Technology is rapidly advancing, yet the manufacturing industry is trying to keep up under the weight of aging processes. The industry is still running on legacy systems that create costly operational inefficiencies, leaving manufacturing leaders struggling to access accurate, real-time insights.
A recent survey from the National Association of Manufacturers (NAM) found that 70 percent of manufacturers still collect data manually. These manual processes cause productivity bottlenecks and mismanaged resources, often losing data inside disparate systems and hindering access to operational performance. This limited visibility results in workers scrambling to keep up and chase down errors only after they’ve already caused costly mistakes, leaving little room for leaders to prioritize strategic initiatives.
Additionally, the average cost to operate and maintain a single legacy system is around $30 million per year, with organizations collectively spending over $1 trillion annually on legacy IT software upkeep. The cost of maintaining these systems leaves little budget to invest in innovative technology that can increase the efficiency of operations. To achieve digital transformation and overcome the barriers of legacy systems, manufacturers must first break down the data and workplace silos.
Fragmentation and Workforce Challenges
Manual, traditional manufacturing systems require deep institutional knowledge. This is a challenge for organizations already working with fragmented and constrained teams as the industry faces down a looming workforce crisis. Just in August, the manufacturing sector lost 12,000 jobs. As experienced employees retire, they take their decades of expertise with them.
Without a collaborative, cross-departmental team structure, this knowledge does not get passed off to the workers that need it most. Without sharing this knowledge across the enterprise, manufacturers struggle to bridge the gap between outdated processes and advanced digital solutions.
This loss of institutional knowledge is exacerbated by the fact that the current workforce also lacks the digital skillset to operate new systems, while the industry struggles to attract skilled talent.
According to a recent State of Smart Manufacturing report, attracting talent with the desired skillsets remains one of the biggest internal obstacles to achieving growth in the industry. However, digital skills are useless without operational context.
The Blind Spots Hindering Digital Transformation
Ultimately, increasing workforce challenges and an overreliance on outdated systems impact one of the most pressing issues manufacturers face today: informed decision-making on strategic initiatives.
Manufacturing disruptions can cause fast ripple effects for the business. It can be typical for products to get delayed in transit, consumer demand to fluctuate, or suppliers to run behind on deliveries. To stay ahead of these rapid changes, leaders need real-time data across the enterprise.
If a shop worker is manually taking note of inventory in a non-centralized system cut off from other departments, that inventory count can be inaccurate by the time it reaches other teams. During peak consumer demand periods, this delay can cause significant problems. The reported 500 units is actually now 200 units, causing products to be oversold by the sales team, impacting a brand's reputation.
This lag-time erodes the trust manufacturers have in their data. When leaders can’t trust that data, they have a difficult time effectively analyzing their operations and finding opportunities to modernize. In fact incorporating advanced solutions into systems that were never designed for modernization can be extremely complex.
Imagine that a company is consistently dealing with a persistent quality issue, and they’re looking to implement a digital solution that can help improve quality operations. But the leaders don’t have a single source of truth, leading them to invest in the wrong solutions or hold off on progressing altogether.
When barriers prevent collaboration, workers lack visibility into the bigger picture of how modern technology will empower their workflows. Instead of guessing how to improve systems, transformation efforts require a holistic view of operations. Without it, adoption stalls and digital initiatives most often don’t succeed.
Cross-Functional Collaboration Drives Modernization
It’s not just about implementing new tools to solve system inefficiencies. Rather, it’s crucial to build a collaborative environment across the enterprise to minimize blind spots and foster innovation. By implementing a collaborative culture, manufacturers from the factory floor to the back office can improve information sharing and communication.
Manufacturers can build cross-functional teams and foster enterprise-wide visibility with:
- Consistent Communication. Utilizing chat platforms and implementing dashboards with performance insights on projects and task management can help to effectively overcome communication barriers. Teams can have a live view of performance and risks, which can help improve the speed of feedback loops and allow them to proactively solve problems.
- Cross-Training Opportunities. By connecting workers from the shop floor to the top floor, employees can share knowledge and expertise across departments. This is crucial as experienced workers retire, and organizations risk losing critical knowledge. It also helps manufacturers build a more agile workforce that can easily adapt to new technologies.
- Connecting People to Processes. By giving employees context around the work they’re doing and the impact it has on the broader business, employees can associate their tasks with strategic objectives, improving overall operations. This is essential as modern tools change the way people work.
It’s no surprise that digital transformation efforts require a big investment with leaders eager to see the return on them as quickly as possible. By implementing cross-functional strategies, manufacturers can help to accelerate the time-to-value for new technologies. Aligning teams and smoothing the adoption process can help to reduce implementation hiccups and employee resistance.
When manufacturers keep collaboration top of mind when undergoing digital transformation, organizations build an adaptable and resilient foundation, which is crucial to achieve sustained growth in the manufacturing landscape. This interconnected approach ensures technology initiatives are aligned with enterprise-wide goals and operational needs from the beginning. The manufacturers that employ this approach create a stronger foothold.
