What does it mean to be digitally transformed?

What does it mean to be digitally transformed? 
 - Mario Ishikawa

Digital Transformation is a common term in different industries or markets in general. It is mentioned so often, usually when the goal is to sell some product to companies or when companies want to address their market about their competitive advantage. 

But what exactly does it mean? 

For sure, it is not simply using the latest technologies or implementing digital tools. It is a more complex process that requires an understanding of how technology can enable and enhance business processes, as well as a cultural shift towards embracing digital solutions. 

Understanding Digital Transformation 

Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how it operates and delivers value to customers. 

To make it easier to understand, let's illustrate it with some examples, especially those ones which most of us feel in our daily lives. 

A hotel may proudly claim to be fully digital, with a web application for guest reservations and an API for third-party bookings. However, in today's world, potential guests are unlikely to call the hotel directly to make a reservation. Instead, they prefer to visit the hotel's website or use popular platforms like Booking.com. If the hotel cannot be found on these platforms, it simply isn't considered as an option. Thus, having a digital reservation system is not a competitive advantage but rather a necessity in the industry. 

Imagine how tedious it is to make a reservation online, diligently filling out all the forms with your personal information, only to arrive at the hotel and be asked to fill out a paper form with the exact same details you already provided online. Occasionally, there may be excuses like local regulations, but it still hampers the overall experience. What's even worse is when you are a loyal customer of the hotel chain, but because you haven't stayed at that particular location before, you are required to provide all your information on paper once again. Not to mention, the staff will then transfer this information from paper to an electronic form, duplicating the effort. 

I'm certain that you have encountered this situation before, perhaps on multiple occasions. 

Here's another example related to international air travel. Imagine you're booking a trip from your local airport to a major travel hub like Dubai. While there is a direct flight from your country's major city to Dubai, the flight from your town to the major city is operated by a local partner airline. Initially, this seems convenient since you don't have to purchase separate tickets, and the two companies have integrated systems. However, there's a catch. You realize that you're unable to select your seat for the first leg of the journey because it's operated by the partner airline. Additionally, you're unable to check-in online for the same reason. 

These two examples prompt us to consider the issue of internal integration. With access to the necessary data, why is it challenging to establish seamless communication between systems? There have been cases where companies made this transition and subsequently emerged as market leaders. Such instances highlight the significance of this change and its potential impact. 

How can this be applied to the realm of manufacturing? 

In the world of manufacturing, internal integration is just as important. Not only does it affect efficiency and productivity within a single company, but it can also have an impact on the entire supply chain. 

Take for example a car manufacturer. They have multiple departments - design, engineering, production, sales - all working together to create and sell their vehicles. But what happens if these departments are not integrated?  

If a vendor in the supply chain lacks access to material consumption data at the main plant, how can they proactively ensure timely and efficient delivery of parts? The prevailing reality is that numerous companies still rely on phone calls and emails as the means to exchange data between departments and partners. 

The lack of department integration is not the sole contributor to this situation; the absence of system integration also confounds users within a single department. It is not uncommon for managers to access multiple systems to make planning decisions on expenditures. They need to check scheduling in an ERP, review consumption in an MES, and perhaps even consult another system to understand planned machine downtime for the week. Although this information is already digitized, it follows different data models across disparate systems that do not communicate with one another. As a result, data must be manually transferred from digital systems to spreadsheets for report consolidation. 

What does a digitally transformed manufacturing plant look like? 

Imagine a digitally transformed toy box production company, let's call it "ToyPro". At ToyPro, all departments are seamlessly integrated. Just like when you book a hotel or air tickets online, where everything is interconnected and automated, ToyPro operates in a similar manner. 

The design team creates new custom toy boxes, and immediately, the production department can access the design, understand the materials required, and work on the manufacturing process. The production team, in turn, gets real-time information about the boxes they need, and suppliers are automatically notified about the materials required. This eliminates the need for time-consuming phone calls or emails. 

Additionally, ToyPro's managers closely monitor market predictions and work in sync with their main customers, the toy makers. They have a unified dashboard that integrates all systems - ERP, MES, and scheduling. They can instantly see the materials used, the production schedule, and even when machines are planned for downtime. All this data is not isolated in different systems but is interlinked, providing a clear, comprehensive picture of the entire operation. 

This way, ToyPro can not only reduce inefficiencies but also respond quickly to changes, just like how you can easily modify your hotel or air ticket reservation if needed. When a one-of-a-kind event, like a viral social media post, creates a surge in demand for a particular toy, ToyPro promptly receives a notification and adjusts production accordingly. This adjustment is seamlessly propagated across departments, preventing any conflicts or delays that may arise from working with outdated plans. That's the kind of smooth, responsive operation a digitally transformed toy box production company could achieve. This way, our imaginary ToyPro will be better equipped to deliver quality and value to its customers, faster and more efficiently than ever before.