“The cliff of 2025” is a term that refers to the expected delay in international competition and the stagnation of the Japanese economy if the current complex and aging system persists. The Ministry of Economy, Trade and Industry pointed out that DX is struggling due to the excessive customization of the current system, and if the current situation cannot be improved, economic losses of up to 12 trillion yen could occur. out every year after 2025.
The Ministry of Economy, Trade and Industry is actively calling for the domestic manufacturing industry to promote digital transformation. This is due to changes in the business environment, such as changes in consumer demand, trends in market globalization, and labor shortages.
On the other hand, the estimated results show that by 2030, only 64.29 million people will be able to supply labor compared to the labor demand of 70.73 million people.
This figure indicates a “labor shortage of 6.44 million people”. In terms of sectors, labor shortages are particularly large in sectors such as services, health care, welfare, and manufacturing. Demand for these industries is expected to increase significantly in the future due to declining birth rates, aging populations, and advancements in the healthcare services industry, hence the growth rate of the labor supply. the movement will not keep up.
In recent years, Japan’s concerns about labor shortages and digital transformation have been emphasized in all industrial sectors. Efforts to promote “DX”, which uses technology to transform industrial structures, are currently attracting attention in the business world. This blog will tell you what DX is in the manufacturing industry and how the introduction of a production management system contributes to driving DX.
What is DX Manufacturing?
The aim of DX (Digital Transformation) in the manufacturing industry is to drive digitalization and improve operational efficiency by making the most of AI. To enhance the value of products and services, DX uses external environmental information converted into data such as customer needs and market trends as well as internally accumulated information such as feedback from customers. customers to develop new products and services, resulting in increased added value and increased sales. Many companies are starting to consider DX as it is expected to help improve work efficiency in manufacturing facilities where a lot of manual work remains.
In other words, production optimization aims to improve the efficiency of the entire process and enhance cost competitiveness through automation as well as the calculation, prediction, and optimization of processes. different tasks. It can be said that production DX is really achieved by implementing management reform based on these two wheels, but it is important to proceed step by step from what can be done first.
By using digital in the manufacturing industry, it will be possible to jointly manage the production process with electronic data, and digitize the production process, thereby sharing information, techniques as well and work. It’s easier to depend on the skills of individuals across the organization. This will allow building a company structure that can respond Agile to even the fastest changes.
Benefits of DX for manufacturing industries
When the environment around production sites is constantly changing, the digital transformation of manufacturing industries will be an effective weapon to support business management. However, if you have no knowledge of DX production, and you can’t decide how to use it in what situation, there are three benefits that can be gained when DX is in production, and they must be understood:
By converting previously paper-based processes to DX using digital technologies such as IoT, the manufacturing industry can visualize information about all processes from receiving orders to After-sales service in real-time. By centralizing data on device status and manufacturing processes, smooth feedback and improvements can be realized even if something goes wrong.
By visualizing data, it is possible to generate sales forecasts based on customer data and optimize delivery volumes and resource costs in the manufacturing industry. Data should be used to improve quality, develop new technologies, and contribute to the growth of companies.
In addition, in the case of sales activities, the operational status of the sales staff can be confirmed, and in the case of marketing activities, the results of the measures can be evaluated quantitatively. In addition, when an existing customer visits a website, it can be used to negotiate an on-site sale by capturing which pages they have viewed and it can also be used to remove the thinking old.
Eliminate the use of human labor and the dependence on individual skills
In Japan’s manufacturing industry, which thrives on a hands-on approach and craft culture, with emphasis on the skills and experience of so-called experts, and the work itself tends to direction become dependent on the individual. In the past, efforts have been made to eliminate dependence on individual skills, but to radically eliminate this condition, it is necessary to systematize the whole mechanism.
By digitizing work that has become dependent on individual skills through DX, it is possible to standardize work. The personalization dissolution process takes place according to the following steps.
○ Check if the work itself is necessary in the first place
○ Review without following normal workflow
○ Use tools and systems that automate work as much as possible
To eliminate dependence on individual skills and increase productivity, it is important to identify which jobs do not need humans and which can be done more efficiently by digitizing it. If we can get rid of dependence on individual work and can allocate human resources to jobs that only humans can do with higher added value, that will lead to improvement. on product and service quality.
Improve production efficiency
By bringing digital technology into the business processes of the manufacturing industry, it is possible to systematize repetitive activities and improve productivity. If we appropriately combine the latest technologies such as IoT and AI, it will be possible to automate every activity in the manufacturing industry, from development design, and production processes to clerical work… Since data is automatically accumulated, it is not only possible to improve operations and reduce labor costs but also to prevent errors, and maintain and improve production efficiency. In addition, paper-based management will be more and more popular in the manufacturing industry and contribute to improving production efficiency.
In addition, DX in sales and marketing activities is also attracting attention recently. Until now, digitalization has mainly focused on improving the efficiency of production and distribution processes, but the number of digital tools in sales is also increasing, and more and more companies are applying.
Improve customer satisfaction
By leveraging DX, the company can respond flexibly to rapidly changing market movements. Through the use of data, accurately capture customer needs and reflect them in improving the quality of products and services the company provides. If you can provide new services that meet customer needs and improve existing products, customer satisfaction will improve and they will continue to use your products and services… Building strong relationships with high-quality customers will also contribute to the growth and development of the company.
In addition, as the data visualizations mentioned above progress, customers will get the information they want and wasted communication will be reduced. As a result, customer satisfaction will improve and the company will be loved by only providing customers with good information.
Problems in the DX in the manufacturing industry
DX is required not only in the systems and information processing industries but also in the manufacturing industry that creates the product, but there are various obstacles to its promotion. Two major challenges in DX production emerge.
Issue 1: Labor shortages are evident and incomplete optimization is being done through individuals
In Japan, the population decline is becoming more and more serious, so labor shortage is an issue that cannot be ignored in industries that need workers such as manufacturing. In addition, there are many cases in the manufacturing industry that belong to a particular individual. Therefore, improving the difficult situation of securing human resources and transferring technology is a challenge.
Issue 2: DX investment is not optimal
In DX investing, companies emphasize “application capabilities” (ability to do work correctly) in order to maximize profits by using management resources more efficiently and switching only in response to changes in the environment. (increasing the likelihood of doing the right thing).
Many companies in Japan are doing this. However, in an uncertain world where market demand fluctuates wildly, efforts such as the following are essential.
How to do DX in the manufacturing industry
“DX should not proceed blindly.” DX’s ultimate goal is to improve productivity and create high-value-added products that can meet the ever-changing needs of customers. Focus on the original intent rather than digitizing immediately and DX step by step.
From here, we’ll explain the DX realization process for each of the four steps.
Step 1: Share about the company’s problems and goals
First, identify the problems you are facing and develop a strategy to solve them. Strategy formulation and execution is more effective if the entire company is led by a management team.
Step 2 Collect manpower and data
“Let’s gather the human resources and data needed to drive DX.” When analyzing the collected data, consciously shape “what the customer wants”. If we focus too much on quality, we can create products that do not meet the needs of our customers.
Step 3: Make the activity more efficient
Review entire business processes, find performance bottlenecks, and review and implement improvement methods such as automation. Trying to streamline the entire process in the first place costs a lot of time and money, and can cause confusion due to procedural changes, bringing work to a halt. Let’s start small, to control the risk of failure.
Step 4: Transform the organization to meet customer needs
In addition to providing products that match the times, continuously improve customer satisfaction by transforming business models and organizations to be able to meet customers’ ever-changing needs. To avoid conflict with customer needs, it is important to continue to collect real data and build new value-creating processes.
This Blog has explained in detail the current situation and challenges of the manufacturing industry, how to proceed with the digital transformation of the manufacturing industry, and the steps to realize it. While DX is attracting attention in a variety of industries, it is particularly attracting attention in the manufacturing industry, where there is a lot of room to promote DX.
If you are in need of DX in the manufacturing industry, please refer to the examples featured in this article and find the method that is right for your company. Or contact NAL for more details.