Title: Boosting Manufacturing Efficiency with Five Cloud-Driven Digital Transformations for Swift Returns
Meet Rajdeep Biswas, currently serving as the Global Vice President of Industry Solutions at Neudesic, an IBM company.
The digital transformation in manufacturing is proving to be an indispensable catalyst for operational efficiency, customer interactions, and financial growth. Given that most organizations have embarked on their digital journeys, the secret recipe for success lies in pinpointing and executing initiatives that yield a swift return on investment (ROI).
As per IDC's 2023 survey on the business value of AI, businesses amass an average ROI of $3.50 for every dollar spent on AI, with 5% of global enterprises achieving returns as impressive as $8. Moreover, a whopping 40% of companies swiftly implemented AI solutions within a timeframe of six months.
This piece will delve into five cloud-based digital transformations that have generated substantial ROI for the manufacturing sector.
1. Industrial Copilot with Agentization
Copilots, hailing from the realm of generative AI, are intelligent digital aides that can tackle complex tasks. Industrial copilots employ advanced AI models in conjunction with cloud-based large language models to aid factory operators, maintenance teams, and decision-makers in their tasks.
The accelerated adoption of this technology is evident, as three out of four knowledge workers already use AI at work, with half of them embracing it within the past six months.
The benefits of this technology include:
- Efficient Problem-Solving: Copilots assist in predictive maintenance, enabling the identification of potential issues before product failures, thereby saving time and resources on repairs.
- Enhanced Productivity: In real-time, copilots offer plant operators suggestions for optimizing production runs, thereby improving efficiency and minimizing waste.
- Human-Machine Collaboration: Copilots allow workers to engage in complex analysis and decision-making activities in real-time.
2. Enhance the Customer Experience
Manufacturing businesses no longer need to limit themselves to a B2B model. As D2C models continue to gain prominence, prioritizing personalization and swift responses in customer experiences is indispensable. Cloud-based Customer Data Platforms (CDPs) and AI-driven contact centers have become instrumental in this transformation.
Neglecting customer experience can have detrimental consequences, as nearly three out of four customers would abandon a brand after a single unpleasant experience. Companies that channel their decision-making through marketing analytics witness margin growth of 21% and increased revenue by 23%. Moreover, these businesses witness a 15% surge in conversion rates and a 20% boost in customer satisfaction.
Leveraging customer experience technology delivers the following advantages:
- Personalized Engagement: Cloud platforms integrate customer data, analyze it, and provide recommendations on customized products and services.
- Omnichannel Support: Cloud-enabled contact centers and chatbots offer 24/7 customer support on multiple platforms for enhanced satisfaction and brand loyalty.
- Streamlined Sales Process: AI-generated sales insights and recommendations aid cross-selling and up-selling efforts, boosting revenues.
3. Improve Production Monitoring and Optimization
Smart manufacturing relies on real-time data collection from production lines, enabling manufacturers to spot anomalies and optimize production via IoT sensors, edge computing, and cloud-based AI analytics.
The analysis of a job-shop manufacturing system demonstrated that digital twin solutions using RFID resulted in a 9.2% higher ROI, increased net present value by 53%, and a CAGR increase of 1.6%.
This technology supplies the following benefits:
- Transparent Operations: Real-time dashboards provide an aerial view of production processes, enabling the identification of bottlenecks instantly.
- Predictive Quality Control: AI-driven visual inspection finds defects and anomalies, improving product quality and reducing waste.
- Informed Adjustments: AI-generated insights recommend optimal output settings to maximize efficiency.
4. Gain Supply Chain Visibility
Cloud-enabled supply chain platforms consolidate data from suppliers, logistics providers, and production facilities into a comprehensive, end-to-end view of the supply chain. Real-time insights empower manufacturers to mitigate risks, forecast demand, and optimize inventory.
During the third quarter of 2024, over a third of manufacturers reported skyrocketing transportation and logistics costs as one of their critical operational challenges.
This technology can alleviate these challenges and more, including:
- Risk Mitigation: AI algorithms pinpoint the likelihood of supply chain disruptions and recommend alternative supply strategies.
- Smart Inventory Management: Cloud platforms contribute to real-time inventory planning, reducing excess stock and freeing up working capital.
- Demand Forecasting: Predictive models analyze consumer trends in demand, enabling just-in-time production.
5. Empower Connected and Enhanced Workers
Connected workers rely on smart devices, augmented reality headsets, and wearables to access real-time information and safety guidelines. This technology can help minimize disruptions due to labor turnover and enhances productivity by reducing errors.
According to a 2024 survey of manufacturing professionals, more than 80% reported that labor turnover had impacted production. With 60% of employees disengaged at work, organizations confront heightened risks, such as doubled accident rates and a 60% increase in defective products, leading to lower profitability.
Connected technology delivers the following advantages:
- Remote Collaboration: Augmented reality solutions enable workers to collaborate with remote engineers, resolving issues without requiring on-site experts.
- Interactive Work Instructions: Factory workers receive step-by-step instructions via AR headsets, fostering accuracy and reducing errors.
- Safety and Compliance: Smart wearables monitor environmental hazards and worker safety metrics, ensuring adherence to safety regulations.
Making the Most of Digital Transformation
Investing wisely in digital transformation initiatives involves anticipating potential challenges and addressing them proactively. Over my career, I've observed several common obstacles:
- Resistance to Change: Employees may exhibit hesitancy towards adopting new technologies and workflows.
- Data Integration and Interoperability Issues: Merging various systems and overcoming compatibility hurdles can be challenging.
- IT/OT Convergence Challenges: Integrating IT and OT systems introduces cybersecurity risks, necessitating robust defenses and skills gap mitigation.
- Cybersecurity Concerns: The surge in IoT devices, sensors, and cloud solutions marks a rise in cyber threats.
- Skills Gaps and Workforce Training: Digital transformation calls for novel skills, such as data analysis and machine learning, which may require extensive training and reskilling of the workforce.
- Data Management and Integration: Managing and integrating vast volumes of data across various departments is complex, demanding an effective data governance system and compatible software solutions.
- Cost of Implementation: Digital transformation demands substantial investments, and budget constraints can hinder swift ROI.
- Measuring ROI and Success: Establishing pertinent KPIs to accurately assess transformation outcomes is innate.
- Complex Tech Landscape and Decision Paralysis: A sprawling technological landscape can overwhelm organizations, prompting decision paralysis.
To realize quick ROI from cloud transformation initiatives in manufacturing, the emphasis should be on high-impact, data-driven use cases. Embracing initiatives like industrial copilots or production monitoring provides the most promising returns.
If you're contemplating where to start, prioritize projects like industrial copilots or production monitoring, which typically deliver the swiftest returns.
In a future article, I will share battle-tested insights on how to set reasonable technology expectations in your organization, fostering timely transformation success.
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Rajdeep Biswas, the Global Vice President of Industry Solutions at Neudesic, an IBM company, emphasizes the importance of focusing on high-impact, data-driven use cases to realize quick returns from cloud transformation initiatives in manufacturing.
Furthermore, Rajdeep Biswas is a potential member for the exclusive Website Technology Council, an invitation-only community for top CIOs, CTOs, and technology executives.
