Digital Transformation in Manufacturing

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Vasion Team
February 27, 2026
10 mins
The progression of the manufacturing industry from the onset of the industrial revolution to the present day has always been about doing more, faster, and more efficiently. This is still the underlying objective for manufacturers across the globe. That said, manufacturers in all industries are pursuing digital transformation to stay relevant and innovative.
Digital transformation in manufacturing involves using smart technologies to redesign operations, enhance productivity, and enable faster, more flexible decision-making. It replaces legacy, manual processes with integrated digital systems that connect machines, people, and data across the value chain.

The Evolution of Manufacturing

By way of recap, the Industrial Revolution can be depicted as the catalyst for the evolution of manufacturing operations. Beginning around the 18th century, industry kicked things off with the steam engine and continued on an upward trajectory through the development of mechanical, digital, electronic, and automated technologies that are in use today. The accelerated pace of innovation and change has introduced an array of new tools and machines, as well as new paradigms in labor, production, and resource management.
One of the more pivotal aspects of the Industrial Revolution has been the widespread push for digital technology. Key inventions and innovations in mechanization, electricity, and automation have shaped virtually every sector of manufacturing. This progression period can be summed up as Industry 1.0 through Industry 3.0. The advancements introduced in Industry 4.0 and 5.0 are where things really get interesting.

Industry 4.0: Digital Transformation in Manufacturing

What Industry 4.0 brought to the table can be defined as the digitization and automation of manufacturing and operations enabled by interconnected technologies. The following sections are a sampling of the contributions of Industry 4.0:
  •  Big Data. Uses sensors on production equipment, portable devices, and enterprise resource planning (ERP) systems to improve operational efficiency, such as detecting human errors, predicting equipment maintenance, performing quality control, and setting up optimal production or assembly routes.
  • Robotics. Leverages autonomous, programmable mechanical systems designed to perform repetitive manufacturing tasks, making operations faster and more efficient.
  • Automation. Involves a set of technologies that perform machine operations without significant human intervention. They perform tasks with consistent precision, reducing human error and cycle times while increasing throughput.
  • Internet of Things (IoT). Incorporates a network of physical objects, such as machines, sensors, devices, and appliances, that interact over the internet, collect data, and act on that data. This technology improves overall efficiency by providing greater visibility into operations, optimizing resource allocation, and reducing downtime.
  • Digital Twins. Comprises a virtual representation of real-world objects, processes, and systems. It can provide a digital image of a factory's operations, a communication network's activities, or the movement of items through the logistics processes. For example, it can be a simple algorithm that forecasts how a product or process will perform based on real-world data. 
  • Cloud Computing. Provides on-demand delivery of computing resources, like storage, databases, networking systems, and software, over the network instead of running them on local hardware.

Industry 5.0: Unification of Humans and Technology

Industry 4.0 inaugurated many of the technology advances that paved the way for Industry 5.0. This current version of the industrial revolution is a technological transformation that unifies humans and technology. Much of the technology unveiled in Industry 4.0 is a complete overhaul of the traditional landscape, which has been valuable for optimizing processes. However, human creativity and problem-solving skills are still critical to the digital transformation of manufacturing. The human-technology collaboration opens more opportunities for efficiency and growth in the manufacturing industry.

What Is Driving Digital Transformation?

In a nutshell, manufacturers are embracing manufacturing innovations to alleviate the costs and stress instigated by errors, supply chain disruptions, unplanned maintenance issues, and delayed deliveries, to name a few. Some of the perks of digital transformation include improved product quality, new business opportunities, adding jobs, and maintaining competitive advantages amid ongoing market changes. Implementing Industry 4.0 and Industry 5.0 strategies presents significant opportunities for manufacturers to differentiate themselves, capture new markets, increase customer loyalty, boost growth, and create more resilient, reliable supply chains.
Digital transformation has also led to an increased focus on agility, enabling companies to quickly adapt to market and consumer behavior changes. This involves breaking down silos within organizations and creating cross-functional teams that can quickly respond to changing circumstances. According to a recent survey conducted by McKinsey & Company, initially, manufacturers wanted to implement automation for cost reduction and increased productivity, but today, manufacturers also want to improve resilience, flexibility, and sustainability.

Real-World Applications

Headlining what motivates manufacturing organizations to adopt digital technologies is reducing errors, improving productivity and efficiency, and mitigating risks. Implementing digital technologies in manufacturing leads to producing high-quality, innovative deliverables. The Industry 5.0 blueprint for  integrating human factors with technologies and processes incorporates the use of real-time data to optimize production phases, reduce downtime, and ensure materials and labor are available when needed by leveraging ‘advanced technologies’ like the internet of things (IoT) and big data. None of these technologies are new; they became commonplace during industry 4.0. The technology boom that inaugurated Industry 5.0 encompasses all the Industry 4.0 capabilities in both hardware and software with humans and technology collaborating to improve all aspects of manufacturing.

Production Planning and Scheduling

Manufacturing organizations worldwide are turning to more reliable and agile production practices that are essential for minimizing downtime and optimizing throughput. For example, the IoT is valuable functionality for reducing manufacturing costs, assisting in preventive maintenance, and providing a safer work environment. For example, stopping a production line for repairs would result in a loss of production time and impact dependent assembly lines. Identifying potential malfunctions in advance using equipment sensors boosts manufacturing reliability and performance by eliminating failures which in turn results in saving money.
Ideally, machines should stay productive more than 85% of the time, and most products (95% to 99%) should pass inspection the first time. Quick changeovers, less wasted material, and on-time delivery over 95% of the time are all signs that a factory is operating smoothly. This level of performance and production enables more accurate planning and scheduling of production resources and runs.

Inventory and Materials Management

The ability to precisely track the movement of raw materials, components, and finished goods in real-time enables manufacturers to improve inventory management, mitigate risks, and enhance collaboration with suppliers. In addition, predicting consumer behavior is another area of the business that has a higher impact on profitability by reducing cases of unsold inventory or the lack of inventory. Statistics reveal that up to 60% of companies struggle with stock management, resulting in lost sales and excessive storage fees. Manufacturers are employing predictive analytics in demand forecasting and inventory management, which contributes to informed decisions, risk mitigation, and operational efficiency.

Quality Control

Historically, quality management primarily focused on ensuring that products and services met consumer expectations and, if necessary, adhered to regulatory standards. The quality management version of Industry 5.0 is Quality 5.0. It is designed to circumvent the limitations of conventional quality control techniques, which are typically reactive, by adopting a proactive stance towards defect prevention and process optimization. Quality 5.0, when integrated into the Industry 5.0 framework, offers a multitude of benefits.
Quality 5.0 is about exceeding standards, not just meeting them, which is a core differentiator for companies. As manufacturing becomes more complex and customer expectations rise, companies need QA processes that are fast, adaptive, and reliable. Quality 5.0 enables quality managers to identify risks before they impact production. In addition, Quality 5.0 technologies provide end-to-end visibility into various quality areas, such as supplier performance, so quality personnel can enforce quality agreements and quickly respond to issues.

Supply Chain and Logistics

Supply chains serve as a cornerstone for companies operating in the manufacturing sector, facilitating the transformation of raw materials into finished products, and connecting suppliers to customers. Supply chain managers are always striving  for more responsive, transparent, sustainable, and efficient operations.
Supply chains often struggle with internal and external disruptions that need to be resolved quickly to avoid costly downtime and shipment delays.

Internal Issues

  • Siloed departments, communication gaps, and ineffective production planning.
  • Bottlenecks caused by outdated processes.
  • Inaccurate or outdated data used for forecasting and inventory management.
  • Human errors with ordering, scheduling, or data entry.
  • Cybersecurity vulnerabilities that interrupt operations.
  • Legacy systems that can’t integrate with modern tools.

External Events

  •  Strikes or shortages in trucking, ports, or manufacturing facilities can halt production or slow distribution.
  •  Raw material shortages leading to shipment delays and rising costs.
  • Supplier and material quality issues.
  • Single-source dependencies can impact upstream processes.
Some industries rely on just-in-time inventory systems, where parts and components are delivered exactly when needed. These supply chains require precise coordination with suppliers and stakeholders up and down the supply chain. Companies in all other industries are really no different. They need access to real-time data, predictive analytics, and an interconnected network to have full visibility of the entire supply chain to quickly adjust and mitigate disruptions.

Cost and Performance Management

Combining the strengths of technology and automation with human workers' unique skills enables intelligent collaboration—with machines performing repetitive tasks and individuals contributing on other levels (creativity, critical thinking, decision-making, adaptability, etc.). This leads to more flexibility and agility in production and optimized performance.
The Industry 5.0 technology processes diverse data streams captured from operational environments, creating intelligent models that reflect current system conditions. This continuous feedback mechanism provides operators with real-time visibility into performance parameters while enabling predictive insights for proactive management. This enables management staff to spot costly inefficiencies, such as undertrained or underproductive teams. Catching these patterns means saving your business from the costs incurred by chronic underproductivity and attrition of frustrated workers.
Predictive analytics and process optimization allow manufacturers to quickly identify issues that can adversely affect operations. This enhances overall operational efficiency, which leads to lower costs and higher productivity, making manufacturers more competitive in the global market.

Measuring Digital Transformation Success

Companies rely heavily on their ability to develop and deliver new products. But this is becoming more difficult to do, which is why more companies are seeking ways to improve their product development capabilities. Successful digital transformation fosters smoother processes, greater agility, and healthier financial results. Here is how to measure progress across key areas:
  • Operational Excellence
  • Financial Performance
Digital transformation should reduce the total cost of ownership for equipment and boost forecasting accuracy by up to 85%. It should also create new revenue streams through digital services, while predictive maintenance should extend equipment life by 20% to 40%. Meanwhile, faster cash conversion should keep operations agile.

Agility and Flexibility

With the agility and flexibility that come with Industry 5.0 technology and strategies, manufacturing lead times can be cut by up to 40%. Additionally,  tools like digital twins can accelerate development by 20% to 50%.

Sustainability

Sustainability is rapidly moving up on the list of priorities for manufacturers as they seek ways to reduce their environmental footprint and join the global efforts to combat climate change.  Digital technologies should cut emissions, energy, and water consumption by 25% to 50%, helping operations run greener and more efficiently.

Sustaining Industry Leadership

The manufacturers leading the pack today succeed because they leverage digital technology. From the early days of water-powered equipment to today’s digital technologies, the goal has always been to lean on better tools, simplify processes, and improve results across the entire business.
Ready to start your digital transformation journey? Discover automated solutions for service-less print and beyond with Vasion. Schedule a demo today to see how we can help you streamline and modernize manufacturing.
Digital Transformation in Manufacturing | Vasion