Digitalization is a buzzword across every industry, from Microsoft to Qualcomm. If you want to improve your business, digitalizing is the best way to start. Specific digital tools can vary between companies, but the benefits remain the same.
In 2019, Microsoft released a study called “The State of Tech Intensity,” detailed in an article by Forbes. Tech intensity, digital transformation, and digitalization are all sides of the same coin. Tech intensity and digital transformation were the precursors to digitalization. In Forbes’ article on Microsoft’s study, Microsoft revealed that the overall expectation among 700 executives was that the use of advanced technology would increase in intensity. That 75% of respondents believed harnessing tech intensity, the rate of tech adoption, and capability is the most effective way to build competitive advantage today.
For manufacturers, digitalization is crucial to staying on the competitive edge.
While every business, from retail to healthcare, benefits by adopting technology into business operations, manufacturing stands to gain the most. The top five technologies implemented in any industry are all tools manufacturers can use to optimize their production lines and supply chain. The top five technologies are machine learning (ML), the Internet of Things (IoT), artificial intelligence (AI), automation, and mixed reality or augmented reality (AR). Many other tools are used during the digitization of a company’s operations. The only difference is which suits a business’s needs more.
For original equipment manufacturers (OEMs), contract manufacturers (CMs), original chip manufacturers (OCMs), original design manufacturers (ODMs), and more along the semiconductor supply chain, high levels of digitalization promote rapid innovation. For those who don’t, it is far quicker to fall behind now than ever.
So, what is digitalization? As described by Gartner, digitalization is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”
Gartner describes digitalization as using digitalized information to make workflows and processes more straightforward and efficient. Digital culture is an essential aspect of modern business, with every organization utilizing some form of digitalization. It varies from business to business but is becoming more apparent every year. Those that do not embrace digitalization don’t fall behind.
They lose the race entirely. As described by Microsoft’s study, digitalization is not optional.
In 2019, the benefits of increasing tech intensity or further digitalizing your business were already massive. Businesses that digitalized saw lower costs by 43%, improved connectivity in rural areas by 40%, reduced corporate waste by 40%, better worker safety by 33%, and more access to financial services by 33%. Only 8% of respondents in 2019 said they didn’t expect tech intensity to bring positive benefits.
Since Microsoft’s study, those numbers have only increased. Forrester reported in 2022 that digitalization has the potential to save on operation costs by 90%. That’s a significant boon to manufacturers, where operational costs an average of 30 to 40% of sales revenue. The more inefficient the operating process, the further drain in both price and production efficiency. Digitalization in automation, AI, and ML lowers the risk of human error during production, operates 24 hours daily, and can learn processes that prevent future product design errors.
Cloud-based software can provide further transparency over operations while connecting all job positions, making communication between levels of management fast. Management will be alerted if a problem occurs on an automated production line to resolve the issue. This prevents lengthy production stalls and possible dysfunctional products from making it further down the line before the problem is finally noticed.
Better communication and automated production lines are just two examples of how digitalization appears when implemented by a company.
On a grander scale, digitalization helps companies navigate shortages, mitigate component obsolescence challenges, issue alerts for unforeseen risks, and provide greater data visibility. Each process typically requires a large team of people, takes a few tools, and takes no time. Better, it aids company staff by filling in gaps caused by labor shortages, improving employee morale. This is further enhanced by automation completing repetitive and tedious tasks while the human team can focus on more significant and complicated initiatives, allowing them to innovate and advance.
In periods of shortages or excess, manufacturers can strategically prepare to prevent backlogs and bloated inventory with AI and ML. Historical trends paired with supply chain data can quickly be assessed and analyzed for detailed snapshots of possible future risks. The amount of data needed to be analyzed would be far too extensive for a human employee to manage in an equally short time. Indeed, digital tools provide a much clearer picture that experts can then study to find an effective solution.
And this is just scratching the surface of what digitalization can do for manufacturers. The benefits are immense, but here are the three most important ways digital tools can aid manufacturers.
A Bill of Materials (BOM) is an essential but tedious task to fulfill and manage. Depending on the product, OEM BOMs can range from a few items to several thousand. More than likely, a typical BOM consists of several thousand components for one product. Purchasing these components on a BOM takes buyers hours upon hours to complete. BOMs usually require price, availability, logistics, and other comparisons between different suppliers for a single component.
Traditionally, that process involves lengthy spreadsheets and weeks of calculations to find the most cost-efficient transaction. Manually entering and searching for each component on a global marketplace, despite being digital, takes hours. This doesn’t even take upcoming component obsolescence or end-of-life (EOL) and shortages into the equation and how that affects the BOM management process.
It’s a tedious process that should be the first thing a manufacturer digitalizes. Many digital BOM tools are available, but their efficiency and capabilities differ. Sourcengine’s BOM tool, Quotengine, has the most to offer in terms of cost-effectiveness, time efficiency, and ease of use. Quotengine capabilities cut the time a professional buyer fulfills a BOM by over 50%. This is possible due to Quotengine’s integration into a global marketplace with over 1 billion part listings.
Users can upload up to 4,000 line items in a single search and are not limited to single search options. Upon uploading a BOM, buyers can sort through technical data on components they require and quickly benchmark component prices through other suppliers to make the most cost-effective decision. When buyers are finished, they can all be added to the cart for a straightforward checkout. Enterprise quoting capabilities are available alongside filters for buyers to categorically list component offers via manufacturer, price, and more.
For manufacturers, utilizing Quotengine in your digitalization process will streamline order purchases and more effectively manage operations. Saving both cost and time, manufacturers have the assurance that their buyers make the most informed decision at every point.
Supply chain health is a complicated but pertinent part of semiconductor manufacturing. Having visibility over the entire global supply chain is a monumental task for OEMs. There are thousands of chipmakers, distributors, fabrication plants, and components. Keeping track of what could impact one chipmaker’s facility and lead to a shortage, plus every component’s lifecycle in every product you manufacture, is a lot of data. The only way to monitor a supply chain efficiently is through a platform that can catalog and handle so much data.
Human teams can overlook significant events in a sea of data. Even excel sheets full of information cannot alert manufacturers to upcoming challenges. Staff members must pour over the information, update accordingly, and raise alarms if components enter EOL or shortages. The solution, through digitalization, is called predictive analytics.
Predictive analytics encompasses various statistical techniques, from data mining, predictive modeling, and machine learning, that analyze current and historical facts to predict future or otherwise unknown events. In semiconductor manufacturing supply chains, predictive analytics predict customer demand and forecast future component trends.
This data tool is highly effective in achieving greater supply chain visibility in less time it takes for a team to do so. In an interview with Thomas Insights, Sourceability CEO Jens Gamperl spoke on the importance of predictive analytics in the future of the global supply chain’s health.
“Some of the largest manufacturers of electronic components on the whole planet have all this information, and they are working with ERP systems, with PLM systems, to collect this data and use this data, then to make these predictions,” Gamperl told Thomas Insights. “I’m very optimistic that in three to five years from now, we will be much closer to predicting what happens [compared] to what really happens.”
Is there a tool that manufacturers can utilize that provides predictive analytics on the thousands of components on the market? Yes.
Datalynq is a market intelligence tool easily integrated into any manufacturer's organization. Datalynq uses AI, ML, and data from a digital and global component marketplace that forecasts component availability based on several scores. Datalynq’s scoring system includes design risk, market availability, multi-source availability, price, and inventory trends. Each looks at a specific data set to present a window of potential future risks.
That’s time saved and future challenges mitigated with a quick and sufficient tool. In return, OEMs and others save on cost and time while boosting resilience and supply chain transparency. These propel you leagues ahead of competitors who haven’t integrated predictive analytic tools into their organizations.
Efficiency, efficiency, efficiency. That’s the goal of many industry leaders. The more efficient an organization, the better cost, time, productivity, innovation, connectivity, and resiliency become. Automation of production lines lowers the occurrence of production stalls and human error. Cloud-based software keeps all facets of an organization connected at any time and place, with data easily transmittable.
The key to a streamlined digital company that embraces and implements digital tools is to prevent data from being siloed. However, that doesn’t mean endless adoption of various digital tools that serve different functions. What’s the use of a BOM management tool if its information must be manually applied to an existing catalog system without your business?
Enter APIs as a solution.
An application programmable interface (API) is a way for two or more computer programs to communicate with one another. An API connects computers or pieces of software without the end user, aside from a programmer, having any interaction in its use. So, how does API help OEMs and others?
The best example of how API can benefit organizations in digitization is the global marketplace Sourcengine’s API capabilities. Sourcengine’s API integration allows your enterprise resource planning (ERP) system to fetch data, price, availability, and more information on Sourcengine’s marketplace to help your company make the most informed decisions on component procurement.
Sourcengine’s API integrations offer a variety of support depending on the manufacturer's needs. Sourcengine’s API partnership with Orbweaver provides three levels of integration built off Connect: inform, advance, and custom. If you’re an EMS provider that requires traditional RFQ processes that are faster, CalcuQuote manages all your RFQ processes on Sourcengine’s user-friendly dashboard.
EMS providers can utilize Sourcengine’s partnership with Luminovo’s LumiQuote to streamline and expedite quoting processes.
All of which can be summarized in a single statement. No matter the need, efficiency is a guarantee. Procurement of necessary components within manufacturing is a task that requires transparency to make the most informed decision. API integration between a global marketplace with any ERP system makes a world of difference, as data is communicated quickly between both pieces of software. The difficulty inherent to this process disappears. The only challenge left is clicking the button to purchase what’s needed.
Can that be considered a challenge anymore?
As Microsoft’s study said, digitalization is not optional. Digital tools released yesterday are only becoming more advanced in ease of use and capabilities tomorrow. The benefits digitalization provides significant to staying competitive in the modern age. Traditional processes that worked for years can no longer compete against the new, innovative tools that quickly compile data and predict future bottlenecks.
Digital tools are easy to implement into any business model and are especially useful for manufacturers. OEMs and others deal with thousands of operational processes daily, most of which can be easily automated through AI, ML, IoT, and other computer processes. Once utilized, staff can focus on more advanced tasks to improve innovation within the business to a whole new level. The best part is these tools don’t take much time to learn.
Sourceability is a digital electronic components distributor that offers three digital tools to help OEMs and others manage their supply chains better. Sourcengine, Quotengine, and Datalynq were developed by industry experts that know how detrimental these pain points can be. That’s why they are so easy to integrate into any organization.
And they’re ready to work, providing you with the data you need to take charge of your supply chain.