What is It?
Gartner gives an effective definition of digitalisation as ‘the use of digital technologies to change a business model to provide new revenue and value-producing opportunities.’ It refers to the ‘process of moving to a digital business.’
If digitisation is the art of making analogue data digital, then digitalisation moves beyond this, leveraging that data to transform business processes and create new models which result in higher value for customers.
Digitisation encodes data – digitalisation converts and transforms that data, collating it, establishing trends, and facilitating real-time business decisions and actions. Therefore, while you would digitise supplier contracts, you would use digitalisation to scan these contracts for common trends, showcase different prices and costs and enabling operators to identify and compare these costs for better decision making.
Digitalisation harnesses new technologies, such as artificial intelligence, the industrial internet of things, computer visioning, and machine learning to completely change traditional business processes based on digitised data.
The history of digitalisation can be traced as far back as 1967 when Barclays opened the first ever automated teller machine, or ATM. Without digitisation and the creation of electronic bank accounts, such a move would not have been possible.
ATMs were revolutionary in the financial sector, enabling people to carry out basic banking transactions without a teller of branch representative, simply by manipulating data that had been digitised to achieve a desired outcome. For the financial sector, ATMs transformed business models. No longer were large physical premises required, since customers could self-serve a lot of their own requirements. Furthermore, eventually money could be withdrawn outside of a bank environment, in supermarkets, high streets and more.
The banking sector has continued to digitalise since this point. Stock exchanges such as NYSE and NASDQ quickly followed, with heavy dependence on internet infrastructure to enable payments and transfers. Today, the sector has gone even further with introduction of mobile banking and Bitcoin.
How does it work?
The Internet of Things (IoT), and Industrial Internet of Things (IIOT) are prime examples of digitalisation. It is about the interconnectedness of the supply chain – reading data from a digital machine, acting on it and sending the data to another entity in the chain. Imagine your fridge being able to monitor how much milk you have left and, when more is needed, to send a notification to the dairy which then packages and delivers the milk to you.
With digitalisation, you can manage day-to-day performance reliably, learn from the past and respond to future swings in market dynamics. You can drive innovation, create value, improve safety, and enhance resource management. Mundane jobs have been automated and employees are all actively involved in decision making and improving business results.
There are lots of benefits to digitalisation, ranging from increased efficiency and productivity to a reduction in operational costs, the creation of more integrated supply chains, improved customer experience, higher agility, better communication, improved transparency, and faster decision making.
However, one of the primary benefits of digitalisation is the ability to automate processes in a busy manufacturing environment. One of the biggest challenges manufacturers have faced in recent years is that of human error, manual processing delays, mistakes, and inefficient communication. Such errors can cost thousands of pounds every year to a business. However, by automating processes, the potential for human error can be significantly removed. Furthermore, humans can be freed from repetitive and low value tasks to instead work on higher value projects, unleashing their potential. This has a transformative effect on a business and its operating model, boosting employee morale, enhancing productivity, and creating new value streams for customers.
While there is a large number of advantages that can be gained from digitalisation, there are also a few disadvantages to consider. While digitalisation does eliminate the risk of human error, we all know that technology can still fail. By centralising our data, we are putting it at potential risk and could lose control over our assets in the event of technology failure. Technology is also prone to hackers and cyber criminals, who become smarter in line with technology upgrades.
Furthermore, by automating processes and instructing technology to empower decisions, we do risk losing thought autonomy. Just as the ease of communication with mobile phones has impacted the way people socialise in person, the convergence of technology in manufacturing could lead to complete dependency, removing the very thing that makes a successful business – entrepreneurship.
Example of a business using it
When a packaging specialist opened a new office, the company wanted to utilise SYSPRO ERP to improve productivity levels on the shopfloor by posting real-time transactions through the use of barcoding technology.
We implemented our NexSys mobile scanning solution, which makes light work of managing inventories, receiving purchase orders, and picking orders. It also complements the powerful inventory management features of their SYSPRO ERP solution and provides real time transaction processing to enable quick and accurate data entry from barcode labels. This effectively eliminates issues associated with manual data entry and transcribing notes from paper documentation. Once scanned the information flows through to SYSPRO in real time, to update its central database.
They have been using mobile scanners with SYSPRO for a few years and are seeing a real increase in productivity levels. The company no longer must perform time consuming manual downloads of stock information. The process of movements in stock is also a lot quicker than when the company used manual methods and they are now able to fulfil a larger number of orders than it could previously.
What does it mean for manufacturing?
Digitalisation is enabling global manufacturing businesses to completely transform their business models. It is changing the way that products and solutions are designed, produced, used, and serviced, and enabling business owners to streamline their capital costs and optimise productivity.
Manufacturing businesses are moving ever closer to their customers, armed with a greater understanding of requirements, and purchasing habits. Through digitalisation, they can respond to periods of peak demand, optimising machinery, and employee shifts, and integrating supply chains to always ensure high productivity and available capacity.
Digitalisation is also a primary enabler of many other associated business goals, for example sustainability, net zero, and the move towards Industry 4.0. Without being able to access, manipulate and act on data through digital tools, manufacturers are unable to optimise their operations with as much speed and accuracy as they can today. This heralds in an exciting new time for the sector.