation shows that 39 per cent of manufacturers have been targeted by a cybersecurity breach, and the Cyber Risks in Manufacturing report goes into detail about how new advances in manufacturing such as the Internet of Things, sensors and smart products can put manufacturers at a greater risk.

Further, according to Dean Bartles, Founding Executive Director of the Digital Manufacturing and Design Innovation Institute, most of the small/medium sized companies that make up the United States manufacturing sector do not understand the newer technologies or the processes involved in switching over to them.

However, the research clearly demonstrated the benefits for manufacturers who do introduce digitization, including increased uptime, efficiency, productivity and the ability to create new products.

Commonly Used Digital Technologies

The report also examined the most popular digital technologies that are being adopted by manufacturers.

Cloud computing currently dominates with 85 per cent of the manufacturers surveyed incorporating it into their business. However, connected sensors also have wide use, and 3D printing has been picked up by almost 40 per cent of manufacturers.

Data & the Manufacturing Industry

The research details how the manufacturing industry has been keen to introduce advanced data analytic tools into their business, with 34 per cent of them stated they have implemented them; there was also heavy use of predictive analytics.

However, the report also reveals a lack of data analysis by companies in this sector, which the report concluded meant “a significant amount of data goes unanalysed”

In addition, the research indicates many manufacturers could be missing out on revenue opportunities by not better using the data they have access to. However, this isn’t just a problem in the manufacturing industry.

Research from PricewaterhouseCoopers and Iron Mountain regarding data shows that almost half of companies gained “little tangible benefit from their information”, while others admitted they gained no benefit at all.

The Importance of Digitization

As with other industries, manufacturing companies that incorporate digitization have a better chance of outperforming others in their sector. For instance, a use of data analytics can increase profits. In addition, digitization can enable businesses to use technology to their advantage to create the next generation of products.

For example, a report by McKinsey shows how manufacturers have used digitization to aid in the creation of connected cars and intelligent oil fields. Digitization can also improve efficiency and productivity – two factors that are crucial to the manufacturing sector.

Manufacturers who have yet to go digital need to be careful they don’t get left behind. According to McKinsey’s report, digitization will be a key part of the economy in the future and they predict that it might “add up to $2.2 trillion to annual GDP by 2025”.

Digitization & the Future of Manufacturing

Many experts agree that digitization is the future for the U.S. Manufacturing industry. And as William King, chief technology officer of the Digital Manufacturing and Design Innovation Institute (DMII), told chiefexecutive.net back in 2016:

“Digital is how the U.S. wins in manufacturing,”

Despite the patchy progress, manufactures do understand the importance of digitization. 80 per cent of the 180 firms interviewed described digital operations as “a critical driver of every organization’s manufacturing competitiveness”, however, only 13 per cent of them stated that they had “digital marketing capability”, according to the DMII.

The article also notes that while there are ‘pockets of excellence’ in the manufacturing industry, more needs to be done if the United States is going to become a leader in digital manufacturing.

Conclusion

Digitalization has become a core part of the way many sectors do business and one of the industries that can benefit most is manufacturing.

Digitization allows businesses to be cost effective, while, allowing greater productivity, efficiency and deeper data analysis, which all enable manufacturers to compete against rivals and deliver new innovations to win over new consumers

This latest research mirrors earlier studies from other sources, which showed that while progress is being made in the move toward digitization, there is still more than needs to be done if manufacturing is going to succeed and remain competitive in the future.

 

Founder and CEO of Preferred Payments. Financial guru and advocate for transparency in the merchant provider space.