How Data Can Help Manufacturers Thrive in the Fourth Industrial Revolution

To fully realize the benefits of a digital transformation strategy, manufacturers will have to address the fundamental challenge of data integration and management.

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Thomas LeesonThomas Leeson

Manufacturers are excited about the possibilities of digital transformation. As the Fourth Industrial Revolution gains traction, 65 percent of manufacturers expect to adopt digital manufacturing practices by 2020, according to IDC Manufacturing Insights. But only 26 percent believe they have a “digital advantage” from the investments they’ve made, as research from OpenText found. So, how can manufacturers close the gap and make the promise of digital transformation a reality?

To fully realize the benefits of a digital transformation strategy, manufacturers will have to address the fundamental challenge of data integration and management. Reliable access to quality data is essential, and manufacturers who address these challenges can connect operations with analytics and securely unify the enterprise, all while remaining in compliance with evolving regulations. A smart data integration and management strategy is the starting point for better performance.

Efficiency and Performance Improvements at Scale

An investment in data integration and management capabilities pays dividends in any economic environment. When the economy is humming along, it’s important to minimize downtime and increase efficiency to maximize production. The same is true during economic downturns, when budgets for items like equipment repairs are squeezed. In both scenarios, an effective approach to data is the key to performance improvement initiatives.

For example, the quest for increased efficiency and better performance is driving adoption of the data-fueled Internet of Things (IoT). As noted in a McKinsey report, data-reliant predictive maintenance and asset management programs can enable manufacturers to cut downtime by 30-50 percent and extend  machine life by up to 40 percent. Whether the manufacturer is expanding operations or pinching every penny, savings and performance improvements on that scale are a huge advantage.

Streamlined Production and Supply Chain Operations

Supply chains are growing more complex and less linear, so manufacturers who are seeking better performance through consolidation and streamlining must analyze data from more sources than ever before. As a Deloitte Insights report noted, “supply chains are transforming into dynamic, interconnected systems” that require integrating “information from many different sources...”

But to achieve the agility today’s competitive landscape demands, manufacturers have to implement a strategy that addresses information from multiple sources in a variety of formats. They need a way to break down data silos and create a centralized repository. To achieve this, most prefer to focus on their core competencies instead and partner with a data integration and management vendor to ensure access to best practices, skilled technologist and reliable platform to help them complete the vision and strategy for supply chain operations.

Other manufacturers choose traditional Integration Platform as a Service (iPaaS) solutions to build point connections in-house using so-called “citizen integrators,” typically drawn from the IT team.  Whichever path they choose, a centralized data repository makes it possible to analyze processes and examine interdependencies in the detail required to streamline production.

Enabling Product Customization

Product customization is another trend that requires a high level of data competence. Traditionally, manufacturers focused on mass production and left customization to niche players. But today’s consumers want personalized products delivered to their door, and manufacturers are scrambling to meet this demand, using data to predict trends and produce products more quickly so customers aren’t lost to competitors.

As PwC Strategy reports, “within the next five to 10 years, manufacturers in all industries will find themselves in a race to efficiently produce products at the point of demand—that is, where their customers are—and to deliver these items when their customers want them, personalized to their customers’ individual tastes.”

The report also observed that success in product customization will hinge on data systems “that can generate deep analyses” to enable affordable product personalization. Once again, an effective data integration and management strategy is the key, whether the company builds out these capabilities in-house or works with a partner.

Data Fuels the Fourth Industrial Revolution

Manufacturers led the way in the First Industrial Revolution, with steam powering mechanized production. In the Second Industrial Revolution, electricity provided the power for mass production. The Third Industrial Revolution ushered in the era of automated production. And now, manufacturers are adjusting to the Fourth Industrial Revolution, with data-fueled digital assets automating human production tasks.

Manufacturers are increasingly recognizing that data is the new business currency, and they’re looking for ways to generate a maximum return from this valuable asset. However, many companies are still in the early stages of the Fourth Industrial Revolution, with 80 percent of their data siloed and in an unstructured format that makes it difficult to apply. Data integration and management remains a fundamental challenge for these companies.

But it’s not an insurmountable challenge; today, manufacturers have options. Some will devote resources to building a data integration and management infrastructure in-house. Others will work with a vendor capable of collecting, cleansing and harmonizing data, providing secure, reliable access to data that yields insights. As data grows in complexity, many manufacturers are making the decision to partner with a data integration and management expert.

Regardless of the path they choose, manufacturers will find that digital transformation changes the way they interact with customers, suppliers, assets and partners. It’s already happening today. But since data is fueling this revolution, developing a smart data integration and management strategy has to be one of the first steps on the journey. Manufacturers who achieve competence with data will be in a position to outperform competitors as the Fourth Industrial Revolution accelerates.

Thomas Leeson is an industry marketing strategist for manufacturing and supply chain at OpenText.