Digital Transformation in Manufacturing: Trends and Challenges

Digital Transformation in Manufacturing

Previously, manufacturers unflinchingly followed their traditional business practices. But today, with automation in manufacturing, business processes operate more effectively and have the power to deliver products and services quickly by applying more digital initiatives.

Stricken by inflation, recession, globalization, and the pandemic crisis, manufacturers understand that their day-to-day business practices will take them only a short time. In such a scenario, automation in manufacturing is the need of the hour to speed up the processes and promote smarter, more secure, and cost-effective techniques.

Those are the prime benefits of digital transformation in manufacturing but calling them the sole benefits of automation in manufacturing is far-fetched. Other benefits of digital transformation in manufacturing include boosting productivity, reducing the time taken for complex tasks, boost in product manufacturing, etc. Furthermore, optimizing real-time supply chain management, monitoring product quality, access to delivery tracking and predictive maintenance are also a few more notable benefits of automation in manufacturing.

If you’re planning to incorporate digital transformation into the manufacturing process. You need to understand the driving factors, trends, and challenges of implementing Digital Transformation. That’s exactly what we’ll talk about in this article, so continue reading.

Firstly, let us understand what digital transformation in manufacturing and the need for automation in manufacturing industry.

How to leverage automation in manufacturing?

Digital transformation in manufacturing refers to the practice of incorporating automation in manufacturing to replace outdated legacy systems. Due to the turbulent economy and globalization, manufacturers require something that can future-proof their business, while providing competitive advantage.

Furthermore, Digital Transformation can enable manufacturers to stay accountable via AIOps and cloud computing. Digital transformation in Industrial manufacturing can also simplify sales processes to create better visibility for the products.

Role of Industry 4.0 in Digital Transformation

Digital Transformation in Manufacturing

Industry 4.0 is the key driving force behind the evolving global markets and is often considered synonymous with digital transformation in manufacturing. This isn’t far-fetched as both Digital Transformation and Industry 4.0 aim for smart manufacturing.

Additionally, the technologies used in Industry 4.0 are also the ones that are used in Digital Transformation. They use technologies such as IoT, AI, and ML to transform dumb machines into smart machines.

All the technologies above work together to achieve a competitive advantage by leveraging real-time data, advanced analytics, and smart devices in their operations.

Key Factors Driving Digital Transformation in Manufacturing

Several factors are driving digital transformation in the manufacturing sector as companies increasingly recognize the need to innovate and adapt to compete in the global market. Some of these main drivers include:

Industry 4.0 and smart manufacturing

The adoption of automation in manufacturing is what sets the Fourth Industrial Revolution, often known as Industry 4.0, apart. Robotics, AI, ML, and IoT are a few of the technologies that make up Industry 4.0.

This advances traditional manufacturing processes into smart manufacturing processes that are efficient and flexible.

Increasing customer expectations

Technological evolution has empowered consumers to expect speed, quality, and product personalization. Meeting these expectations through traditional methods is a challenge, but it becomes a real possibility through digital transformation. Manufacturers that embrace digital transformation can deliver personalized product experiences and render exceptional services that enhance customer engagement and improve their supply chain management processes.

Workforce evolution

As Industry 4.0 and digital transformation continue making changes in the manufacturing sector, there’s a growing need for new skill sets, particularly in data analytics, automation, and digital technology initiatives. Incorporating these technologies at the earliest enables manufacturers to upskill their employees and attract new talent.

Data-driven decision-making

Today, having high-quality data is crucial. Manufacturers can now go through massive amounts of data using analytics tools and AI to make informed decisions and reduce risks.

Technological advancements

Rapid development in AI, ML, blockchain, and 3D printing frameworks makes these technologies more affordable and accessible to manufacturers. These technologies act as the backbone for upgraded production processes, product design, and innovation.

Top Trends in Digital Transformation in Manufacturing

Digital transformation in industrial manufacturing forces manufacturers to be on the edge while adapting to the digital era. Some of these groundbreaking trends will increase efficiency and cost savings as well as improve products and services. These trends can be successfully leveraged as an integrated approach, enabling manufacturing companies to wrap and expand their existing product lines.

Digital Transformation in Manufacturing

1. Internet of Things (IoT)

Digital transformation is about connecting equipment with smart devices to collect data and what makes this possible is the Internet of Things. In manufacturing, IoT uses smart sensors to monitor machinery to identify potential problems even before they occur.

IoT, when paired with Bluetooth-enabled beacons, is capable of tracking product movement throughout the supply chain. This enables manufacturing units to optimize their inventory and reduce waste.

Furthermore, IoT’s monitoring capabilities not only prevent physical loss or theft but also protects manufacturers from cyber threats.

2. Artificial Intelligence (AI) and Machine Learning (ML)

AI and ML maximize the chances of achieving manufacturing goals successfully by correctly interpreting external data, extracting learnings from that data, and then using these insights to achieve various manufacturing goals. They enable manufacturers to automate and optimize processes that can also help make real-time decisions.

AI and ML technologies can fully analyze the manufacturing process and detect potential breakdowns through predictive analytics. It can also provide accurate data on lost resources, energy, and even processes that could be improved.

Additionally, using AI chatbots can not only assist with flawless 24/7 customer support but can also provide accurate information/updates to the employees.

3. Digital Twin Technology

While AI and ML are receiving the most attention as revolutionary technologies, manufacturers wishing to bring automation in manufacturing should be looking towards Digital twins. Digital twins are correspondingly like simulations, except it’s far more detailed and accurate.  

Digital twins use a large number of sensors to build an exact virtual replica of a physical asset. This process lets manufacturers enhance product quality while improving their operational efficiency.  

Here are a few examples of how Digital Twin Technology helps revolutionize the manufacturing industry: 

  • Virtually monitoring physical twins’ performance and health.  
  • Virtually developing, testing, and validating products through digital twins.  
  • Virtually building large projects and running stress tests to understand their full capabilities under different levels of stress.
4. Additive Manufacturing (3D Printing)

Considering its unlimited potential applications, additive manufacturing is extremely sought after these days. Using additive manufacturing processes such as 3D printing can save lots of money that’d otherwise be spent on creating prototypes.

Additive manufacturing allows manufacturers to design and develop prototypes at minimal costs while providing unforeseen levels of flexibility. This is a must-use technology for creating personalized products for customers without spending a fortune.

5. Augmented Reality (AR) and Virtual Reality (VR)

Augmented Reality and Virtual reality are relatively new technologies and have the potential to become core technologies for manufacturing. Using AR/ VR technologies can aid in the product designing process and create nearly realistic and functioning digital copies of the product.

These technologies can also be used to train/ upskill employees to troubleshoot complex assembly processes without any unwanted accidents.

Additionally, VR can be used to design manufacturing units so that the equipment is in the right place and won’t cause any mishaps.

Challenges of Digital Transformation in Manufacturing

Incorporating digital transformation in the manufacturing sector is a complex process as it revolves around adapting to new technology and mindset. Following are some of the key challenges of digital transformation in manufacturing industry:

Digital Transformation in Manufacturing

Resistance to change

The biggest challenge faced by digital transformation in manufacturing is employee resistance. Due to the lack of clear information and poorly informed decisions, employees are concerned about their future in the manufacturing sector. Clear communication and transparency are the key requirements to resolve this issue and digital Transformation, backed with chatbots can achieve this.

Integration of legacy systems

A large proportion of manufacturing units need to be updated and made compatible with digital transformation. Upgrading/replacing these outdated legacy systems can be time-consuming and costly.

Data management and security

Ensuring protection against ransomware is a significant challenge in the digital era. Considering manufacturing units will generate large quantities of data, it is important to ensure data privacy and security. This challenge can be mitigated through AI and ML frameworks, but it takes a while to implement these technologies to govern security against cyber threats.

Lack of skilled workforce

Adoption of new technologies means a requirement for a workforce with specialized skill sets. The existing workforce may need to possess the said skills, and this requires sectors to invest in upskilling/reskilling their employees. Yet again, achieving this can be a costly and time-consuming task.

High upfront investment

Applying digital transformation practices requires significant expenditure. Justifying these investments and securing adequate funding can be extremely challenging for manufacturing units that wish to transform.


Digital transformation in manufacturing is driven by top technology trends such as Industry 4.0, IoT, IIoT, AI, digital twins, and automation. These tech trends have the potential to aid manufacturing units in improving their efficiency, reducing costs, and enhancing their product quality. However, achieving this is challenging due to outdated legacy systems and other uncertainties. Also, addressing these uncertainties is the first step towards digital transformation.

Our experts at Tezo are here to help manufacturers accelerate digital transformation through Digital workplace solutions, low-code/ no-code applications, process automation solutions, and governance & security solutions.

Schedule a call with us if you’re looking for digital transformation experts to begin your journey the right way!


Meet an experienced Digital Marketing Executive who is dedicated to driving business growth through strategic campaigns. With proficiency in SEO, SEM, and analytics, this individual is always results-oriented and committed to achieving tangible outcomes.

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