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Smart Manufacturing: A Cogwheel in Driving Business Strategy Transformation

Your business strategy must consider the growing importance of digitization or smart manufacturing in order to stand out from the competitors and stay profitable. Read on to understand why most manufacturers are keeping digitization at the heart of their business strategies.

The half-life of even the most popular products and services has decreased in the past decade, primarily due to rapidly evolving customer needs. Succeeding in this fierce environment requires innovative, resilient, and agile business processes. Also, business leaders need to continually modify their strategies, even if they've yielded results in the past. What worked in the past may not work now! In other words, technology is evolving, markets are evolving, and business strategies must evolve, too. 

One of the critical examples of how technology has evolved in recent years is digitization or smart manufacturing. The term digitization, with all its weightiness, might sound complicated, but it's not. It simply means incorporating digital technologies into your manufacturing processes.

Before we dive deeper, let’s understand what exactly smart manufacturing is and why it is the current buzzword in the manufacturing industry.

Smart manufacturing is an approach that utilizes fully integrated, Internet-connected machines to monitor the production process and respond to the changing market dynamics, supply network disruptions, and customer needs in real-time. The goal of smart manufacturing or digitization is to identify opportunities to automate the production process and use advanced technologies and data analytics to enhance manufacturing performance.

Whether you call it "Industry 4.0" or "smart manufacturing," the application of advanced technologies is reshaping the manufacturing sector. The best thing about smart manufacturing is the way it's helping manufacturers improve product customization, increase productivity on the shop floor, reduce downtime, and gain supply chain transparency.

Though the smart manufacturing approach impacts almost every aspect of running a business, one aspect that's getting the most impacted is – business strategy.

How is smart manufacturing changing business strategies?

Manufacturers are discovering that the traditional ways of doing business are no longer relevant in today's digital world. To retain their leading positions and to ensure healthier bottom lines, manufacturers are looking to transform their business models and build resilient value chains through smart manufacturing. 

Another reason why smart manufacturing is becoming the cornerstone of every business strategy is sustainability. Sustainability, which is often the goal of most business strategies, is the core principle of smart manufacturing. For most manufacturers, building a robust business strategy is the first step towards building a sustainable business that delivers exceptional customer experiences, stands out from the competitors, and maintains a healthy growth trajectory. Clearly, smart manufacturing and business strategy go hand in hand. 

Smart manufacturing, enabled by cutting-edge technologies, such as the Internet of Things (IoT), Artificial Intelligence (AI), and Machine Learning (ML), leads to efficiency and revenue gains through better ways of producing goods and optimizing the overall supply chain. It allows the development of products at lower costs through the efficient use of energy and resources.

With the right implementation of smart manufacturing technologies, manufacturers can identify process gaps and right-size their equipment and resources to reduce operating costs and increasing productivity.

Building the foundation for digital transformation

As already discussed, digitization or smart manufacturing can bring new opportunities, streamline processes and help optimize production. However, to lay the right foundation for digitization, business leaders need to develop proper structures, systems, and expertise. 

Embracing any new technology involves a willingness to disrupt existing processes and develop more efficient ones. This can be challenging and uncomfortable. It's the responsibility of leaders to acknowledge these challenges and be willing to make changes to leverage the full potential of new technologies. 

In addition to making a mindset shift, leaders should assess their existing structure, systems, employees, and processes. For instance, consider the skillset of teams and think about the changes that would ease the transformation. Next, think about managers who will lead this transformation. Should your business build skills internally or partner with a firm externally? Finally, it's essential to think about which processes should be transformed first and how. 

When considering processes, it's also helpful to determine how much disruption you're prepared for. Are you ready for a "big bang" change, or would you prefer a phased approach?

Thinking through organizational and operational issues and being strategic about the upcoming changes will help ensure that your employees and business are poised for a successful transformation. 

Business Benefits of Smart Manufacturing or Digitization

As mentioned earlier, digitization increases productivity, agility, performance, and profitability, making a business more sustainable. Also, increasing production volumes and right-sizing overhead and operating costs are critical drivers for manufacturers to invest in smart manufacturing. However, what are the benefits beyond efficiency and productivity?

One of the business benefits of smart manufacturing or digitization is the integration of key business processes. With most manufacturing companies deploying different planning, production, and reporting systems, digitization plays a crucial role in bringing all the systems under the same umbrella. By implementing digitization, manufacturers will eliminate functional silos and increase coordination between benchmarks and goals.

Integration of systems leads us to the next significant benefit of digitization: accurate data analytics. Advanced technologies, such as AI, ML, and IoT that act as the backbone for smart manufacturing or digitization, have become a strong force by connecting systems and enabling more accurate and accessible data analytics.

This brings us to the third benefit of digitization: enhanced collaboration. As mentioned previously, digitization helps manufacturers eliminate silos across the organization. This means that employees have a greater capacity to collaborate and work together to ensure smoother workflows. Miscommunications in key business processes increase the chances of bottlenecks and breakdowns. By incorporating digitization, manufacturers can enable end-to-end process visibility and seamless communication.


Smart manufacturing or digitization is transformational. As mentioned earlier, digitization increases productivity, agility, performance, and profitability, making a business more sustainable. Also, increasing production volumes and right-sizing overhead and operating costs are critical drivers for manufacturers to invest in smart manufacturing. However, what are the benefits beyond efficiency and productivity? to digitization will help manufacturers respond to the evolving needs of the market.

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