Capitalising on the opportunities and overcoming the challenges: A fresh look at digital transformation in UK manufacturing

Written by Jack Durrant - Head of SME and Digital Trading.

Admire him or loathe him, Amazon Founder Jeff Bezoz knows a few things about how new and advanced technology is forcing the world to progress, and this is best summed up in his own words:

In order not to fall behind other countries and regions, the UK manufacturing sector has no choice but to robustly align itself with this inevitable and ongoing digital transformation. It is achieving this by being open to the power of AI, data analytics and robotics to improve efficiencies, step up the speed of innovation, while paving the way for future growth. But is the UK reaching its digital transformation targets at the rate it wants?

The British manufacturing sector is increasing momentum, but this has been known to falter. Those organisations still in the small/SME bracket tend to utilise more traditional manufacturing and working methods, showing a reluctance to get onboard with digital change. This may be due to concerns over cost, or possibly fears that their business is not ready and may be outpaced by technology. 

For decision-makers, stakeholders, and ‘heads of’… bravery and openness to a digital future is key, keeping both eyes open to investing in new technologies and processes, while being able to predict the future landscape, and current barriers towards change. And with the sum total of benefits supporting change being greater than that of staying as is, even the most traditional of industries need to be open to the advantages a digital transformation presents. 

A recent and key report from Deloitte, noted: “86 per cent of manufacturers believe digital technologies are key to their future competitiveness, yet only 45 per cent have fully implemented such solutions across their operations, and only five per cent of manufacturers have at least one factory at full smart status, and with 30 per cent having smart factory initiatives underway.” 

Production manufacturing processes are already being reimagined as Industry 4.0 principles  become the norm, and both the physical and digital landscape shifts with smart factories, IoT (Internet of Things), AI, as well as robotics. Add the wholehearted pursuit of data-driven decision-making, automation, and cloud-based systems to the mix, and the output of enhanced productivity and cleaner, clearer operational insights are plain to see. 

While the expense of making such enormous changes to a digital platform may be the most obvious barrier, we can’t underestimate some of the other factors getting in the path of modernisation. For those clinging onto more traditional methods and mindsets, an erasure of all they’re familiar with may be difficult to even contemplate. The ‘If it ain’t broke…’ philosophy may be as hard to let go of as a trusted yet dated piece of equipment. But, in order to remain competitive and relevant, even the oldest industries need to embrace some transfer to digitisation.  

Returning to the monetary elephant in the digitisation room, the financial fear factor of switching to a digital platform cannot be overlooked. The upfront expense for new software, equipment, and wider infrastructure in most cases may feel like an obstacle for smaller enterprises keeping a close eye on the bottom line. There is also the not-insignificant matter of retraining staff to operate new technology or having to make tough decisions on letting employees go as their work will now be undertaken by machines. 

“Approximately 55 per cent of UK manufacturers have integrated multiple digital technologies – such as automation, data analytics, AI, and cloud computing – into their operations. An additional 35 per cent are in the process of introducing new tools to enhance insight and performance. Notably, only nine per cent have yet to initiate digital transformation efforts.” FourJaw

And while the dawning of a new digital age of industry brings refreshed opportunities to manufacturing, there is also a set of previously unforeseen risks in the form of potential cyber-attacks and criminal infiltration. Increased interconnectivity between digital systems and data stores may create vulnerabilities, and this in turn has made some manufacturing businesses unwilling to open themselves up to security risks. While there are as many solutions to cyber interference as there are dilemmas, a lack of pragmatism and willingness to embrace change may be just as damaging as a computer virus or malware. 

While in general the UK may be getting its digital shopfront in order, there are some wider situations that have the power to cause mass chaos to the wider manufacturing infrastructure. We may be five years on from the COVID-19 pandemic, but the aftershocks of global supply chain breakages and weaknesses are still being reflected on. And it may be that Brexit is now so far off in the past as to be included in GCSE History, but the impact it has made on how we trade and who we trade with needs to be considered as part of the current digital transformation story.

Conversely, developments and products from the digital world such as predictive analytics and real-time monitoring can help to reduce gaps in the labour world, improve supply chain visibility, and of course, increase productivity. 

Businesses may have to up their pace of adaption and change anyway, due to regulations around the reduction of emissions and a need to embrace more sustainable practices that also protect resources. These challenges act as catalysts, pushing businesses to innovate and adapt in order to remain afloat.

Regardless of the many advantages presented by digital transformation, all of the reasons cited above have put several spokes in the wheel of change, causing a slowdown in many areas. A report from Made Smarter revealed that: “40 per cent of UK manufacturers cite financial constraints as the primary reason for delayed digital adoption.” The survey also drew attention to the stat that two in five (42 per cent) manufacturers highlight a shortage of investments and capital as blockers to the progression rate of digital technologies.

Then there are those legacy systems a bit past their ‘use-by’ date that are incompatible with newer, better integrated digital platforms – with an appetite for change stymied by the cost and time-to-make-change factors. Information issued by Oxford Innovation Advice states that close to: “85 per cent of small to medium-sized manufacturers (SMEs) are seeking more government funding to help bridge the digital skills divide, further emphasising the financial challenges manufacturers face when going digital.”

Despite this constant see-saw effect between those that ‘do’ and the others that currently ‘don’t’, there is no better time than now for undecided manufacturing enterprises to opt for digital change. 

The Manufacturers Organisation Make.UK advises that “to help manufacturers navigate regulatory complexities and ensure compliance while innovating with AI technologies, regulatory sandboxes and testbeds for manufacturers of all sizes should test new AI applications under controlled conditions, allowing regulators to assess risks and develop appropriate use and regulations.”

An openness to change, a keenness to foster and not filter innovation, as well as making the most of any supporting grants and finance will enable many a doubter to adapt and thrive. Which in turn will secure and ensure a long-term and thriving future for a plethora of UK manufacturing sectors – both traditional and new.

And who better to end with than from the same person we quoted at the start? Over to you, Jeff Bezoz.

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