Time for a short thought experiment. You are asked to make a presentation on the top 5 reasons to invest in a digital transformation program. What would you write down? Resist the urge to read on for just a couple of seconds and try to answer this question in your own words.
Most people would start with a list of technologies. They answer the ‘what’ or answer with a confusing mix of what’s and why’s. We’re pretty confident that during this quick thought experiment, you most likely listed one or more of these trending technologies:
- Introducing Artificial Intelligence in the form of Machine Learning (e.g., to make predictions), the application of Large Language Models (e.g., to assist operators and technicians), the use of Computer Vision (e.g., to speed up quality checks) or why not some form of Agents (e.g., to automatically track the health status of all machines and create work orders assigned to the right team when the Agent believes it’s necessary).
- Putting your data to work in the form of a Unified Namespace or DataOps solution to turn raw data into actionable insights, either on your local systems or in the Cloud.
- Introducing a Digital Twin which links all data from engineering documents, technical manuals and daily operational data into Augmented or Virtual Reality applications.
- Improving your maintenance processes via Predictive Maintenance approaches to predict upcoming failures, potentially utilizing (wireless) the Internet of Things (IoT) sensors to augment the traditional sensor data.
- Make use of advancements in Robots and Cobots to automate repetitive tasks, maximize precision and accuracy, and enhance safety etc.
Most of us love to talk about the ‘what’ rather than ‘why’ when it comes to virtually everything in our life. The same is true when it comes to digital transformation. While these sentences are not necessarily saying wrong things, it’s really nothing more than just name dropping the latest shiny buzzwords (we printed them italics in the above sentences). And we’re sure that by the time this book gets read by you, there will be other ones ready to add to this list.
How can Digitalization help? None of us digitalize for the sake of digitalization or reorganize because it’s just so fun. We do so because our business has certain problems that need solving. We need to define the why before we can jump onto the organizational how and the technical how. We believe that there are three important categories of why’s:
- The classical challenge: optimizing the process (and thus profit),
- The emerging challenge: empowering and optimizing the worker,
- And the must do job: ensuring safety and compliance.
(1) Optimizing the process
Increased profitability is the most popular of all why’s. It’s why companies exist in the first place: make money for their shareholders and pay their employees. Depending on the industry you are in, your focus is somewhere on the scale between ‘being most efficient or reliable’ and ‘being most responsive to market changes’ (or in the case of some companies like SpaceX both). Flexibility (and agility) in your operations gives you the possibility to quickly introduce new or improved products, adapt to changing customer preferences, and seize market opportunities ahead of competitors.
When you produce commodity products or large quantities of the same thing, you want to be as efficient as possible. But you might also be active in an industry in which you need to be able to adapt to changing market conditions rapidly: being able to handle disruptive events, changing customer demands, etc… All these external factors require you to be responsive because those who aren’t, struggle to survive.
Digitalization emerges as a powerful tool for optimizing operational efficiency and driving revenue growth. Most people consider an optimal process as the most important way to outperform the competition. This can be achieved by having the lowest cost per product/ton or by having the best possible overall equipment effectiveness (OEE). Automation and process optimization can optimize several types of costs: equipment, labor, and material usage. Moreover, smart digital solutions can contribute to reaching the optimal product quality (not too high, not too low), thereby reducing waste and rework. A focus on improving the first-time right ratio ensures that resources are utilized efficiently, while mitigating the risk of costly errors and defects. Additionally, you might want to focus on minimizing unplanned downtime, especially when you run at very high utilization rates.
(2) Empowering and optimizing the worker
While profitability is typically seen as the number one reason to digitalize, it’s not the only one. Attracting and retaining people is another reason for those who dare to look further than next quarter.
While assets are a key part of manufacturing, most of these assets are useless if you don’t have the right or even enough people to operate these effectively. And several factors will come together in the next decade to exacerbate this problem: retirement of baby boomers, tight job market, high learning curves, and an unattractive reputation. However, digitalization is an important piece of the puzzle to addressing this issue, and compared to the competition, those who start to take action now will reap the benefits in the years to come.
Hiring for production isn’t easy. The sector has an historic unattractive reputation, sometimes tough and hazardous working conditions, shift work, and little to no remote work. Furthermore, most production sites feel stuck in the 80’s and 90’s with little or no evolution or modernization. For the new generation joining the workforce, this might feel like a step back in time. They have never known a world without the Internet, constant connectivity, and streaming. Why would they want to work in a place where time seems to have stopped and where they have to turn in their smartphone upon entering the building?
By creating a modern environment, you will have a leg up in recruiting and keeping your future talent. Recruiting and retaining these people also comes with an additional benefit since their acceptance of digital solutions is much higher. This will facilitate the acceptance and change management for your new digitalization initiatives.
Attracting new talent is only the beginning. The real challenge lies in equipping and retaining them.
Many manufacturing operations still rely heavily on a handful of experts who’ve been around for decades. These veterans are walking encyclopedias of plant knowledge, deeply familiar with specific machines, processes, and quirks no manual ever captured. Their loyalty and know-how are invaluable—but they won’t be around forever. As they near retirement, companies face a difficult truth: the next generation simply won’t be sticking around for 10 or 15 years to reach that same level of expertise.
Retention is already becoming a critical issue. A 2024 study by LNS Research found that manufacturing workers stay, on average, just three years in a role—and shockingly, half of all new hires leave within the first 90 days. Meanwhile, the existing workforce continues to age, and the gap between experience and expectation widens.
So how do we close that gap?
One answer is to radically accelerate the learning curve. If it used to take a decade to truly understand a plant, the new target needs to be considerably lower. Achieving that won’t happen with traditional training alone. It requires smarter systems that capture institutional knowledge, simplify complex tasks, and offer in-the-moment guidance. Think co-pilots for the shop floor—digital assistants that help people do the right thing, faster and with more confidence.
But empowering workers goes beyond guidance. It’s also about reducing friction. Whether it’s engineers writing PLC code or analysts crunching process data, new technologies like large language models (LLMs) can help automate repetitive steps and streamline decision-making. Not to replace human expertise, but to augment it. To turn every worker into a faster learner, a better problem-solver, and a more confident contributor.
(3) Ensuring Compliance
Lastly, companies don’t work in a vacuum. We need to adhere to legal and industry policies or face the possibility of having to shut down. Ensuring a license to operate encompasses a commitment to sustainability, compliance with legislation, and adherence to industry policies such as Good Manufacturing Practices (GMP), ISO certifications and Cyber Security regulations, amongst many others. Digital solutions can facilitate a lot of the work we do to prove this adherence.