Digital transformation in manufacturing is an ongoing challenge as the sector navigates Industry 4.0, supply chain disruptions, competitor innovation, and a growing market of digital-native buyers. To stay competitive, manufacturers must move beyond fragmented digital initiatives and build a connected ecosystem—one that unifies engineering, production, sales, and service into a seamless, data-driven network.
What’s Driving Today’s Digital Transformation Strategies?
Digital transformation in the manufacturing industry involves incorporating digital technologies into all facets of the production lifecycle. Unlike simple automation solutions, digital transformation facilitates transitioning from traditional, siloed processes to interconnected, data-driven operations. This shift encompasses every aspect of manufacturing, including product design, supply chain management, sales, and customer service.
Several factors are driving manufacturers to modernize their operations and adopt digital-first strategies:
- Evolving customer expectations & market pressures: Manufacturers are responding to a growing demand for personalized, flexible, and seamless buying experiences. A KPMG survey found that 44% of industrial manufacturing executives identified customer feedback as a top driver of digital transformation. This pressure pushes companies to enhance engagement, responsiveness, and digital sales channels for today’s buyers.
- Breaking down data silos for unified decision-making: The focus is shifting from isolated operational improvements and data silos to a holistic, interconnected system. By linking production, sales, customer service, and beyond, companies can ensure that every step—from design to delivery—is data-driven, agile, and aligned with modern market demands.
- Connected ecosystems & service-cased innovation: Manufacturers are leveraging real-time data, AI, and automation to build connected services like predictive maintenance, pay-as-you-go models, and digitally enabled aftermarket offerings. These innovations open new revenue streams and deepen customer loyalty.
- Optimizing production processes & supply chain resilience: Digital tools are revolutionizing the production life cycle. Advanced analytics, IoT, and automation are being applied to optimize product design, streamline production workflows, and enhance supply chain management. This approach not only improves operational efficiency, but it also increases quality control and helps mitigate disruptions across suppliers and logistics.
Digital Transformation is Reshaping Manufacturing from Operations to the Buyer Journey: Key Benefits
Adopting digital strategies and emerging technologies—AI, for example—is yielding impressive results for those who embrace them. McKinsey notes that adapting to Industry 4.0 has led to such benefits as increases in labor productivity by 15 to 30%, improvements in forecasting accuracy by up to 85%, and reductions in machine downtime by 30 to 50%.
These results not only optimize production and reduce waste, but also pave the way for further benefits downstream:
- Enhanced customer experiences: Digital software like CRM and CPQ systems, AR/VR visualization, chatbots, and self-service portals enable faster and more personalized customer interactions.
- Improved decision-making: Leveraging big data analytics and AI promotes informed decision-making by enabling you to analyze trends, predict demand, and identify potential bottlenecks, so you can deliver the right products to customers at the right time—on time.
- Cost reduction: Predictive maintenance and automated quality control keep operations running smoothly and eventually lower production costs. Meanwhile, smarter sales tools can reduce cost-of-sale and eliminate rework in the quoting process by connecting sales with accurate product and engineering data.
- Greater agility and flexibility: Cloud-based platforms and smart manufacturing systems are handy when scaling production based on demand. Furthermore, various digital tools shorten product development cycles or reduce administrative tasks to allow teams to focus on product innovation.
How Manufacturers are Leading with Digital Innovation: Examples and Real-World Applications
Today’s most competitive manufacturers are leveraging these emerging trends and technologies not just to improve production efficiency, but to create seamless, data-driven experiences that place customers at the center of their business model.
These examples of digital transformation show how manufacturers are using data and automation to drive smarter decisions and elevate customer experiences.
Creating a Faster, More Personalized Buyer Experience
Manufacturers are transforming the buying experience by integrating data from sales and engineering systems that enable real-time customization and visualization. CPQ is helping bridge the data gap between engineering and sales teams by ensuring that sales configurations always align with production capabilities, reducing costly order errors and accelerating fulfillment times. CPQ software captures product rules and constraints so that sales teams can configure complex products accurately without the need for frequent engineering involvement.
When paired with CAD systems or advanced AR/VR visualization tools, these platforms generate precise technical drawings and 3D models, allowing sales to provide customers with real-time product previews that drive confident purchasing decisions.
Manufacturers like FLSmidth have reduced lead times and engineering errors by automating CPQ and CAD processes, improving efficiency and customer communication. Similarly, Metso has centralized CPQ to replace manual configurations, speeding up quote generation by 20% while cutting proposal management efforts by 40%.
Shifting to Predictive Maintenance and Smarter Service Solutions
To meet customer expectations for reliability, manufacturers are shifting from reactive to predictive maintenance models, ensuring minimal disruptions. Industrial IoT sensors and AI-powered analytics continuously track equipment performance, detecting early signs of failure and scheduling proactive maintenance. This shift not only improves product uptime and order fulfillment reliability but also creates more transparent service agreements that build trust with customers.
Intelligently Forecasting Demand for Smarter Operations
AI-powered demand forecasting enables manufacturers to optimize inventory, align production with market demand, and enhance supply chain agility. By analyzing real-time data using machine learning algorithms, companies can anticipate shifts in customer needs, reduce excess inventory, and prevent stockouts.
This enhances:
- Supply chain efficiency: Better coordination with suppliers reduces delays and disruptions.
- Production planning: Adjusting schedules in real-time maximizes resource utilization.
- Sales strategy: Proactive insights help sales teams sell profitably and ensure product availability to meet customer expectations.
Navigating Common Challenges in Digital Transformation
Despite the known benefits of digital transformation in the manufacturing industry, the road is stalled for many. One IFS report finds that fewer than 10% of global manufacturers qualify as “digital leaders”, and 65% of manufacturers label themselves as “laggards”, having stalled in the early stages of transformation.
The challenges extend beyond cost and technical expertise. Here’s how manufacturers can overcome key roadblocks.
Securing Stakeholder Buy-In
A significant challenge in digital transformation is securing executive support and sufficient funding. The aforementioned KPMG survey reports that 39% of manufacturers say projects stall due to a lack of executive buy-in and investment approval.
To prevent stalled or underutilized investments, involve cross-functional leaders earlier in the evaluation process. IT leaders who drive new software purchases, for example, should work with the appropriate business leaders to identify pain points, uncover relevant use cases, and align investments with real business needs. Stronger stakeholder alignment ensures healthier adoption and builds a clearer business case for long-term funding and scalability.
Legacy Systems and Technical Debt
Outdated legacy systems continue to be a barrier. Many manufacturers are burdened with high levels of technology debt, where systems built decades ago fail to communicate effectively and limit data accessibility.
When evaluating new technology, prioritize scalability, interoperability, and long-term viability. Middleware solutions can bridge current systems and new technology without the need for extensive coding, ensuring data flows across the value chain without disrupting operations. Opting to buy rather than build a homegrown solution can also speed up time to value, reduce the need for full-time maintenance resources, and allow for future scalability. A strategic IT assessment helps pinpoint areas where investment will have the greatest impact.
Capturing Data and Demonstrating ROI
Despite having transformation roadmaps, many manufacturers struggle to define actionable KPIs that directly measure the impact of digital initiatives. Broad goals like “improving efficiency” or “enhancing customer experience” aren’t enough. Companies need specific metrics tied to cost, cycle times, or other relevant metrics to accurately assess ROI. But this also requires that teams can understand, access, and interpret their data effectively.
Enhance Your Digital Strategy with Tacton’s CPQ Solution
Tacton goes beyond traditional CPQ, enabling manufacturers to seamlessly connect sales, engineering, and production for a frictionless buying experience. By streamlining processes and ensuring real-time data flow, our platform helps you deliver faster, more personalized customer interactions while reducing complexity.
Purpose-built for manufacturing, our CPQ solutions unify every touchpoint of the buying journey—from interactive visualization and CAD integration to self-service experiences—to help you deliver a truly customer-centric buying process. With multiple integration options, from no-code to open APIs, you can connect data across ERP, CRM, PLM and other systems to boost efficiency across the value chain. Ready to experience a more agile, connected, and efficient manufacturing future?