Prostep | Newsletter

The digital transformation also entails risks

By Karsten Theis

Every week we all read new articles, studies and market analyses about Industry 4.0, the digital transformation or the Internet of Things. What strikes me is that many of these articles say much the same thing and are also much alike in their objective: They only ever point out the positive aspects of the digital transformation – rarely the risks. Here are my impressions:

There is without doubt huge potential for new products, services and business models, even though you can be sure that not all of them will enjoy success. More importantly, however, is the fact that many of today's business models are no longer sustainable. Successful companies in particular face the challenge of preparing their organization for the transition from outdated business models to new business models in a timely manner.

New technologies, especially additive manufacturing processes, enable the creation of new products with an even higher level of customization which can be manufactured on demand. They are about to revolutionize the spare parts supply chains. The downside is that many traditional manufacturing companies and service providers will drop out of the supply chains because their know-how is no longer needed. The intellectual property of these companies will become, as it were, worthless. Nobody knows precisely when this will happen, but because of the rapid technological advances being made, I predict that it will be sooner rather than later.

Complexity in all areas will continue to increase: Planning, development, manufacturing and logistics will be interlinked to a much greater extent, development cycles will become ever shorter, and the number of variants will once again rise dramatically. 

Mastering this complexity will thus become a management issue. Only those companies that understand this complexity and work continuously on managing it better will be able to hold their own in the market.

Digitalization requires end-to-end data and processes, flexible interfaces and a highly efficient PLM system architecture. Many companies have already realized this and have been working for years on improving the integration of their PLM system landscapes. Whereas others, and not necessarily the smallest companies, are proceeding hesitantly or, as they enjoy a dominant position in the market, are resting on their laurels. They therefore run the risk of missing out on the opportunities that the digital transformation offers. Any company that does not ensure that it is highly flexible today will not be able to respond fast enough tomorrow.

My advice: Do not merely analyze the potential that the digital transformation offers your company but also the risks that it entails. The need for action will then become obvious.

We at PROSTEP keep a close eye on the changes taking place in the market, we know many of your competitors and are familiar with examples from other branches of industry, and we offer expert strategy consulting. We also have a network of senior consultants who know all about the manufacturing industry and the new topics arising from the digital transformation. Contact us – an outside assessment always brings new aspects and and points of view into play and will help you make important decisions in good time.