When it comes to digital transformation trends, 2020 will be the breakthrough year for manufacturing. According to IDC Research, companies will spend $7.1 trillion from 2020 to 2023, at a CAGR of 17.5%. There’s been so much talk about digital transformation and Industry 4.0 over the past few years that many manufacturing companies are confused about exactly what the term means, and more importantly, what it means for them. Here’s a look at the predicted progress of digital transformation trends 2020 and beyond.
Companies will spend $7.1 trillion on digital transformation over the next 3 years.
Shift from Pilot to Production
If any manufacturing company hasn’t had at least a few digital transformation pilot projects underway, they are sorely behind the curve. In fact, 2020 will be the year that many companies shift their digital transformation projects from pilot to production. The technology has matured enough to be ready for primetime, and teams have had time to become comfortable using these new tools. Now, the emphasis will be on finding the best ways to provide value to customers on a large scale.
Smart Products Improve Profitability
In its infancy, many people considered digital transformation a collection of tools to squeeze out improved productivity with existing processes and personnel. That is certainly possible, but it isn’t the area of largest impact.
The largest and most impactful of the digital transformation trends 2020 will be the reimagining of products. This will move well beyond the “My refrigerator can call the repairman” stage into a complete recasting of a company’s offerings. Customers are usually willing to pay for features that simplify their lives, reduce their hassles, or provide them with data they value. They are less interested in features that solve the manufacturer’s problems. Rather than say “How can we eliminate a non-value add step in our internal process?” companies will be asking themselves “How can we eliminate a non-value add step for our customer?”
The latest digital transformation trends 2020 will push companies to completely reimagine their product offerings.
Better Alignment of Business Objectives and Digital Strategy
This product reimagination activity is occurring at a strategic level in the most advanced companies, who are looking at products from a customer’s viewpoint rather than with an internal focus. The idea is to determine what aspects of the product a customer values and figure out how that can be digitized. In many cases, these are new aspects of the product that never existed in the past.
For example, many utility companies send their customers monthly letters showing how their usage compares to their neighbors. But customers don’t want to see this information on paper once a month, nor do they want it cluttering their email inboxes at random intervals. They want insight when they want it, in the format they want. The preferred format might be an app or a portal or an ad hoc reporting tool.
If they talk to the customer, companies might find the customer doesn’t want the refrigerator to call the repair person, but to send a text with the phone numbers and customer ratings for the three nearest repair firms. The point of this digital transformation trend 2020 is to solve a problem for the customer, in a way that benefits the customer, not necessarily the manufacturer.
Build Processes to Support Digital Transformation
When retail companies started their Etail arms, they kept them separate. Customers couldn’t return things they had purchased online to their local stores. They couldn’t find something they had seen in a physical store online. It was confusing and off-putting for the customer and expensive for the company. They found a better way, and now most successful retail companies have integrated physical, online and catalog processes and consistent product offerings. Manufacturers need to think about their own internal processes in the same way.
It doesn’t make sense for the digital interface to be separate or different from the physical interface on a product, so it doesn’t make sense to have the two UIs designed by separate teams. That’s just one example. Customers don’t want to pay separate invoices for digital and physical products or to be forced to decide between online, on-premise, or remote support. They want one stream—one way to interact. Manufacturers will need to breakdown departmental walls and internal prejudices to offer this seamless interaction to customers.
Customers expect everything to be streamlined.
Emphasis on People and Training
Manufacturing is much different today than it was last century. Today, CNC machinery is common, and the ability to program equipment is key. Yet many millennials shy away from manufacturing as a career path because they still have last century’s image in mind. Unemployment is at historic lows, making it hard to fill open positions and to find people with the right skill sets. Manufacturers will need to find ways to retrain their existing workforce with the new skills necessary to support internal and product digital transformation. Also, as the workforce ages, they need to make it more attractive for young people to enter the industry. One of the most important 2020 digital transformation trends will be the increased emphasis on training and upgrading employee skills. Also, manufacturers will need to find ways to ensure that potential employees see manufacturing as a viable fulfilling career, not a life-sentence of mindless drudgery.
Continuous, Adjacent, Transformative
Just as manufacturers had to get used to adopting a continuous improvement mindset for their manufacturing processes, they will need a similar continuous improvement mindset for digital transformation. Find an area and do it well. Maybe start with one of last year’s pilot projects and expand the scope slightly to an adjacent area.
However, the real trick here is not to kill your digital transformation with a “thousand paper cuts,” that don’t amount to much real improvement. Look outside and beyond the present scope. Bring in customers, competitors, futurists—whoever you need to help you see how to best transform your physical product into a digital product. The biggest digital transformation trend 2020 is that it’s real, and it’s happening all around you. Don’t get left behind.
Don’t try to complete a complete digital transformation haul overnight – take small steps that generate actual improvement and go from there.
Don’t Try to Master Digital Transformation Trends 2020 on Your Own
Most people can think outside the box—just not way outside the box. When the whole fabric of your product, your company, and your strategy will be affected, you may need some help in charting a course. That’s where we come in. We understand the supporting technologies and we’ve seen how to use them to best advantage. If you’re facing the need to adapt to digital transformation trends 2020, contact us today.