Manufacturers are practically forced to upgrade their equipment and processes to a more modern level of technology, to keep up with the competition and continue to operate with a profit. But many manufacturing CEOs aren’t aware of the different types of digital upgrades that are available.
The ideal scenario is a digital transformation, but this vague term can be easily misinterpreted if you aren’t aware of its history or true meaning. Accordingly, many manufacturers commit to a digital migration, rather than a digital transformation—and underestimate the value of the latter.
So what’s the difference between these two notoriously similar terms, and why is digital transformation superior?
Let’s start by tackling the core differences between a digital migration and a digital transformation. The basic idea of a digital migration is taking your existing products and services and taking them to a digital space. Think of it as moving one or more key areas of your business from an analog environment to a digital one. A digital transformation, however, requires your business to undergo systemic evolution, changing how your business operates behind the scenes and changing what your business offers to create a more efficient, tech-optimized company.
For example, let’s consider a company that manufactures specialty parts for appliances. They may undertake a digital migration by utilizing 3D printing to produce those parts; the parts themselves haven’t changed, the business hasn’t changed, and it’s not using a new process to sell those parts.
Instead, one new technology takes the place of another. whereas, a digital transformation could involve the research necessary to produce those parts to be stronger, or produce them much more efficiently, or come up with a digital system that allows them to sell more contracts per quarter.
A digital migration is good; it usually comes with a boost to productivity, or a way to keep up with the competition. However, a digital transformation is almost always superior:
- Long-term optimization. Digital migrations typically arise when a manufacturer recognizes a problem and attempts to fix it; they may be responding to threats from external competition or acknowledging that a new technology could improve a single process. Instead, digital transformations prepare a company for a long-term future with integrated technology. Accordingly, it serves as a long-term optimization, rather than a short-term fix; it gives your business more resources and more flexibility that it will need in the years and decades to come.
- New opportunities. Making a digital migration doesn’t necessarily grant your business a new opportunity. It doesn’t give you a new product, a new customer, or a new way to sell; it simply optimizes one thing that already exists. A digital transformation, on the other hand, could give your business ample new opportunities, including new type of products to produce and new demographics to sell to.
- Increased profitability. A company is only as successful as its profitability allows, and a digital transformation has the power to increase that profitability in both efficiency and productivity. If implemented at every level of your business, and in every department, you could drastically improve your cost efficiency—and wind up with a much more profitable model.
That said, not every manufacturer can begin a digital transformation on a whim. For starters, a digital transformation does involve risk; you’ll be investing significant time and money into updating your policies, equipment, and procedures, and not all of those upgrades may pan out the first time you pursue them. Accordingly, you’ll need to make sure you have adequate risk tolerance before moving forward.
You’ll also need to consider the tech skills of your employees—especially in upper management. After all, your technology is only going to be as good as the people using it on a daily basis. For most manufacturers, that means investing in additional training and/or hiring new people to fill in the gaps.
Manufacturers also need to keep top quality, and at all levels of the business. During and after a digital transformation, it’s not enough to have your quality department simply policing the factory floor; quality-focused staff need to be present at every stage of the process, including design, research and development, testing, and follow up because without quality, even the best technology won’t allow you to keep your brand promise.
Manufacturing companies need to pursue a digital transformation if they’re going to survive in the modern era; a digital migration simply isn’t enough. With sufficient risk tolerance, a decent budget, a continuous focus on quality and enough talent among your staff to make use of your new adoptions, any company can find new opportunities and significantly improve their profitability at the same time.