19 Dec 3 obstacles to digital transformation for manufacturers
by Tom Lovell
“Sure,” you say. “Digital transformation sounds fantastic. I’d love to make my manufacturing organization that customer-centric. But here’s the thing…”
Industry challenges are a regular barricade in the path to the ideal future state. In fact, 53 percent of the industry in the United States had multifactor productivity declines during the recent slowdown period.
If you want to have any shot at overcoming those obstacles, you first need to know what you’re up against and how it’s really impacting your business. Three common obstacles that slow down digital transformation for manufacturers are technical debt, data readiness, and organizational alignment. We’ll take a look at each one to better understand the challenge and its impact on manufacturer processes:
Over the last 30 years, manufacturing companies have invested in ERP solutions. The thinking was that ERP systems would solve all of their business problems. Unfortunately, that hasn’t proven true. ERP systems are product-focused—ordering it, producing it, shipping it, invoicing it. None of this involves a critical element: the customer.
Many manufacturers struggle to look at those longstanding technology investments and admit that additional investments are now needed to keep up and improve the customer experience.
This is a problem across many industries, and manufacturing is no exception. Businesses carry tons of critical data, but also a lot of data that’s not. Between redundant data entry, irrelevant data points, or siloed data that are not accessible to the right departments and teams, data readiness plagues digital transformation efforts.
Additionally, manufacturers often struggle to get the right data for the new technology and solution they hope to adopt. For example, if you want to adopt a quote-to-cash solution complete with CPQ and CLM features, you’ll need to have data ready for a pricebook and contract management features. Some manufacturers haven’t even stopped to consider what that information would look like when they start a new digital transformation project.
This obstacle is a two-for-one hitter striking many businesses. First up, there’s the problem of an aging workforce. This is concerning for many because it brings up the issue of institutional knowledge leaving manufacturing organizations over time and showcases a dire need for younger talent to support the sales process in the coming years. That younger talent expects a digital experience that the previous workforce didn’t demand. Manufacturers are losing out to high tech and other industries when it comes to recruitment because manufacturing has yet to fully adopt digital processes that eliminate manual, paper-pushing workloads.
The second part of organizational alignment woes is the “I own this” mentality. Many team members in manufacturing environments believe that their job is a process they own and no one else can do. They associate job security and accomplishment with being the one person who can put out fires surrounding that manual process. Digital transformation, however, threatens that cherished feeling with its promise of streamlined, automated (and pyro-free) processes.
Manufacturers often struggle to get their workforce on board with digital transformation changes due to these two legacy mindsets.
While these challenges are certainly a source of worry for manufacturing decisionmakers, there’s no need to worry for too long. Stay tuned for part three in this series, where we’ll dive deep into three solutions for overcoming the digital transformation obstacles.
Tom is Industry Lead here at Simplus. For over 15 years, Tom has helped companies implement data and process-driven strategies to bridge the gap between business and IT. These strategies have improved patient outcomes, reduced financial risk, and improved operational efficiency in healthcare organizations while bringing to bear streamlined costs, reduced risk, and improved revenue at manufacturers. His passion is architecting and sharing practical solutions that deliver valuable results for customers.