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3 Phases of the Manufacturer's Digital Transformation Journey

manufacturer digital transformation

>Most recently on the blog, we discussed where manufacturing companies are falling short when it comes to digital transformation (DT).

As a brief recap, here’s what we know:

  • Manufacturers tend to prioritize growing revenue over improving customer experience (CX), when many studies show that the former can be achieved by accomplishing the latter.
  • Manufacturers are focused on building smarter products, but fail to involve their most valuable R&D team—customers—in the process.
  • Actions taken to improve CX don’t actually involve any customer input.

You can read the full post here.

So how can manufacturers improve their DT strategies? By focusing on the customer. But are they successfully doing this? Here’s what Forrester’s Ashutosh Sharma found when assessing how manufacturers progress through their digital transformation journeys.

Phase 1: Digitizing the Linear Value Chain

During the preliminary DT phases, manufacturers are focused on digitizing current processes and improving them to increase operational efficiency. Seen as part of the Fourth Industrial Revolution, this push toward digitization and the automation of manual processes affects the entire manufacturing value chain, from design, development, and product building to aftermarket support.

Forrester found that there are three common kinds of use cases in digitized operations.

Enhancing Design and Development

Manufacturing companies are creating digital replicas of their physical products, allowing them to virtually design, test, and build products rapidly. Sharma explains, “They do so by modeling the life-cycle behavior of subsystems and components that make up the product, or even a physical asset, and simulating their real-world behavior.”

Optimizing Manufacturing Processes

Shop-floor equipment is now being optimized with the Internet of Things (IoT) and other devices to collect and analyze data, gain insights, and improve operations. This is driving use cases in predictive maintenance, quality, and production optimization.

Operating & Monitoring Assets Remotely

More and more companies are connecting assets in the field so that they’re able to control and monitor operations remotely in real time. Benefits include using data collected to optimize maintenance and logistics operations, and reducing operational costs by removing the need for labor.

Phase 2: Delivering Customer Value via a Digitized Linear Value Chain

By changing their operating models without altering value chain linearity, manufacturers are able to leverage digital investments to create new customer propositions, offer more product choices, and deliver better experiences.

More Product Choices

Because digitized processes lend themselves to more granular control, manufacturers are able to “tweak their operating model and build products customized to customer requirements within an acceptable lead time.”

A Better Experience

Using these connected products, manufacturers can make adjustments in real time, optimizing product behavior based on product usage data. Here’s one real-world example:

KONE leverages usage data from its elevators to ensure that they are in optimum position in the building at various times of day in line with when and how people use them. The firm can shave minutes off of the nonproductive time customers spend waiting for elevators.

Phase 3: Exploring Adjacents Sources of Value

All of these connected products and processes means a lot of data. Manufacturers are utilizing this data by looking at usage patterns and product behavior, as well as making it available to other firms at a price.

Forrester found that this is leading to new business models forming, including:

  • A move from selling products to selling services: “Firms complement the streaming data coming from connected products with years of data locked in core systems like enterprise resource planning, PLM, and supply chain.” Such data-enabled services allow them to deliver business outcomes to clients.
  • The building and monetization of data assets: “Companies build enterprise insights platforms to generate insights from large internal and external data sets and make them available to customers and partners on a commercial basis.”


Traditional barriers that once separated partners, suppliers, internal teams, and customers into silos no longer exist. This has created a new, dynamic ecosystem of value.

However, due to manufacturers’ predominantly B2B nature, organizational structure, processes, and culture, they’re a bit slower to make the transition from traditional linear value chain to this dynamic ecosystem.

As more companies enter into this new ecosystem, manufacturers and others are seeing that everything revolves around the customer, and that an empowered customer that dictates his or her needs and desires is the norm, not the exception. By strategizing around such wants and needs, manufacturers can better and more quickly transition from their more traditional, linear ways.

To learn more about how to put the customer at the center of your digital transformation strategy, read this.

Matt Noyes

Matt Noyes

Matt is the Director of Product Marketing at FPX. He focuses on the evolution of CPQ from a traditional sales tool to one that delivers value across the enterprise.

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