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Digitization: A Powerful Trend That's Picking Up Speed

Posted By David Brousell, July 02, 2012 at 12:09 PM, in Category: Transformative Technologies

The trend of converting analog information to digital form has been around for a long time. Who doesn't interact with some form of digital information today in their business and personal lives? Mail, business records, financial transactions, ticket purchases—you name it—have all become part of the digitization trend, propelled by the convergence of information technologies and communications technologies and devices.

In manufacturing, digitization has steadily worked its way into a multitude of business and production processes. But over the next five to 10 years, digitization will sweep across manufacturing like a tidal wave. In a survey conducted by Manufacturing Executive, 94% of respondents said they expect some level of end-to-end digitization of their business processes in the next 10 years, with 63% saying they will be largely digitized in that time.

When it comes to electronically integrating their design and production processes—the so-called Digital Factory idea—the numbers are equally impressive. Here, 92% expect a high degree of integration in the next 10 years, with 38% saying they will be completely digitized within a decade.

"The digitization phenomenon has reached an inflection point," says Booz &Co., in a report titled, “The Next Wave of Digitization: Setting Your Direction, Building Your Capabilities.” "Pervasive broadband, ubiquitous connectivity, cloud computing, social networking, 'the Internet of Things,' are all coalescing to transform how we work, play, communicate, socialize, and do business," the report stated.

For manufacturers, the digitization wave has vast implications for greater market speed, mass customization, how we structure our companies, how we organize work, and how we make decisions.

Other Manufacturing Executive surveys have shown, for example, that collaborative organizational structures and decision-making processes—fueled in no small part by the digitization wave as more people with increasingly intelligent devices gain access to information—are rapidly supplanting traditional command-and-control approaches to managing the enterprise. Manufacturers at the forefront of the digitization trend—those that are investing in digital technologies, revamping business processes, and learning how their management approaches and policies need to change to adapt to the digital reality—clearly have a better shot at riding this wave to success. Those that are bogged down by legacy approaches or haven't accepted the new way of doing things may be putting the future of their businesses at risk.

In its report, Booz recommends that CEOs ask themselves and their executive teams the following four questions:

  • How will digitization impact my current business model and positioning within my industry's value chain?
  • How can I best identify and enter areas where value is being created, both inside and outside my industry?
  • What areas of my business offer new entrants clear opportunity to disrupt my current business model, and how can I best fight back?
  • Which capabilities do I need to build to be a leader in the field?

The answers you come up with can help lay the foundation for a digital strategy. In the end, though, it will come down to a willingness and ability to change—just like in every previous era.

To help you think through digitization and what it may mean for your business, the Manufacturing Leadership Council is holding a special meeting in Indianapolis at the end of this month to discuss the trend.

Click here for information about the meeting.

Written by David Brousell

Global Vice President, General Manager and Editorial Director of the Manufacturing Leadership Council

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