What Is Digital Transformation in Manufacturing? A Detailed Introduction

Leveraging digital transformation in manufacturing

Digital transformation is a hot topic across different industries, and manufacturing couldn’t stand aside. So how do new technologies help deliver the best products and increase business performance?

The COVID-19 pandemic has greatly affected the business workflow, prompting manufacturers to turn to the latest technologies to modernize and automate all stages of production. According to the report, 95% of companies state that digital transformation is vital for their future success. So, the prospects of the digital industrial transformation market reaching $767,82 billion by 2026 seem very feasible.

This rapid and widespread adoption of new technologies and the digitalization of manufacturing leads to industry 4.0 — the next iteration of the industrial revolution.

In this article we will explain how manufacturers use innovative technologies to their advantage and what obstacles they may face. We will also take a look at the real-life digital transformation cases implemented by top manufacturing companies.

What is digital transformation in manufacturing?

Digital transformation in manufacturing means restructuring and enhancing the workflow with the help of cutting edge technologies. These changes are powered by constantly rising customer expectations and increasing market competition, leaving no chances for manufacturers to continue relying on traditional systems and workflows.

Why digital transformation is important in manufacturing?

Digitalization transforms all business practices, bringing an array of tangible benefits across different steps of production. They include:

  • Automatization of repetitive manual tasks
  • Improved quality of goods and services
  • Reduction of operational costs
  • In-depth market and customer analysis
  • Streamlined document and data management

This is an impressive list of improvements. But how to achieve them? Let’s take a look at the industry 4.0 technologies.

What are the top digital transformation trends? Find out the answers in our article

What are the key technologies that enable digital transformation in manufacturing?

Technologies that enable digital transformation in manufacturing

Digital transformation in manufacturing leverages a variety of novel technologies, the core ones being AI, IoT, AR/VR, RPA, cloud services, and additive manufacturing. But what do they do exactly?

Artificial intelligence

Artificial intelligence (AI) is a technology that mimics human intelligence and thus facilitates decision-making across different domains. AI understands human speech, images, video and text, and can be “trained” to solve specific types of problems.

In manufacturing, AI autonomously processes raw data in search of patterns and inefficiencies. It enables effective fault detection, downtime reduction, quality validation, and frees employees from the mundane tasks. This scope of applications has resulted in AI being adopted by 60% of manufacturing companies.

Internet of Things

Internet of Things (IoT) interconnects different physical objects such as electronic devices, machinery and sensors into a single network. Tied together, these devices can exchange data and collaborate. The global IoT in manufacturing market is expected to reach $209,44 billion in 2022.

On a manufacturing site, IoT can monitor machine usage and report on performance parameters such as setup time, idling time, and stops. This way, operators can track whether the machine is handled properly and can also make sure it neither sits idle nor works beyond the recommended time.

IoT is also very effective for labor protection as its sensors can timely alert on any device malfunctions and hazardous material leakage, thus preventing workplace accidents. In addition, workers can be offered wearables that will monitor biometric data — temperature, pulse and heart rate. If an employee is unwell, the device signals to the safety officer, who can take action and therefore help avoid injuries.

One more useful application of Internet of Things is item location. Workers often find it very troublesome to find whatever it is they need on large manufacturing facilities. This can be effectively handled with location-tracking sensors — RFID or Bluetooth tags.

Data collected by IoT is also very informative for supply chain management. Thanks to smart sensors and tags, manufacturers, clients, and stakeholders can receive real-time information on the location and condition of individual items and delivery vehicles. This allows them to quickly react in case of storage or delivery violation and correct the conditions.

Take a look at the IoT solution implemented in BMW showrooms, helping to deliver personalized customer services

Augmented and virtual reality

Both AR and VR are great contributors to industry 4.0, promising to hit $2,8 billion in market cap by 2023.

Augmented reality (AR) is a technology allowing to layer digital objects on a real environment. It has several valuable applications in manufacturing, the most obvious being machinery management. With AR elements layered over the surface of the device, engineers can “look through” and analyze inner mechanisms without the need to dismantle the hardware.

AR capabilities can also be implemented for employee education as it helps to visualize the machinery mechanisms and processes, making them much more understandable.

In addition, manufacturing facilities enhanced by AR signs and directions can greatly help employees with spatial orientation.

Virtual reality (VR) is also an important component of digital transformation. As this technology is able to immerse people into a fully customizable digital environment, VR can be used to simulate different scenarios — from polishing up employees’ skills to rehearsing emergency protocols.

Besides this, virtual reality helps to design and construct new products more effectively since their digital prototypes can be thoroughly examined. Errors and inefficient functionality can therefore be spotted before the product is physically delivered. This saves time and money.

But it’s not just about products. When planning to put up new buildings or restructuring the existing space, companies may opt for a virtual location first as this way specialists can validate that the architecture conforms to the safety measures and that everything is located optimally to deliver the desired results.

These VR concepts can then become digital twins, mimicking the entire factory and all the processes going on the site. Solutions like these will make it easier to perform safety checks and routine inspections.

Robotic process automation

Bet you can hardly imagine a modern production with no robots? According to Gartner, 90% of large international enterprises will be equipped with robotic process automation (RPA) in 2022.

RPA makes it possible to automate manual tasks that don’t require deep cognitive capabilities. In addition to sparing humans from repetitive activities, RPA executes tasks in a more consistent and error-free manner. Moreover, robotic solutions can be configured to identify anomalies that a human employee may have difficulty spotting.

Cloud services

Clouds are digital spaces where manufacturers can store all collected data. This storage option is much more efficient since any information can be easily found by a file’s name, for example.

Another great benefit of clouds is that they allow to save resources on building physical archives. Cloud prices vary depending on the amount of data and the number of users — roughly $400 monthly for one server. This is nowhere near the construction cost of a real-life storage facility.

Additive manufacturing

Additive manufacturing, or 3D printing, helps manufacturers increase the production speed and cut down on materials. A product or its parts are simply printed on special devices based on the design blueprint. The materials can be plastic, metal, resin, ceramics, paper, and more.

Besides, additive manufacturing allows designers to test new concepts fast and cheaply, and improve them right away.

Combined together, these groundbreaking technologies completely transform the production workflow, allowing human staff to prioritize more complex and creative tasks and serving as invaluable helpers for monitoring and streamlining all kinds of processes.

Why is digital transformation a challenge for manufacturing firms?

Once you decide to embrace digital transformation on your manufacturing site, you should be aware of several stumbling blocks that may affect the transition. These are:

  • Poor preliminary analyses — before heading out for industry 4.0, you should clearly understand what real business value new solutions will convey. Otherwise it is money and time wasted.
  • High expenses — implementation of new technologies will require significant financial investments. You will not only need to upgrade software and hardware, but also allocate money for staff training and the hiring of new specialists.
  • Unwillingness to accept new technologies — it will take plenty of effort to convey the importance and benefits of digital transformation to staff members. The issue is not only skepticism about the technologies’ usefulness but also fear of machines stealing jobs.
  • Siloed implementation — it is a big mistake to have different teams responsible for digital transformation across separate manufacturing departments. As a result, instead of enhancing efficiency and interoperability between the processes, everything works out of sync. To avoid such a scenario, digital transformation teams should work hand in hand, and be constantly in touch with business leaders and site managers.
  • Cybersecurity threats — without strong cybersecurity protection, digitalization can expose sensitive business data to fraudsters, jeopardizing the manufacturing process.

These are serious issues, yet a solid digital transformation roadmap helps handle challenging situations and get the most out of new technologies.

How to enable digital transformation in manufacturing?

Enabling digital transformation in manufacturing

There are several major aspects that back up a well-grounded digital transformation strategy:

Step 1. Establish open communication. Continuous communication among site managers, stakeholders, and tech specialists is a must.

Step 2. Set clear goals. Be precise with the goals you want to achieve by leveraging new technologies, and remain focused on real business needs and current performance challenges.

Step 3. Generate funds. Communicate your vision to the stakeholders, and attract new investors to accumulate the finance needed for an uninterrupted transformation process.

Step 4. Find an experienced team. Take time to gather a team of seasoned professionals to enable the effective and smooth adoption of new technologies and workflows.

Step 5. Visualize a roadmap. Develop a scaling plan with clear check points indicating the amount of time and resources that will be required for each stage of digital transformation.

What are the examples of implementing digital transformation in manufacturing?

For the finale, let’s draw some inspiration from three companies that massively benefited from digital transformation: Rolls-Royce, IKEA and Lego.


Rolls-Royce uses the capabilities of artificial intelligence to support engineers in handling tasks and gain useful insights on how to better interact with clients. To store and retrieve all business information, Rolls-Royce leverages Microsoft Azure сloud computing service.

Moreover, the company makes active use of robots on its production lines. For example, the jet engines are thoroughly investigated by tiny SWARM bug robots. As they crawl through engines and capture images of what they see, engineers get a highly-detailed view of the engines’ interior.

Another type of robot employed at Rolls-Royce is COBRA. These are snake-like robots with augmented reality and repair capabilities. When COBRAs move through the engine, they broadcast the picture to engineers who wear VR headsets. Both SWARM and COBRA robots allow specialists to monitor the engines remotely.

In addition, Rolls-Royce has an Advanced Visualization Lab where engineers can prototype at zero cost with the help of virtual reality. VR is also important for maintenance, helping ground crews learn and understand engine design quickly and efficiently, while reducing costs.


You may have thought that IKEA’s whimsical naming was AI tricks. Funnily enough, there are humans behind all the FJÄDERMOLNs and BJÖRKSNÄSs. Yet AI is actively engaged in the company’s production. Demand Sensing AI tool helps IKEA in demand prediction, suggesting forecasts based on up to 200 data sources and such factors as shopping preferences during festivals, seasonal changes, weather and more.

Accurate forecasts mean that IKEA stores will get in-demand articles at the appropriate time, avoiding the risk of running out of stock or being overstocked with the products that are bought less frequently. As a result, the company can optimize its logistics and provide better customer service.

To properly handle all the collected data, IKEA uses several Google Clouds.

What’s more, to improve its warehouse management IKEA makes use of autonomous robots. One example is MiR500 — a robot that helps move used packaging.

The furniture giant is also trying out additive manufacturing — its Flamträd home decor collection is entirely a 3D printer creation.


Lego produces 5 million details every hour — an insane amount hardly possible to create without the help of robots. RPA systems are vital parts of all Lego factories, executing numerous tasks across the production cycle, from sorting the raw materials to packaging newly-made details.

Additive manufacturing is also successfully applied in the Lego production, allowing the company to prototype and deliver new pieces faster and more cost-effectively.

Additionally, the company leverages artificial intelligence to translate its instructions into Braille or audio instructions so that visually impaired customers can enjoy the Lego experience too.

What is the future of digital manufacturing?

It’s evident that industrial digital transformation will continue its advance, since no manufacturer striving for success can neglect new technologies. Digitalization backed by such technologies as AI, IoT, AR/VR and more brings tremendous benefits to all stages of manufacturing, from production processes to customer service.

Planning to modernize your business with new technologies? Then you will need an experienced team able to advise and assist you along your digital transformation journey. Our PixelPlex developers and consultants are just the right specialists. Contact us — and let’s make your business thrive.


Valeria Serebryantseva


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