US Manufacturers Are Stumbling Toward Digitalization

US factories are showing growth in digitalization projects. Yet a fragmented approach has made ROI hard to measure.

Rob Spiegel

May 29, 2024

3 Min Read
digitalization in US manufacturing
Gorodenkoff for iStock / Getty Images Plus via Getty Images

At a Glance

  • US Manufacturers are moving progressively toward digitalization.
  • Digitalization is prompted by the sting of competitive necessity.
  • Manufacturers' digital transformation vision is falling short in practice.

Manufacturers in North American are moving progressively toward digitalization, The progress, however, has often been in fits and starts. “It has been quite a journey. A lot of plants are coming on board in North America,” Rahul Garg, VP of Industrial Machinery & SMB at Siemens Digital Industry Software, told Design News. “Since the pandemic, digitalization has become a necessity. US manufacturers are seeing that. Their peers who are adopting digital systems are becoming more profitable. As companies see that, they are able to move in that direction.”

In the past, the lure of digitalization didn’t come with the sting of competitive necessity. That has changed manufacturers’ view of adopting the new technology. “They’re getting it that they have to adopt digital systems if they want to remain competitive,” said Garg. “They’re seeing companies come into the market with new technologies, and US manufacturers are seeing that if they don’t keep up with that, they’ll be washed up. The only way to stay ahead is to adopt digital technologies.”

New Report Shows Advances in the US

Manufacturers Alliance Foundation in collaboration with Siemens USA has released a research report that highlights the advances of digital transformation in manufacturing. According to the study, “Digitalization Gains: Manufacturers Forge Ahead with Digital Transformation,” over the past few years US manufacturers have made solid progress toward digitalizing their entire value streams, including supply chain optimization, data analytics, and product development.

However, the research also underlines how this progress has been stymied by corporate digital strategies that focus on fragmented one-off high-priority pilots rather than more long-term systematic approaches. “Manufacturers have visions for their digital transformation roadmap, yet the vision in practice is falling short,” Manufacturers Alliance Foundation President, Stephen Gold, said in a statement. “Judging by our findings, by taking a fragmented approach, instead of collaborating across the entire organization ecosystem, manufacturers are only inching towards the competitive advantage they hope digitalization will provide them.”

The report surveyed 199 C-suite level leaders from primarily US-based mid-cap to large-cap manufacturing companies of various industry subsets.

Digitalization Step by Step

Even as companies struggle with deploying the technology, they’re making progress – that includes mid- and small-size manufacturers. “The smaller companies are ready for data analytics now, but they don’t know how to bring it on board,” said Garg. “We’re helping companies with this. They often use low code from companies like Mendix. Even small companies can now do data analytics and monitor the manufacturing on their phone. Even more, they’re using the intelligence to provide improvements in their processes.”

According to the report, digitalization is either already operational or being implemented by about 80 percent of survey participants for supply chain optimization, product planning and development, production efficiency, data analytics, and business intelligence.

At the same time, the report indicates that manufacturers are having difficulty measuring the digital transformation ROI. Lack of alignment between functions and inefficient use of data analytics are the top challenges preventing manufacturers from rapidly progressing their transformation journeys. “We put it in the context of the digital thread. The digital thread provides a roadmap in how to use the technology,” said Garg. “It’s step one, step two, and step three.”

The study also notes that companies implementing more systematic approaches, dovetailing their digitalization roadmap with a business case for moving forward, are often the manufacturers who have made the most technological advancement. These systems have direct advantages in efficiency and operations. “We have different embedded technologies that manufacturers use to do automatic processes, such as the detection issues,” said Garg. “We help these manufacturers manage their processes and systems. We even help to design and build the process. The result is that this technology eliminates a lot of unsafe jobs.”

About the Author(s)

Rob Spiegel

Rob Spiegel serves as a senior editor for Design News. He started with Design News in 2002 as a freelancer and hired on full-time in 2011. He covers automation, manufacturing, 3D printing, robotics, AI, and more.

Prior to Design News, he worked as a senior editor for Electronic News and Ecommerce Business. He has contributed to a wide range of industrial technology publications, including Automation World, Supply Chain Management Review, and Logistics Management. He is the author of six books.

Before covering technology, Rob spent 10 years as publisher and owner of Chile Pepper Magazine, a national consumer food publication.

As well as writing for Design News, Rob also participates in IME shows, webinars, and ebooks.

Sign up for the Design News Daily newsletter.

You May Also Like