Digitalization in Manufacturing: Driving Industry 4.0 and Digital Transformation

What is digital transformation in manufacturing?

Digital transformation, the act of enabling digital businesses through digitalization at an enterprise-wide scale, has a direct impact on people, processes, and technologies. It reinvents the way manufacturing businesses are run and empowers them to quickly adapt to new market conditions and customer needs. For example, IoT has enabled people to become more connected to their homes, just as manufacturers have grown to be more connected to their operations. Smart home devices collect and share information with one another in an integrated platform and automate their actions based on the owner’s preference, often using just a single application. This use of data has allowed us to be more efficient and optimize processes over time.

Digital transformation has quickly become a requirement to remain competitive in today’s manufacturing world and achieve positive results, such as: 

  • Data-driven operations
  • Increased profits
  • Enhanced customer experience
  • Increased innovation
  • Improved agility
  • Improved competitiveness

Frost & Sullivan has seen the use of technology become mainstream since the dawn of Industry 4.0 in April 2011. Data is now the most valuable and transformational asset. Leveraging it to expand knowledge and develop actionable insights will allow industrial organizations to continue to optimize their manufacturing processes.

Impact of digital transformation in manufacturing

Digital transformation can make an impact on every part of the enterprise; it can enable a data-driven enterprise with increasing profits as well as:

  • Increased production efficiencies (up to 30%) stemming from reduced emissions and waste, improved energy efficiency, and better safety and work conditions
  • Reduced operational costs (up to 25%) alongside flexible and decentralized production and a value chain integrated through the digital thread 
  • Improved capital utilization by reducing downtime and inventory rate
  • Higher quality through mass customization
  • New business models and revenue streams using service- and subscription-based revenue models 

Together, these benefits can reduce the total cost of ownership (TCO), strengthen security, expand scalability, improve user experience, and provide greater mobility—delivering a real, tangible impact on an organization. Digital transformation can also contribute to key goals including product quality, worker safety, efficiency and throughput, and sustainability efforts.


Becoming more customer-centric is essential to remaining competitive. To differentiate, companies are improving product quality, creating unique customer experiences, and delivering higher levels of service. Digital transformation supports these goals, while reducing costs in the process.


Digital transformation allows for improved training and onboarding, which enables organizations to keep up with the pace of competition and navigate the complexities of today’s manufacturing processes. Further, real-time monitoring can help manufacturers forecast and resolve potential safety issues before they occur. Patterns in data can trigger alerts for faulty equipment or unsafe conditions.


Maximizing manufacturing throughput is the keystone of delivering revenue growth. Your organization’s ability to meet demand and maintain a competitive edge starts with continuously exceeding expectations. Digital transformation allows for tools such as real-time asset health monitoring and predictive analytics, enabling you to anticipate problems before they occur and empower employees to swiftly address issues as they arise – further reducing unplanned downtime and maximizing throughput.


Digital tools are being used to support a more sustainable future, starting with product design and engineering. Digital transformation has an impact on sustainability in two main ways. First, sustainable design means engineers can more carefully consider materials, processes, and logistics, leading to reduced material and energy consumption, lower emissions, and less waste. Additionally, companies are facing increasing pressures to reduce emissions across their operations. IoT technology can give companies the insights they need to understand inefficiencies, allowing them to make data-driven decisions that optimize operations and improve resource utilization.

Key benefits of digitalization in manufacturing

Digital transformation has become a requirement for surviving in today’s industrial world. While formerly a mid-term objective, challenging market conditions have made technology investment and digitalization a top priority among all industries.

Digital connectivity

Digitalization is the act of using digitized data, digital technologies, and digitally enabled strategies to enable, improve, or automate processes, functions, or operations. It also transforms business models, creates new revenue streams, and creates new products and services, turning data into knowledge and actionable insights.

Operations management

Organizations that quickly adapt to implement and sustain their approach to digital transformation are in a better position to respond to the long-lasting changes in operating environments due to the COVID-19 pandemic and subsequent supply chain disruptions. Further, the flexibility and preparedness that digitalization adds to operations allows those organizations with successful digital transformations to gain a sizable advantage over their less proactive competitors.

3 examples of digitalization in manufacturing

Digitalization in manufacturing looks different at all organizations. While digital transformation is not a one-size-fits-all approach, all use cases of digitalization have opportunities to empower employees, engage customers, optimize operations, and transform products and services.

Industrial IoT sensors

The IoT is a foundational technology for Industry 4.0 initiatives that uses connected smart sensors, actuators, and more to connect your people, products, and processes. Using IoT platforms, you can connect, monitor, analyze, and act on industrial data to achieve the following benefits:

  • Maximize revenue by eliminating unplanned downtime and operational roadblocks to keep revenue growing. IoT can help you scale to new markets, improve throughput, and unlock new business models.
  • Get to market faster with rapid application development. IoT platforms allow you to wrap and extend legacy assets for new functionality.
  • Lower operational costs by unlocking industrial data from connected products and systems to boost productivity and efficiency while keeping costs low by removing bottlenecks and boosting efficiency.
  • Improve quality by scaling your product, service, and factory operations. 

Predictive maintenance

Predictive maintenance continuously analyzes the condition of connected assets and equipment to reduce the likelihood of unplanned downtime or machine failure. It is a transformative application of the IoT with tremendous advantages, such as:

  • Decreased downtime: Predictive maintenance enables technicians to detect issues in advance and resolve problems before equipment failure can occur.
  • Greater worker productivity: There is no need to disrupt worker productivity for an unexpected malfunction or breakdown. Predictive maintenance plans around workers’ schedules.
  • Reduced field service costs: By anticipating machine maintenance, service departments can generate major cost savings and increased ROI.
  • Improved product design: By harnessing the power of IoT data collected through your machine’s sensors, product designers can use this vital information to make thoughtful design decisions.
  • Enhanced worker safety: An unexpected breakdown or malfunction can lead to hazardous working conditions for your employees. By predicting when a malfunction may occur, service can be completed before a machine becomes dangerous. 

Smart manufacturing

Smart manufacturing solutions can unlock new levels of innovation, productivity, and growth through various continuous improvement strategies. These solutions help companies keep pace and remain competitive by:

  • Reducing operational costs by using connected monitoring and analytics to cut labor, materials, and overhead costs by up to 12%.
  • Maximize revenue growth and boost factory output by up to 30% by cutting lead times, lot sizes, and your time to market.
  • Increase asset efficiency by reducing changeover times, unplanned downtime, and your WIP inventory. 

Case Studies

Rockwell Automation

Rockwell Automation, both a global manufacturer and leading technology provider, needed standardization across its operations and the ability to scale improvements across six global facilities. It partnered with PTC to create the FactoryTalk Innovation Suite, which allowed for capabilities such as:

  • Intelligent asset optimization, allowing for increased throughput, predictive maintenance, and improved analytics
  • Digital workforce productivity, solving for problems such as lack of visibility, machine performance, and high employee turnover
  • Enterprise operational intelligence, giving Rockwell Automation the ability to look for new innovations and infuse intelligence into their day-to-day operations. This enterprise-wide operational intelligence can improve performance across all factories – through continuous bottleneck identification, actionable KPIs, and loss prioritization. 

As Rockwell Automation continues to optimize operations and increase workforce opportunities, it will rely on its connected systems and flexible technology to accommodate new innovations.


In manufacturing, keeping up with the competition requires a commitment to continuous improvement and the willingness to examine and refine internal operations – even when that means leading people on a new digital transformation journey. Evyap utilized PTC’s ThingWorx and Kepware servers to reduce scrap by 23%, save 1,500 hours by digitalizing all paper forms, and improve the safety incident rate by 60% with plans to scale across all 50 production lines. The project yielded not only an improved data collection system, but also a way for Evyap to save time and engage its employees in services such as action planning, daily direction setting, and defect handling. Further, any production, maintenance, quality, or safety defect found by any employee could be entered into the ThingWorx-powered application with clear and detailed problem definition and photos. The same employee could also track the status of feedback or actions and could become more engaged and efficient rather than using email, spreadsheets, or trackers. These improvements were key for closed-loop problem solving with employee buy-in.

Frequently Asked Questions

What is the difference between digitization and digitalization?

Digitization is the capturing of information about the business, products, and processes in a digital form. It allows for data processing, transfer, and utilization while laying the foundation for digitalization. This can include scanning a paper document, keying datapoints into an Excel spreadsheet, or recording presentations and converting them to digital files.

Digitalization entails the application of digital technologies to improve or implement functional processes that take advantage of data being in a digital format. It turns data into knowledge and actionable insights. For example, designing a product in a CAD environment instead of on a drafting table or collecting and analyzing manufacturing data using an IoT platform instead of manually would be examples of digitalization in manufacturing.

How is digital technology used in manufacturing?

There are thousands of potential improvements digital transformation can solve for. Global competition and supply chain challenges often complicate manufacturing processes. Whether customers are demanding that tailored solutions of increasing complexity by delivered faster or skilled experts are leaving the workforce at unprecedented rates, manufacturing organizations are racing to adopt Industry 4.0 technology.

Real-time problem identification, root cause analysis, and closed-loop performance management are essential for continuous improvement. PTC’s digital manufacturing solutions can revolutionize your operations with real, impactful use cases such as:

  • Plant benchmarking: Improve data collection and analysis across plants, equipment, and lines. Get a clearer picture of performance and make more meaningful improvements.
  • Achieving a more productive workforce: Adopt technology to empower your most valuable asset – the frontline employees on your factor floor.
  • Concurrent engineering: Begin manufacturing in parallel with engineering and stay aligned with access and visibility to the latest design changes. Accelerate production and reduce non-quality costs via a seamless digital thread. 
  • Improving OEE: Digital manufacturing can discover previously unmeasured KPIs to find – and solve – hidden inefficiencies by minimizing downtime and accelerating changeover. 

Frost & Sullivan estimates that nearly half of industrial companies worldwide are experiencing some measurable benefit from turning data into actionable insights and fully realizing business outcomes, depending on the company’s digital maturity level. The industrial application of digital technologies has led to a plethora of use cases that enable factory transformation and directly impact revenues, operational excellence, production efficiency, worker conditions, quality, service optimization, and customer satisfaction.

Written By: Emily Himes