The manufacturing industry is undergoing a significant shift towards digitization. With the rise of new business models, sustainability issues and stricter regulations manufacturers are embracing technology and data transparency as a way to remain competitive and ensure regulatory compliance.
In this blog, we join a discussion with three industry experts: Paul Clark, Principal Business Consultant for manufacturing industry at Columbus; Håkan Strömbeck, Industry & Solution Strategy Senior Director at Infor; and Henrik Leffler, Digital Transformation Lead. They share their views on several topics in the manufacturing industry, including modernizing with AI and automation, adapting to new business models, using data as a building block for transformation, and the emergence of Industry 5.0.
You’ll find practical steps to tackle these topics, all in a format that suits you – whether you prefer to read, watch, or listen.
- Industry 5.0: Are we there yet?
- Modernizing manufacturing with data, AI and automation
- Emergence of innovative business models
- Breaking down silos and driving change
- Driving Sandvik’s digital shift
Industry 5.0: Are we there yet?
The concept of Industry 5.0 may seem surprising to those in manufacturing, especially as many are still grappling with Industry 4.0. However, both have distinct differences. While Industry 4.0 focuses on automating processes and minimizing the role of humans, Industry 5.0 emphasizes collaboration between humans and machines. In this next phase, machines are meant to augment human capabilities rather than replace them.
“The manufacturing industry is still working to fully adopt Industry 4.0. In the ERP space, for example, many companies are just now moving to the cloud and finding efficient ways of working,” says Henrik Leffler, Digital Transformation Lead at Columbus. “My interpretation is that Industry 5.0 is about connecting humans and automation. It's not just about using data to automate, as in 4.0, but about augmenting human skills in different ways.”
Paul Clark, Principal Business Consultant at Columbus, adds: “Some argue that Industry 5.0 is just a buzzword while most companies still struggle with 4.0. I disagree - I see it as a shift that’s part of a broader evolution in how humans interact with technology. In the past, there was a fear that ERP systems would take jobs, and that led to resistance. Humans have always been protective of their roles, sometimes even holding onto data as a way to maintain control. But with the transition to Industry 5.0, there’s an opportunity for humans to develop, to move from simply executing tasks to influencing processes. Automation will handle the heavy lifting, but it’s the human element that brings purpose and direction.
“Machine learning can’t provide purpose—that has to come from people. Once you have the data, automation can do the work, but humans are needed to structure it and align it with the business' goals,” says Paul.
With Industry 5.0 still in its early stages, questions remain about how manufacturers will adapt and embrace this new concept. According to Henrik, this shift should be seen as a positive opportunity for manufacturers - a way to build on the progress made in Industry 4.0 by complementing, rather than replacing, human roles. “Ultimately, the goal of Industry 5.0 is creating a manufacturing ecosystem where humans and machines work seamlessly, delivering efficiency, innovation, and purpose,” he adds.
Modernizing manufacturing with data, AI and automation
Advanced technologies such as AI and ML are significantly impacting the manufacturing industry by enhancing operational efficiency and creating more agile processes. As businesses increasingly adopt AI, the significance of high-quality data becomes critical for making informed decisions.
However, according to Henrik Leffler, Digital Transformation Lead at Columbus, some manufacturers are guilty of becoming overly attached to their existing systems, which can hinder their ability to adapt to new technologies or business models, which in turn creates barriers to improving data quality. Henrik says several factors contribute to this attachment. Firstly, these systems are often tailored to the company’s specific needs, making them feel reliable and familiar. Employees may have invested years in understanding them, leading to resistance to change.
Additionally, significant investments of time and money in legacy systems create hesitance to overhaul embedded processes, which also become part of the company culture. Concerns about potential downtime or productivity loss during transitions further discourage change. While their current systems may work today, Henrik says they can quickly become misaligned with the business’ needs, especially when it comes to data.
New data requirements are emerging, particularly in areas like sustainability with initiatives such as the digital product passport (DPP) and environmental, social, and governance (ESG) reporting. According to Paul Clark, Principal Business Consultant at Columbus, legacy systems may lack the necessary data elements to meet these demands, and the review of data isn't always a part of ongoing processes. Often, data elements are extracted from legacy systems without validating their accuracy, and additional contingency factors can skew the results. “The increased reliance on decision-driven automation makes it essential for data quality to be high. While data has always been important, its quality is becoming even more critical during this transition. In many traditional manufacturing environments, we often don’t capture all the necessary data points electronically. It’s vital that we ensure this data is collected and integrated back into the system for effective decision-making,” says Paul.
Automation is a powerful tool that manufacturers can use to improve efficiency, reduce costs, and stay competitive. But how do you determine which tasks to automate first? This is where process mining becomes invaluable. Manufacturers can use process mining to identify inefficiencies, manual processes, or frequent errors that are best suited for automation. This data-driven approach pinpoints areas where automation can deliver the greatest impact.
“Process mining provides a clear view of how your systems operate,” explains Håkan Strömbeck, Industry & Solution Strategy Senior Director at Infor. “Instead of relying on gut feelings, process mining highlights bottlenecks and quality issues, allowing businesses to implement automation where it will make the most difference – whether by reducing throughput times or cutting labor hours.”
As manufacturers advance in automation and data management, the potential for utilizing generative AI to enhance processes is becoming more realistic. According to Henrik Leffler, Digital Transformation Lead at Columbus, while we’re not fully there yet, gen AI can offer future opportunities to improve operational efficiency, quality, and sustainability – if the right data is in place.
“Over time, we see gen AI helping us ask the right questions, such as, ‘What process improvements can I make to reduce throughput time or improve quality?’ It all hinges on having the right data. Once we gather sustainability data and refine our process mining, we’ll be able to use gen AI to generate suggestions for improvement,” says Henrik.
But generative AI isn’t just a future prospect – it’s offering real value in specific use cases today. “There’s low-hanging fruit we can already access,” explains Håkan Strömbeck, Industry & Solution Strategy Senior Director at Infor. “A great example that we’ve been working on at Infor and we hope to launch soon is for service technicians. Instead of searching through manuals, generative AI can present relevant information tailored to the specific equipment and the situation they’re dealing with, in real-time. It could even pull up notes from previous technicians who have worked on similar issues, providing invaluable insights on the spot. This is just one powerful example of how gen AI can make a real difference.”
Success in implementing technologies and modernizing systems also hinges on having a well-defined strategy for managing data. “A key part of this process is having a data controller who determines which data is critical (‘hot data’), which is less urgent (‘cold data’), and everything in between. This kind of gatekeeping is essential, not just in manufacturing, but across industries,” says Håkan Strömbeck, Industry & Solution Strategy Senior Director at Infor.
Henrik Leffler, Digital Transformation Lead at Columbus, adds: “I started my career as a controller, and that mindset needs to be applied to data. You need a dedicated function to ensure data accuracy and integrity – it can’t be left as a vague responsibility. The more data drives value, the more important it becomes to create a role that owns and ensures data correctness.”
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Emergence of innovative business models
Historically, manufacturers built strong businesses by simply producing and selling products. However, according to Deloitte, revenue from new product sales has declined over the past decade.
Economic uncertainty often exacerbates this by slowing down capital investments, resulting in fewer new equipment orders. To stabilize their operations, many manufacturers are now shifting toward service-based business models. Through servitization, manufacturers can now stay connected to customers longer, providing continuous services that boost revenue and differentiate them from competitors.
“We're witnessing a shift towards servitization, where manufacturers offer comprehensive solutions rather than just products," says Henrik Leffler Digital Transformation Lead at Columbus. “Some argue that moving to a subscription model will cannibalize existing sales, but I think it’s the opposite - it creates consistent revenue streams and better customer relationships.”
Håkan Strömbeck, Industry & Solution Strategy Senior Director at Infor, adds: “Manufacturers now need to communicate directly with consumers, which is a big shift. Outcome-based contracts mean profitability is tied to performance and customer satisfaction. This requires entirely new processes, from IoT data collection to proactive service planning. It’s not just about distributing the product anymore, but offering a range of related services. If a new company enters the market offering a disruptive business model that traditional companies haven’t considered, they will be at a disadvantage. Manufacturers need to stay agile, not just in their own industry, but by learning from other sectors.”
These changing business models and broader transformation of the industry require a rethink in strategy, processes, change management and people. That means having the right platform in place is crucial. Industry-specific manufacturing solutions like Infor's CloudSuite enable manufacturers to make timely, well informed decisions to support new strategies. Key advantages include:
- Enhanced product management: Infor’s CloudSuite enable manufacturers to accelerate product innovation and manage strategic configurations effectively, ensuring compliance with regulatory and quality standards through integrated product lifecycle management (PLM)
- Improved project control: With robust tools for work breakdown structures and analytics, manufacturers can gain better visibility into project scheduling and costing, enhancing overall project management and delivery
- Increased operational efficiency: Infor’s CloudSuite streamline productivity and planning, supporting various manufacturing models and automating shop floor processes to reduce costs and improve quality
- Optimize supply chains: Infor’s CloudSuite provide end-to-end visibility, enabling seamless integration of inventory management, warehousing, and logistics for more efficient supply chain operations
- Cost-effective multi-tenant cloud solution: Infor’s multi-tenant cloud solution offers continuous updates at a lower cost, with automated updates that minimize downtime. Businesses can easily preview and implement new features without having to run major upgrades.
nVent is an excellent example of a manufacturer that has successfully implemented Infor CloudSuite as part of its digital transformation strategy. By modernizing its ERP system, nVent has been able to enhance performance and efficiency across key areas of its manufacturing operations, including improved customer engagement, streamlined processes, and a better-organized supply chain.
“We needed a tailor-made system that could meet our high demands and digitize our end-to-end supply chain processes from planning to shipping,” said Mufaddal Photographer, Vice President of Information Technology at nVent. “Infor M3 CloudSuite was the ideal solution, clearly designed for the manufacturing industry. This journey has dramatically increased our operational velocity by reducing lead times, enhancing customer response times, and lowering processing costs – all aimed at delivering greater value to our customers and improving their experience.”
Breaking down silos and driving change
To successfully drive transformation across the organization, Henrik Leffler, Digital Transformation Lead at Columbus, says that manufacturers must break free from the ingrained behaviors that encourage working in silos. One critical step is identifying those in the organization who can lead and inspire change across departments.
Henrik adds that implementing modern technologies like AI requires significant changes across the entire business, including processes and people. This isn’t just an IT initiative; it impacts every department. That’s why it’s crucial to involve all stakeholders in the process, ensuring they understand why the change is happening and what the objectives are.
“In the manufacturing industry, there's often a tendency to view the organization like a machine – each function operating independently, like cogs and switches. But this mindset can limit collaboration. What if we thought of the organization as an organism instead – a collection of interdependent parts? By breaking down these silos, you encourage people to look beyond their immediate role and become more connected to the overall business,” explains Henrik.
“I’ve seen a 'hero mentality' in manufacturing, where a few standout individuals end up shouldering all the change initiatives,” continues Henrik. “It’s important to identify who these people are and enable them with a focused agenda. Give them the resources and authority to drive change across the company.”
Another challenge is manufacturers can get swept up in the excitement around modern technologies, in particularly AI, which can lead to them losing sight of the original goals. Research from Gartner reveals that only 54% of AI projects move from pilot to production. This highlights the need for clear, measurable objectives to ensure AI initiatives don’t fall short of expectations.
“Modernization isn’t just about replacing one system with another – it’s about having a clear objective,” says Paul Clark, Principal Business Consultant at Columbus. Without that, projects risk losing focus and taking longer to deliver results. Manufacturers need to be able to answer, ‘What are we trying to achieve with this investment?’ That purpose is essential to driving success.
“When teams are aligned, transformation becomes a shared responsibility - not just something driven by leadership. Cross-departmental collaboration is essential; breaking down silos fosters innovation and accelerates transformation.”
Henrik adds: “It's easy to get caught up in the novelty of AI tools, but to create real impact, you need grassroots engagement paired with top-down direction. Leaders must define the change vision – what are we aiming to achieve? Instead of focusing solely on functionality or processes, you should concentrate on business outcomes and capabilities.”
Driving Sandvik’s digital shift
One manufacturer that’s achieved significant success with its digital transformation plans, including a strong focus on change management, is Sandvik Rock Processing Solutions, a global leader in mining and infrastructure.
Sandvik’s approach focuses on two key components: developing digital products and ensuring seamless enterprise IT integration. This holistic transformation touches all aspects of the business, from improving customer experience to optimizing application processes and automation to enhance decision-making.
The company has set ambitious goals, including reducing job completion-to-invoicing time, increasing digital orders, and improving employee productivity through automation. Success is driven by strong leadership buy-in and a culture of innovation, backed by clear objectives and key results (OKRs).
Change management has been central to the digital shift, with a focus on thorough training and transparent communication to help employees understand and adapt to new processes. Sandvik has also embraced AI and sustainability as critical parts of its strategy, establishing an AI center of excellence and promoting eco-efficient practices in rock processing.
By staying ahead of emerging trends and enabling collaboration across the organization, Sandvik has been able to deliver exceptional value to customers and ensure long-term business success.
You can read the full details of Sandvik’s digital shift strategy here.
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Technologies are transforming the manufacturing industry, and leveraging them is essential for staying competitive and ensuring regulatory compliance. With advanced platforms like Infor’s CloudSuite, manufacturers can boost efficiency, improve customer experiences, and reduce operational costs.
Any transformation requires clear communication with all stakeholders. A strong change management plan that addresses all aspects of the transition and highlights how technology will not only make their work easier but also open new opportunities for upskilling and career growth is crucial to reducing resistance. For more information on how we can help your business, feel free to contact a member of our team below.
