Digital Manufacturing: What It Is, Where It’s Headed, Why You Need It

In a survey of 300 publicly traded businesses, McKinsey found that design is the differential for top-performing companies.

Strong financial performance correlates with thoughtful, deliberate design across industries like media technology, manufacturing of consumer goods, and retail banking. 

This trend remained consistent regardless of whether the company sold physical products, digital products, services, or a combination of all three. 

Of course, design is not just how something looks—it’s also how it works. 

For manufacturing businesses, designing the “how” aspect of operations is at the core of realizing greater revenues, eliminating waste, and delivering high levels of value to the end customer. 

The question this survey sparks is a simple one: In the age of digital, how are manufacturing businesses designing their operations to win—financially and when delivering on value prop?

The answer lies in the developments and shifts within digital manufacturing: What it is, where it’s headed, and why companies are immersing themselves in improving the “how” of the way things work.

State of the Union: The Future of Digital Manufacturing In The U.S.

Given its industrial power, you would think that digital manufacturing is in full swing, thriving in manufacturing companies and heartily embraced by operators on the plant floor.

You’d be only somewhat right: The truth is that American companies are lagging.

  • 70% of companies admit that the only reason they considered updating their infrastructure was to respond to competitive pressures—it’s FOMO, not the advantages of digital transformation that propels change, apparently
  • Only 35% of companies that begin digital transformation have the confidence to feel they can finish it—they don’t feel they have adequate leadership to guide these changes
  • Even when companies embrace software designed to simplify and automate operations, integration occurs only 29% of the time

Clearly, there are still significant opportunities to be realized in the present state of digital manufacturing.

Digital transformation in the U.S. is not all doom and gloom though. Different industries are maturing into digital at different times. 

Some industries, like IT and technology, are better poised to advance. They’re high on the digital maturity scale, while also adopting initiatives for transformation across the enterprise in a 3-year timeframe. 

In comparison, manufacturing is low on the digital maturity scale, even though its enterprise strategy for digital transformation is the same as a more sophisticated industry like IT and technology. 

Yet if many manufacturing companies did commit to transforming, it would be premature. They simply don’t have the infrastructure in place—yet.

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But whether it’s because of an organizational fear of change or a lack of organized planning, the old ways of manufacturing will eventually hit a ceiling. 

Digital manufacturing represents both a new way of doing things (disruption), as well as the next natural step for firms. The requisite for this evolution is business development and maturity, which are themselves measures of readiness. 

Businesses understand that digital manufacturing paves the way for maturity and evolution to the next stage. 

What Is Digital Manufacturing?

Digital Manufacturing makes sense when set against the backdrop of the Fourth Industrial Revolution—known as Industry 4.0. It’s all about connected factories, amplified through technology, with specific activities like:

  • Automation
  • Servitization
  • Industrial Internet of Things (IIoT)
  • Robotics
  • Additive Printing

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Digital transformation for manufacturing companies have four main hallmarks: 

  • business intelligence 
  • automation and (real-time access to) analytics 
  • virtualization 
  • all delivered over a reliable, high-performance network 


The activities grouped under Industry 4.0 are major contributors to spearheading digital transformation in manufacturing companies. The caveat is that these initiatives have to be undertaken altogether and integrated as a complementary set of capabilities. 

It’s called the PDP (Physical-Digital-Physical) loop, and it’s a complex cycle that enables real-time access to data and intelligence, giving actionable insights for smarter, more aligned decision-making. 

For manufacturing, in particular, the PDP loop is an integral part of the product cycle. Developers create a digital copy of the physical product they’re working on, relying on real-time data and analytics to then optimize this product along multiple parameters. 

Production then begins on this optimized product. 

Production then relies on digital supply networks, or DSNs. These are integrated networks characterized by a continuous flow of information. They’re designed to facilitate automation, add value, improve workflow and analytics, and generate insights. 

The trick to all of this is that you have to plan meticulously if you want to get it right—and for many that’s easier said than done. 

Where Is Digital Manufacturing Headed?

Digital manufacturing is moving in the direction toward real applications, but it will take time for everyone to get there. Current estimates say that only about 26% of companies are already using some type of digital manufacturing—the “frontrunners.”digital manufacturing solutions

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These frontrunners strongly believe in the value that adopting new technology has for digital transformation, making them poised and primed to use new technologies. Their competitive advantage is simply the fact that they’re the first players at the table. 

The promises of the digital manufacturing revolution are relying on five related trends emerging today:


Airbus uses digital innovation to enhance value for its customers and its technicians. Known as Skywise, Airbus’s open-data platform offers features such as fleet analysis, efficiency monitoring, and predictive maintenance. Data also drives the analytics tool on the platform, which minimizes fuel consumption. So far, more than 12 airlines and 2,000 aircrafts connect to its digital platform.


Networked manufacturing allows for a reduction in waste, better predictive maintenance, and flexibility. It’s the customer’s demand that becomes the driver in the supply chain, as production systems will be designed to handle smaller volumes and mass-customized product portfolios. 

Global fashion retailer Zara is using connected tools to respond even faster to customer preferences, reduce supply-chain costs, and empower staff members to update a store’s inventory simply by waving a small, hand-held device at racks of clothing


AI is changing the landscape by learning what the landscape is, then using that insight for continuous improvement. In partnership with Google, former Baidu star Andrew Ng is creating, a platform specifically focused on bringing artificial intelligence to the manufacturing industry. 

The platform can empower an organization’s digital maturity, prompting it to transform along a coherent plan. also developed Landing Light, an AI-powered SaaS product designed to visual inspect and showcase detection of defects on manufacturing lines


This trend relies on 3D printing, known as “rapid,” “additive,” “instant,” or, “on-demand” manufacturing. Used by Boeing to create nonflight critical hardware for military aircraft, on-demand or “Direct Digital Manufacturing” (DDM), is a way to fabricate components seamlessly. 

From computer design to actual part in hand, DDM opens up a whole new realm of possibility. Speed is just one benefit. An even more tangible advantage is the fact that it doesn’t call for an entire manufacturing line doesn’t need retooling for new or small change.


Automation, a tenet of digital transformation in Industry 4.0, relies on robotics. These enable a level of accuracy and productivity on processes, far beyond human capability. 

Robotics in manufacturing also have the potential to bring in voice and image recognition to mimic and re-create human-centric tasks. 

It’s manufacturing firms that will invest the most in robotics—because manufacturing businesses have the most to gain.manufacturing in a digital world

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These examples highlight the obvious: You need digital manufacturing because there’s no avoiding it. 

The only question for manufacturing companies is if there’s a chance to transform—not as a reaction or an obligatory response to competitors—but as a proactive next step. 

To take full advantage of the opportunities it brings, you need to be leading the charge on digital change.


Why Do You Need Digital Manufacturing?

Don’t think of it like pulling teeth. Don’t conceive of it as a spotlight on your firm’s lack of leadership or capabilities. 

Digital manufacturing presents a clear and calculable competitive advantage to firms willing to commit to seeing it all the way through. A study by Genpact reveals that 64% of executives understand that there is significant value to be gained from digital technologies over the next two years. 

Beyond this, five key strengths outline why you need digital manufacturing.  

1) Flexibility

Thanks to the integration of software, tools, methodologies, and data, businesses have the chance to be more flexible than ever. They can re-use manufacturing lines, fitting them with the technologies they need to manufacture multiple products with speed and ease, much in the way Toyota does with its TNGA platform

2) Workforce Talent Re-Trained And Harnessed To Their Fullest Potential

Rather than allocate human resources to repetitive tasks, digital manufacturing re-positions humans at jobs where they can use their greatest strength: creative problem-solving. 

While robotics and automation can take care of defect detection, assembly line production, and even predictive maintenance, it’s up to individuals to administer these actions and make the right decisions from this highly curated and real-time data. 

3) A Focus On Continuous Improvement and Iteration

Solutions in digital manufacturing demand integration because that’s the only way to realize continuous improvement. If factories aren’t connected, how can data be genuinely effective? 

Continuous improvement is also at the heart of flexibility. For businesses to remain flexible in their output and even their processes, they need to continually iterate on the final product or streamline the process to a greater degree each time. 

4) More Intelligent and Efficient Operations

Iteration leads to more intelligent and efficient operations. AI platforms designed to bring constant, attenuative learning and observation to the process is in part the cause for business intelligence. Part of it is simply an inevitable consequence of continuous improvement and iteration. 

Efficient operations go beyond waste reduction or elimination. It pushes into the territory of innovation, allowing firms to lead with customer value as a primary goal. 

5) Greater Revenues

If you plan to be a frontrunner, you have more to gain. It makes sense: Simply because they’re in somewhat uncharted territory, first movers can innovate, delight, and surprise, setting themselves apart with greater ease. 

They’re three times more successful in driving higher revenues while also seeing significant gains in cost reduction. manufacturing digital


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Followers and stragglers will have to play by their rules when first movers arrive at digital maturity first, prepared to implement an enterprise-wide digital transformation strategy.


You can’t have a digital manufacturing revolution without technology investments. It’s a part of the test of digital maturity. 

Before an enterprise-wide strategy for digital transformation comes along, businesses need the software and infrastructure intended to power this change. 

Yet, many manufacturers have a difficult time making this change. If you’re already struggling with daily operational challenges, how can you simultaneously develop and invest in a strategy for your digital manufacturing revolution? 

In our Industry 4.0 whitepaper, we show you it’s possible. Download it to discover how to address current production issues while paving the path forward using a proven evolutionary roadmap. 

Download the Industry 4.0 Guide

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Kevin Bryan - Autoliv

Kevin Bryan


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