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Successful Digitalization in Production

Planning the transformation

Industry 4.0: How to Set the Right Priorities
Digital Transformation

If the German economy continues to miss out on digitalization and ecological transformation, deindustrialization could become a reality in 10 to 15 years. This wake-up call from Prof. Marcel Fratzscher, President of the German Institute for Economic Research, is clear. The manufacturing industry must no longer press the pause button on the digitalization of production if Germany wants to continue its success story as a business location because the gap between the potential of digital technologies and their transfer into actual value creation is significant. Although manufacturing is now highly automated, digital maturity means much more: networking of machine data, optimization of processes, new digital services, and even new business models and collaboration with third parties in horizontal data ecosystems.

The Challenge of Digitalization in Production

Above all, uncertainty about the orchestration of the IT landscape and uncertainty about concrete opportunities and risks for one's own business slow down important decisions. German medium-sized-companies have to build the industrial transformation on heterogeneous machine parks and IT landscapes that have mostly grown over decades and are very individual, depending on the manufacturing niche. There is no blueprint for the successful digitization of production. But there are proven approaches that help to set the right priorities.

5 Steps to a Transformation Roadmap

The goal is to develop a roadmap that fits your prerequisites, expectations, and resources. Therefore, take your time and work through all the relevant questions: 

1. Starting impulse & vision: Why do you want to transform - and where to?

Economically sound companies lack the "pressure to suffer" to tackle the Digital Transformation. A vague idea of the benefits also hinders digitization in production. For example, do you want to save energy, produce more environmentally consciously or cheaply, increase process transparency or product quality, comply with legal regulations, or win new customers? Digitalization is always a means to an end. Take a close look at the opportunities and formulate the goals and added values you want to achieve with your project - both in the short and long term! 

These strategic questions clarify that digitalization cannot be located exclusively in the IT department. The vision to which digitalization measures are aligned must be set, supported, and driven forward by the company's management. The Chief Digital Officer (CDO) can help remove obstacles and keep motivation high - as a bridge between management and specialist departments and between strategy and pragmatic implementation.


2. Status quo: Where are you now?

Taking stock is the next step if you know where your digitalization journey should lead. The success of digitalization is decided in three central fields of action: DIGITAL BACKBONE, OPERTATIONS PLATFORM, and CONNECTED ECOSYSTEM:

Industry Wheel_Fertigungsindustrie_1480x814
(c) Arvato Systems

3. Resources: Do your framework conditions fit?

While a lack of budget was the bottleneck for many years, today, human capital - i.e., IT specialists, data, and digitalization experts - is becoming the limiting resource. In addition, the digitalization of production is a change project that affects not only technologies but also people, namely those who work with the new systems. Non-cooperating employees worsen the ROI and, thus, the digitalization success. A smooth transformation also needs communication, a culture of error, a spirit of innovation, and accompanying change management. 


4. Strategy: Which prioritization makes sense?

To ensure you use your budget and human resources efficiently in the plethora of technical possibilities, you must prioritize: What is the logical next step? With which project can you solve an acute problem or achieve quick monetization successes that motivate and release energy for further transformation? And which steps should you take today, even without quick wins, to avoid missing the boat? There is no "one-size-fits-all approach", but flexible and modular frameworks with which you approach your vision in learning loops are ideal.


5. Team: Where do you need support?

Planning and implementing a Digital Transformation requires a large ensemble of competencies. Successful digital projects, therefore, involve many employees and are characterized by cross-departmental cooperation and precise coordination. External experts can also help in various roles to compensate for missing skills and relieve employees - for example, as external CDOs, IT architects, security specialists, implementation partners, change managers, or in strategic sparring during the development of business ideas. 

A Look at the Practice

A manufacturing company may already have machines with sensors that monitor the wear of cutting knives (condition monitoring), for example, but only uses this technology for the message "Replace knife". The transformation idea now goes further: with the appropriate analysis, the sensor data can forecast when the next replacement of a cutter blade is expected (predictive maintenance). This makes it possible to plan machine downtimes and thus safeguard production processes. The next stage of expansion could be the analysis of sensor data with AI algorithms, for example, to identify the degree of wear of the knife that impacts product quality. Additional sensors are used that also measure energy consumption or emissions. Planning a Digital Transformation of this kind means bringing the technology's potential into line with the goals and challenges of the company and finding the right entry point. With an experienced partner, manufacturing companies can keep up with the Digital Transformation and remain competitive.

Conclusion: Time to Act

The awareness of the necessity of smart digitalized production has reached the management floors. The start has been made with automated production - now it is a matter of successively increasing digital maturity, optimizing internal processes, and exploiting opportunities for new growth. The phenomenon of "German Angst", i.e., a cautious wait-and-see attitude and an excessive need for security, is something that manufacturing companies cannot afford if they want to survive in global competition and avert the threat of Germany's deindustrialization.


A deep dive into the three fields of action and the building blocks of the respective transformation phase is provided in our trend paper "Digitize Manufacturing. Securing Future."

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Written by

Becker, Oliver_00708305
Dr. Oliver Becker
Expert for the Digital Transformation of the Manufacturing Industry