Gearing up for Growth: The Benefits of Digital Transformation in Industrial Machinery

This informal CPD article will look at uncovering the challenges faced by the industrial machinery industry - including labour shortages and supply chain disruptions - and explore how digital transformation initiatives can provide solutions to these pressing issues. It was provided by Cambashi, a global market research, industry analysis, consulting & training firm, focused on engineering and industrial software markets.

The industrial machinery industry is one of the largest and most competitive manufacturing sectors and plays a critical role in the global economy, producing a wide range of products that are essential for the manufacture of other goods. Machinery products are constantly advancing, with efforts focused on creating machinery and equipment that are more efficient and effective, which drives market expansion and meets the needs of the diverse range of industries they serve.

However, the industry is currently facing several challenges, including a shortage of skilled labour and disruptions throughout the supply chain. These challenges are impacting the operational efficiency of manufacturers, leading to increased costs and reduced competitiveness. If suppliers to the machinery industry can address these challenges, they will have a competitive advantage.

What are the challenges?

A significant shortage of skilled labour is making it difficult for manufacturers to find enough workers to meet demand. This shortage is driven by several factors, including a declining pool of skilled workers, an aging workforce, and the automation of many manufacturing processes.

Worker shortages are negatively impacting the bottom line of many manufacturers, as they are forced to either pay higher wages to attract workers, or invest in additional training programs to develop the skills of their existing workforce. This has resulted in increased labour costs, which are reducing the competitiveness of manufacturers and making it more challenging for them to compete in the global marketplace.

Cambashi employment data shows over 25 million people were employed in the machinery industry in 2021. China is the largest employer in this industry, employing 10 times the number of workers than the US. However, the distribution of occupations between the two countries is revealing.

China has a far larger proportion of manufacturing workers and machine operators—these are typically blue-collar employees working on the plant floor. This contrasts with the US where, despite having a smaller pool of workers, they typically occupy more senior positions such as engineers, technicians, managers, and supervisors.

To keep up with the changing demands of the industry, the machinery sector must ensure its employees are equipped with new skills, particularly in the areas of design, data processing, and additive manufacturing. These skillsets will become crucial as the industry transitions towards a blend of traditional subtractive manufacturing techniques and new, additive methods.

Additionally, the industry is facing major disruptions in the supply chain, which are making it difficult for manufacturers to secure the materials and components they need to produce their products. The disruptions are due to several factors, including the global pandemic, trade tensions, and political instability. 

These disruptions have resulted in delays in the delivery of materials and components, which result in manufacturing delays and reduced operational efficiency. An unpredictable supply chain also makes it more difficult for manufacturers to plan their production schedules, which is leading to increased costs and reduced competitiveness.

Investment in Digital Transformation

To address the challenges facing the industry, manufacturers must invest in digital transformation initiatives that will improve operational efficiency, reduce costs, and improve competitiveness. Digital transformation involves the integration of digital technologies into all areas of a company's operations, but manufacturing and logistics will be two of the greatest beneficiaries.

One of the key digital transformation initiatives that manufacturers can invest in is Industry 4.0, which involves the integration of advanced technologies such as the Internet of Things (IoT), artificial intelligence (AI), and robotics into the manufacturing process. Industry 4.0 technologies can help manufacturers automate many aspects of their production processes. Automating manual processes reduces the need for skilled labor, but also frees up time for available labor to focus on value-adding activities.

The availability of data and the increasing integration of technology are revolutionizing the way industrial machines operate. This technology allows for assets to be operated remotely in challenging environments where finding skilled workers is difficult. Real-time monitoring of asset health is a great example of a digital tool that can detect potential problems before they become critical and result in unscheduled downtime, saving companies significant costs.

One of the most notable developments in production techniques is additive manufacturing, or 3D printing, which constructs products by building them layer by layer, as opposed to traditional forging or casting. 3D printing offers numerous benefits, including the ability to use various materials for a wide range of applications. Prototyping remains the most popular use case, but as the technology grows in popularity it is likely to forge a much more fundamental role in the manufacturing process.

Additionally, Industry 4.0 technologies can help manufacturers optimize their supply chains, reducing the impact of disruptions and improving the reliability of their deliveries. For example, advanced analytics can help manufacturers track the performance of their suppliers, identify the causes of disruptions in the supply chain and take proactive measures to mitigate their impact. Additionally, advanced analytics can help manufacturers predict demand, allowing them to plan their production schedules more effectively and reduce the risk of out-of-stock situations.

We hope this article was helpful. For more information from Cambashi, please visit their CPD Member Directory page. Alternatively, you can go to the CPD Industry Hubs for more articles, courses and events relevant to your Continuing Professional Development requirements.