New Digital Technology Transforms Manufacturing in Australia

Digital transformation, disruption, innovation. Business and modern technology.

Australian manufacturers are using new tools to optimise their revenue stream. While development and production are still important, the new focus is on digital transformation to remodel value propositions and processes. Fujitsu surveyed over 1500 business executives in mid-sized and large companies in 16 countries. Of those surveyed, 69 percent had already initiated digital transformation programs. These programs begin by looking at production efficiencies, but then move on to other sectors that have journeyed farther along the transformation pathway.

Digital transformation has hit some industries earlier than others, especially service industry categories. For instance, when disrupters affected the financial industry, service providers began with innovations looking to focus on optimisation and reducing costs. From this beginning, they turned to alternative products and services. Transforming the value chain introduced new opportunities for development, growth, and expansion.

How Can Digital Technology Transform Manufacturing?

According to Ian Brady at Steadfast Solutions, a Melbourne IT services company, “forty percent of manufacturers are currently focused on improving their production efficiency. Using new digital technologies, they are identifying optimisation opportunities to minimise disruption with the use of predictive maintenance and better monitoring of the supply chain and production centres.”

For manufacturers who have gone further in their transformation journey, optimisation is only the first step. With proper implementation, digital transformation can completely overhaul the manufacturing sector that can open up new avenues. For instance, manufacturers may begin to experiment with retail using online channels that don’t come with the same costs as opening a brick-and-mortar location.

How Are Retailers Affected?

Retailers may also find new opportunities in manufacturing due to reduced costs in some types of manufacturing. One example is 3D printing (also called additive manufacturing). Another change is that distribution companies are able to create direct access to consumers. These changes increase competition from sources new to the industry.

How Can Manufacturers Become More Competitive?

According to Steadfast Solutions, manufacturers that don’t respond to this new technology with strategic plans may get squeezed out of their core business. However, many industries have experienced market consolidation and profited from it. Savvy businesses not only survive, they thrive with new challenges. Businesses slow to respond to new technologies may be left behind.

Are Manufacturers Facing Other Challenges?

While consolidation is one challenge, it isn’t the only one facing manufacturers. Increased globalisation has significantly affected Australian manufacturers, making competition with outside businesses difficult. The cost of manufacturing is relatively high in Australia compared to the lower cost in nearby Asian countries making it difficult to compete.

This factor may change as wages rise and working conditions improve in countries such as China, a country that has a history of lower-cost manufacturing. The increasing usage of artificial intelligence (AI) and automation will help lower the cost of manufacturing at home, eroding the advantage of countries with lower energy and labour costs. In addition, Australian companies may find that consumers and businesses aren’t willing to pay the extra costs of shipping to get products from other countries and longer supply chains.

Are There Other Results of Digital Technology?

Online retailers such as Alibaba and Amazon allow even the smallest manufacturers reach larger global audiences. Small arts and crafts businesses in Africa can sell to buyers anywhere in the world. In the past, these small companies were limited to do doing business in a geographical are nearby due to the complex logistics and costs to set up as global retailers. Small companies can now benefit from economies of scale they couldn’t access on their own. The entry of Amazon in the Australian market has already changed the local scenario and expanded the range of products available to Australians.

The digital innovation involved in the process of getting products from the manufacturer to the end consumer is only the start of how digital transformation is revolutionising the future of manufacturing. The Internet of Things (IoT), AI, and Analytics can be used to create global dashboards to monitor a wide range of manufacturing. This technology allows operators to see detail as small as how a single machine is performing, use data to predict and eliminate maintenance issues or bottlenecks, allocate components, raw materials, skills, and capacity where they are most needed.

Businesses can use cheaper, faster methods to produce customised products at scale, offering a customer experience that once was only available to the wealthiest clients. Manufacturers can present clients with new innovations to ensure unique products from cars and boats to clothing and home furnishings.

Are There Any Limits to Digital Transformation?

In the end, the only limits are what businesses place on themselves in their willingness to re-imagine and redesign their purpose including finding the right partners and flexibility in creating products, Brady concludes. “As manufacturers learn to embrace digital transformation, they will be rewarded with increased revenues, a broader market, and a more stable future.”

Roy Ellery

Roy Ellery

Roy Ellery is the founder and creator of Adore Australia, he lives in Melbourne, Australia. Roy is a professional website developer by trade, and runs the Adore Australia blog as a hobby.

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