Digital transformation (DX) is a journey, not a destination, requiring manufacturing businesses and those who lead them to ensure they have the right strategy and people in place to not only execute key digital initiatives, but to optimise them along the way.
With the International Data Corporation (IDC) forecasting that the global DX spend among manufacturers will total more than $816 billion this year, it’s clear that the move towards Industry 4.0 is a key priority for manufacturing business owners, and it needs to be, as the very viability of their businesses hinges on the success of key digital initiatives.
There is a heightened sense of urgency for manufacturing owners to transform or fail, as The Manufacturer reports that the majority (82 per cent) of industrial leaders predict their enterprise won’t last another 1-3 years without accelerating their DX efforts. Making matters worse, over half (65 per cent) of respondents admit to being ‘laggards,’ highlighting that they are significantly behind, stuck in the beginning stages of their digital transformations with little to no real DX plans in place.
The rate of failure and biggest barriers to DX success
The DX imperative is no longer optional and requires a commitment to seeing things through, but the manufacturing industry, specifically, is struggling. Digital initiatives are failing at an alarming rate, impacting business performance and the morale of the workforce. According to Gartner, less than half (48 per cent) of digital initiatives enterprise-wide achieve business targets and over three-quarters (76 per cent) of logistics transformations in manufacturing fail to meet critical performance metrics.
The DX challenges that manufacturing owners face are extensive and vary depending upon the organisation, including high costs, pilot purgatory, cultural resistance, uncertain ROI, digital skills gaps, outdated equipment, IT/OT integration hurdles, cybersecurity risks, and data management challenges. But in our experience, the three main challenges manufacturers must avoid at all costs are outlined below:
The top 3 digital transformation pitfalls and how to avoid them
1. Lack of clear digital strategy
The reason why manufacturing businesses aren’t more successful is that many transformation projects begin without well-defined goals or a roadmap to achieve them. Yet without a map and clear objectives, you’re lost before you start your DX journey, wasting time and resources.
Best practice: Your DX strategy must answer your most significant challenges on a fundamental level. It should be future-proof, uncovering new opportunities for digital technology to act as a lever to boost revenue, cut costs, improve quality, and enhance flexibility.
“The digital transformation journey continues to advance, with manufacturers steadily maturing their smart factory strategies. While progress is evident, most companies are still in experimental phases—40% are piloting small-scale projects and 6% are implementing on a single-project basis.”
The Manufacturing Leadership Council
2. Ineffective communication and change management
Miscommunication or, worse still, no clear messaging about why change is happening creates confusion, causes disengagement, and ultimately results in wasted money or causes digital initiative failure. Additionally, a lack of why the project is required, combined with low digital literacy, increases resistance.
Best practice: Change management doesn’t start with technology; it starts with people. Leaders must hone their communication skills and engage their workforce along the way. Make sure your people understand why certain digital initiatives are necessary and that they’ll make their lives easier. Vet the solutions with your team, celebrate wins, and redeploy talent to more strategic and valued added tasks.
“Leaders often respond to resistance by ramping up urgency and adopting a directive leadership style, which is not only ineffective, but actually counterproductive.”
Snigdha Dewal, Senior Principal Researcher in Gartner’s Supply Chain practice
3. Not knowing where to turn for assistance
The current vendor landscape is a “confused marketplace.” With partners promising everything but often underdelivering, adding to the load that manufacturing owners have on their shoulders. Identifying a trusted and suitable partner to meet your requirements is difficult and the cost of misaligned partnerships can be significant, leading to delays, budget overruns, and more.
Best practice: Leverage the support of a select few trusted partners within the broader ecosystem, specifically those who are the right fit for your business and its unique needs. Also, avoid being locked into a vendor; ensure there is flexibility and avoid competing projects.
“We see it time and again—companies eager to transform but lacking the right support network. Without the right partners or the knowledge to guide them, even the most promising digital transformation efforts can lose momentum, stall, or fall short.”
INCIT
Getting ready for next-generation change
A combination of a lack of vision, ineffective change management, and misalignment with partners is holding manufacturers back from progressing on their DX journey. Manufacturing businesses must revisit their overarching strategy and think about how they will bring everything together- i.e., people, technology, and partners to meet critical business objectives.
To address these challenges, INCIT designed Priorities+マーケットプレイス, a dynamic matchmaking platform that facilitates connections between manufacturing businesses and innovative startups that can act as future partners who can help solve their most critical challenges. INCIT’s innovative one-stop platform features vetted providers who offer digital toolkits and/or solutions that grant access to tools such as diagnostics, target setting, calculation, and visualisation, which can be used to address identified digital performance and capability gaps.
Through a unified approach that aligns with your transformation objectives, Prioritise+ ensures you find your right-fit providers that can support DX goals and the materialisation of measurable results to truly transform. To learn more about Prioritise+ Marketplace, お問い合わせ today.
