Digital transformation for discrete manufacturers – why it’s so important and how to get it right

Unless you have been doing business under a rock for the last 15 years, you will have heard of the term 'digital transformation’. It was first used in 2011 by Capgemini and MIT, meaning the use of ‘technology to improve performance or the business's reach radically’.

Since then, it has become commonplace. Some sectors have approached digital transformation enthusiastically and quickly, but others have been more hesitant. Manufacturing is one such sector, rooted in the 20th or even 19th century. Digital transformation is easier for bigger companies, but small to medium-sized manufacturers often lack the resources and expertise to approach it confidently.

That’s unfortunate because it means they are missing out on genuinely transformational benefits to the company. Forthcoming Forterro research will show that almost half of UK midmarket manufacturers see ongoing digital transformation as a future technology priority. The desire to embrace digital technologies is evidently there, but some organisations need a guiding hand.

Why is digital transformation so important for discrete manufacturers, how can it address pain points and what’s the best way to approach it?

Operational pain points in manufacturing

At Forterro, we mostly provide our 123Insight MRP and ERP software to discrete manufacturers. We work with a number of industries within manufacturing, including electronics and engineering. While each has its differences, there are a number of challenges that we see time and time again.

First, there is a lack of detailed knowledge regarding costs. In an uncertain economic and political climate, prices can fluctuate dramatically with little notice. This has an impact across the business, and when you also factor in labour costs there is a clear and direct effect on profitability.

When profitability is affected, there is an inevitable knock-on effect on a company’s ability to grow. With profits squeezed, growth is best achieved by improving efficiencies and productivity, and they are incredibly difficult to do when relying primarily on manual processes.

There is also an overall lack of visibility and control over the business, which is crucial. When a discrete manufacturer has yet to embark on a digital transformation programme, it doesn't mean that the company is not using technology at all. Instead, it means it is likely to have old and disparate systems that are not integrated. This means data is fragmented and cannot be used for the smart and informed decision-making critical to modern business.

Employee productivity and motivation are other common pain points. Some roles within manufacturing, such as data entry and invoice processing, are hugely time-consuming. Working in such roles is not productive and is rarely seen as enjoyable. When such tasks are automated, it can free up significant time that can be spent much more productively in other areas of the business.

ERP and digital transformation

An ERP solution like 123Insight can address all the above pain points. There are so many tasks in a business that can be automated, or at least simplified and streamlined using ERP software – including data entry, invoicing, and order processing – across many departments, such as production, inventory, and sales. Having your staff carry out those tasks when they could be processed through a system and completed in minutes makes no sense.

ERP can simplify, accelerate and help automate all this by processing all tasks within the same single system. This saves a discrete manufacturer time and drastically reduces the possibility of errors. ERP systems do not get tired and do not make mistakes.

An excellent example of this is Boyce Precision Engineering. After implementing 123Insight, BPE saw a 25% reduction in stock, with the creation of purchasing and works orders dropping from a whole week for two staff to just half a day for one person. The company is now seeing 20% year-on-year growth and has the capacity to double in size without any increase in administrative staff.

Automation is also critical in areas such as demand forecasting, inventory management, and procurement processes, all crucial to the success of any manufacturer. This reduces waste, improves resource allocation, and saves significant costs, meaning businesses can innovate and grow more efficiently.

Perhaps the most significant impact, though, is using ERP to improve data-based decision-making. With ERP and MRP solutions, a discrete manufacturer will benefit from real-time insight from across the business. This means they can identify potential bottlenecks, head off issues with the supply chain, monitor production efficiency, and change tack according to what the market is doing. It means they are agile, informed, and on top of all business areas.

Best practice in digital transformation

It’s clear that discrete manufacturers should be starting their journey to a digital future. But it’s equally clear that some of those are unsure of the best way to proceed. Do they know what digital tools are available? Which are truly indispensable for a manufacturing business, and which are nice to have? And do you motivate and empower your employees to embrace digital technology?

An initial step is to change how data is perceived in the company. If it’s regarded as a potential wealth of insight and opportunity instead of something to be cautious of, this change of mindset is critical. From there, you can engage your teams about their thoughts on digital transformation – identifying and developing digital champions within the business can also be important – and then develop the right digital strategy for your business.

When you come to select an ERP solution provider, ask to see case study examples of other customers in your industry. This way, you can gain insights and avoid pitfalls from others who have adopted this technology and help your business make the most of the opportunities that digital transformation offers.

Another option would be trying something like 123Insights’ 'No Obligation' training. This allows prospects to become fully trained and have all their questions answered about the system and ERP generally. This significantly reduces the risk of the system being wrong before you commit to a lengthy contract.

If your competitors are embracing digital transformation and enjoying its benefits, it makes it even more important that you begin your own journey. The current business landscape is highly competitive, and you need every advantage you can get.

Book one of our evaluation workshops, which includes a demo of 123Insight and the opportunity to learn how discrete manufacturers can realise all the benefits of digital transformation.

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