Thought Leadership

How digitalization helps manufacturers future-proof their business

By jnercesian

A new digital revolution is taking digitization a step further, and the result is continuous disruptive innovation that’s dramatically altering the market landscape. Digitalization is changing everything, and every industry feels its effects.

Companies that once held huge market shares are vanishing. Kodak’s dominance in photography evaporated after smartphones with cameras hit the market. Ride-hailing services like Uber and Lyft upended the taxi industry in a very short time. Streaming services like Spotify revolutionized the way customers listen to music and, for better or worse, how artists receive royalties.

These kinds of stories will become more common, and unless your company embraces digitalization, your business will take a hit and could even disappear completely as new players come to the market.

In part one of his series on digitalization, Jeffrey Nercesian explored the differences between digitization and digitalization and how digitalization is rapidly revolutionizing industries. Here, he discusses the ways global industries are responding to disruptive innovation and two companies that embrace digitalization as part of their future-proof business.

Digitalization’s effect on global manufacturing processes

Digitalization transforms all parts of a business with a digital thread that optimizes the digital business assets. This thread, which includes knowledge of the product’s lifecycle, can connect smart devices that interpret and react to information it receives. This revolutionary process is toppling decades-old business models at a pace we’ve never seen before.

Buyer behavior is also changing. Globalization and the growing consumer class is fueling the trend toward personalized products. To serve the growing global consumer base, manufacturers are looking for ways to support individualized production with a lot size of one.

Digitalization is changing how people think. Adopting digital processes is a fundamental step in addressing the effects of disruptive innovation. This adoption results in integrated digital technologies that can be found and used in daily life.

As manufacturers transform their operations into a digital enterprise, they bring all of their business’s complex digital assets together to improve performance and create new revenue opportunities.

Image 1.jpgManufacturers can implement digitalization to improve their plant operations and create a future-proof digital enterprise.

World growth initiatives are helping manufacturers during this transformation. Governments and industries get it. They understand how important manufacturing is to their economies, and they’re working together to enable this transformation through public and private partnerships.

Most industrial countries and developing countries have initiatives to include digitalization in their manufacturing processes. These initiatives include Industrie 4.0 in Germany, DMDII in the U.S., Make in India, Made in China and the Industrial Internet Consortium.

Countries know how important manufacturing is to their economy, and they see this disruptive innovation happening. These public and private partnerships aim to enable manufacturers to improve their processes and encourage new businesses to enter the economy.

Image 2.jpgPresident Obama and Chancellor Merkel were impressed with the Siemens vision of digitalization when they visited the Siemens booth at the 2016 Hannover Messe.

Siemens PLM Software isn’t alone in recognizing how important digitalization is to manufacturing: our entire company is onboard. Siemens AG included a strategy in its overall business plans to develop a forward-looking roadmap that prepares manufacturing industries for the Internet age.

It has three key areas:
• Horizontal integration of the entire value creation process through corresponding technical IT support;
• Seamless integration of all engineering tools along the entire value creation chain; and
• Vertically integrated, networked production systems.

In this business moment, successful manufacturers will adopt a digitalization strategy to transform their operations into a digital enterprise. Strategies should be flexible enough to react to market shifts, and competitive advantage will flow to the first businesses that see and act on those shifts.

How Siemens PLM helps companies implement digitalization

We know what digitalization is capable of because we’ve implemented it in our Amberg factory. Our experience allows us to guide customers as they begin transforming their businesses into digital enterprises and confront disruptive innovation.

Haier. Haier is a leading global electronics and appliance manufacturer and the market leader in China. The company uses digitalization and Industrie 4.0 to improve their business.

Haier has an Industry 4.0 showcase factory called the Shenyang freezer plant. It’s an interconnected digital plant that supports individual customization for their customers. The Shenyang freezer plant can provide more than 500 models based on 16 general variants and 7 individual variants. It can increase capacity without increasing personnel.

Siemens PLM is helping Haier merge its virtual designs with its manufacturing process. We’ve helped Haier create the digital twin and a mass personalized customization model to support the company’s customer experience.

Konecranes. Konecranes is also working with us to implement digitalization, and the company is in an industry you probably wouldn’t associate with digitalization: heavy lifting equipment.

Image 3.jpgAll industries, including the industrial machinery and heavy equipment industry, stand to benefit from digitalization.

The Finnish company uses digitalization and the Industrial Internet to broaden its customer offering. In a recent interview, Juha Pankakoski, chief digital officer of Konecranes, discussed how the Industrial Internet fit into digitalization and brought machinery alive:

“It brings sensing and communicating capabilities to places where they’re not expected to be found. This enables the machinery to sense its own condition, understand the usage situation and support the user to carry out the operation more safely and productively.”

Companies in all industries are recognizing digitalization’s importance. Rather than just survive the disruptive innovation that could put them out of business, they could leverage it. And if they want a successful future, companies must implement digitalization into all of their business processes.

This concludes part two of our series on digitalization’s role in revolutionizing global manufacturing. In part three, we explore why Siemens PLM is the important cornerstone to help companies with their digital transformation. 

About the author 
Jeffrey Nercesian is the senior director of business architecture for Siemens PLM Software, a business unit of Siemens’ Digital Factory Division. Nercesian and his team are responsible for the long-term vision and strategic direction of the technology roadmap driving the organizational capabilities. These capabilities are required as the sales and marketing functions transform to support a broader set of industries and market segments as well as a more diverse set of sales channels. He has worked closely over the last ten years with many of the world’s largest manufacturers and their Tier 1 suppliers across all industries. He has extensive experience in global data management, digital mockup and supplier collaboration. Before joining Siemens, Nercesian managed the global PDM initiative for a Fortune 500 interiors systems integrator, which included every major auto OEM CAD systems integrated into a single BOM-centric managed environment. Nercesian has more than 20 years of experience as a designer, engineering manager and certified instructor for multiple solid and surface design systems.

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This article first appeared on the Siemens Digital Industries Software blog at