People: The Key to Digital Transformation of Manufacturing

The manufacturing industry is digitizing, and it’s a matter of survival. The application of Industrial IoT to manufacturing generates $300M today. As more innovations disrupt the industry, that number will continue to grow. A perfect storm of technology trends – the increasing intelligence and falling prices of smart sensors, the advent of big data and analytics, and automation and AI – enables manufacturers to use their data in radically new ways. Digital transformation or Industry 4.0 are not just buzzwords; 56% of CEOs said that their digital improvements have already increased profits, according to a recent Gartner study. Yet it has become all-too-clear that technology is not the most fundamental barrier to realizing the possibilities: culture is. 

Cultural and behavioral challenges are the biggest barriers to meeting digital priorities, according to results recently published from McKinsey’s 2016 survey of 2,135 global executives. Among the top 5 barriers companies face for digital transformation cited by Harvard Business Review, 4 deal with people and culture: the inability to experiment quickly, inability to work across silos, inadequate collaboration, and risk-averse culture. These challenges impact the manufacturing industry and its workforce in particular. 

For manufacturers who embark on digital transformation, LineShift has identified the following factors for success:

  1. Tying digital strategy to people strategy: Management teams should assess the ways the workforce is enabling (or constraining) digital growth today, and what the needs are for the next five years. To prepare for the future of work, manufacturers must predict the roles and skills they’ll need to get there.
  2. Developing a learning organization: According to Deloitte, employees at organizations that don’t provide opportunities related to digital business are six times more likely to seek new employment than professionals who are receiving training. Providing opportunities to transition skills to digital roles reduces turnover risk - a key cost driver for manufacturers today. Bringing current employees along in the journey is a critical component of change management for digital initiatives. 
  3. Attracting the right talent: Digitally-savvy individuals want to work at cutting-edge companies, and manufacturing could address its talent shortage by cultivating, rather than avoiding, a digital culture. Attracting millennials and fresh voices will also help kickstart innovation.
  4. Breaking down barriers between management and employees: LineShift’s manufacturing workforce interviews indicate that employees who understand and trust their management team’s strategy are more engaged and productive. Unfortunately, this is a fairly uncommon state; according to Capgemini, while 85% of top execs believed that their organization promotes collaboration within the business, less than half of employees shared these views. This shows a “startling lack of confidence” in the company’s ability to adopt modern work practices. These siloes are costly, because they not only inhibit the adoption of a digital strategy, but also show that management is consistently underestimating the magnitude of the cultural change required.

LineShift equips manufacturers to prepare for the future of work by guiding them through these four areas of opportunity. We assess the capabilities and needs of process using data, and then identify a workforce strategy that enables the company and its people to realize its potential. Our team is most interested in the people side of the equation – one of the most important and yet underserved needs facing this industry. Ultimately, manufactures that want to digitally transform their operations and stay competitive must cultivate a culture that promotes the ability to innovate new business models, experiment quickly, and collaborate – traits that come not from technology, but from people. 

Sruti Bharat, Strategy and Systems Engineering