Digital transformation in Brazilian industry: bridging theory and practice

Stradioto, Luciana; Frazzon, Enzo Morosini

doi:10.1590/0103-6513.20220076

Luciana Stradioto ^* * luciana_stradioto@hotmail.com

Universidade Federal de Santa Catarina, Florianópolis, SC, Brasil

https://orcid.org/0000-0003-2955-0076

Enzo Morosini Frazzon

Universidade Federal de Santa Catarina, Departamento de Engenharia de Produção e Sistemas, Florianópolis, SC, Brasil

https://orcid.org/0000-0002-6629-6938

* luciana_stradioto@hotmail.com

Figures (12)
Tables (2)

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Figure 1
Research steps.

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Figure 2
Inclusion and exclusion criteria.

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Figure 3
PRISMA steps.

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Figure 4
Selected reports.

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Figure 2
Inclusion and exclusion criteria.

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Figure 3
PRISMA steps.

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Figure 4
Selected reports.

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Figure 5
Digital transformation aspects.

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Figure 6
Digital transformation aspects.

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Figure 7
Classification of aspects by number of citations.

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Figure 8
Steps and main results.

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Figure 9
Comparative analysis.

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Figure 10
Framework for the practical approach.

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Figure 11
Digital transformation roadmap.

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Figure 12
Conceptual model for a real-world case.

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Table 1
Definitions of digital transformation aspects.

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DT Aspects Brazilian Machinery Builders´ Association (ABIMAQ) McKinsey Brazilian National Confederation of Industry (CNI) Organisation for EconomicCo-operation and Development (OECD) GOVERNMENT (e-digital) Organizational Strategy 61% of companies are undergoing major changes in their business models, aiming to increase competitiveness relative to the foreign market Companies are aware of the potential of digital transformation within their organizational strategy. Leading companies in the Brazilian scenario show a clear link between digital and business strategy, while other companies tend to view digital as an additional pillar, generating initiatives that are dispersed within the organization. The strategic focus on using technologies is highly associated with cost reduction and increased productivity. 58% of companies understand the importance of digitalization for competitiveness; however, less than half of the industries studied use digital technologies in their organizations. The Brazilian strategy for digital transformation includes a set of practices and incentives of the Brazilian government, following the enabling axes and axes of digital transformation, which unfold strategic actions aimed at the reach and progress of the entire country in the following aspects: data-based economy, connected devices, and new business models, supported by citizenship and government. IT Infrastructure Need to improve infrastructure, especially regarding networks, access, and internet speed, considering these critical factors in the implementation of IoT systems and other technological solutions. - The lack of infrastructure is considered the fifth most significant internal barrier to the adoption of technologies, mainly impacted by the high costs of technology implementation, which is regarded as the biggest internal barrier. The Brazilian scenario reveals that investment in the information and communications technologies (ICT) sector is below the OECD level, which reveals Brazil's backwardness in terms of information technology infrastructure. The government aims to expand the infrastructure of networks (5G) that support digital applications. Organizational Culture Most companies (66%) identify and recognize that their employees are open and engaged in adopting digital transformation in the organization. Most companies recognize the importance of a culture focused on innovation; however, they still face barriers regarding the long-term financial result mentality generated by digital transformation. Identified as the third biggest internal barrier to the adoption of digital technologies. - - Customer Focus Digital transformation actions are developed with a customer focus in 66% of organizations. Most organizations have widespread concepts regarding focusing on the customer journey and improving the experience. The industry extensively uses digital technologies for product development with a focus on reducing customer availability. In Brazil, customer relationship management systems are present in 22% of companies. - Integration – Vertical And Horizontal Integration in the industry is mainly focused on vertical integration, with high levels of Programmable Logic Controller (PLC) implementation (advanced implementation) on the shop floor regarding the digitalization of objects, but ongoing implementation projects and interest in implementing systems such as Manufacturing Execution Systems (MES), Enterprise Resource Planning (ERP), and Supervisory Control and Data Acquisition (SCADA) in an advanced manner. Concerning horizontal integration, they indicate little integration with the supply chain, with a high interest in implementation. - Vertical integration is identified as important for competitiveness, but its use is below average among the companies surveyed. There are no results regarding horizontal integration. The Brazilian average for using vertical integration technologies such as ERP is below the OECD average, representing a gap. However, the significant differential of advancement in integration in small and large companies stands out. - Smart Services Advanced implementation of maintenance, installation, and customer customization services. Growth in the offer of services related to product performance monitoring. - There are clear initiatives recognized in the National Internet of Things Plan, highlighting “servitized” business models in manufacturing. - Smart Products High degree of interest in product digitalization within the scope of performance monitoring and fault detection and maintenance, and low level of implementation of digitized products for autonomous or remote operation. - The use of data from customers through Big Data is performed by only 9% of industries, of which only 4% incorporate digital services in their products. Manufacturing companies in the ICT sector are prone to innovate in their products, while other sectors develop innovations with a focus on the process. Therefore, Brazil is below the OECD average in terms of representation in high-technology manufactured goods. - Monitoring and Control Although most companies have access to data through connected equipment and processes, less than 20% use this data through analytics or digital intelligence. These data are mainly used to develop production indicators and understand patterns. Companies are still concentrating efforts on structured collection and improving data quality. The data-based mindset is present in specific areas of some industries. However, there is a trend toward increasing the amount of data and the capacity to process it. The opportunities for improvement in the models and analysis techniques used are evident. Recognized as the most important aspect for industrial competitiveness. Mainly through the implementation of sensors for process control, product identification, and operating conditions. However, its full implementation is still considered low. The average Brazilian use of cloud computing is above the average of OECD countries, representing 80% of all companies, while big data has a low diffusion in the country, representing 11% among companies. The government aims to develop actions that promote dynamic and competitive industrial environments through IoT devices, sensors, machines, and equipment. Operations Management 32% of companies have some type of operation virtualization, which allows them to anticipate problems and make strategic and agile decisions, with this being an aspect that still needs development. - - Still below the average for OECD countries, an increase in the use of M2M (machine-to-machine) cards was identified, indicating an advance in the use of IoT in the industry. In the last three years, only 4.5% of Brazilian manufacturers have been operating with industrial robots. These data reveal a deficit in operations management, monitoring, and control. The government aims to develop actions that promote dynamic and competitive industrial environments through IoT devices, sensors, machines, and equipment. Qualified Professionals Most companies (51%) agree that they have qualified and prepared professionals on their team; however, they recognize that aspects related to digital transformation training need further development. Many companies report a shortage of skilled talent primarily in analytics, pointing out internal development as an option for professional training. 41% of employers report difficulty in filling vacancies due to the lack of hard skills (digital technical skills) Companies report the lack of skilled workers as a barrier to adopting and implementing new technologies. In Brazil, the proportion of graduates among the adult population represents 18% compared to 39% in OECD countries. The Brazilian digital transformation includes actions for professional training aimed at developing skills for use in new technologies, in addition to new educational lines in this area. Resource Management (Environment) - - - Until 2017, Brazil registered an increase in the intensity of energy use in manufacturing. The adoption of industry 4.0 technologies is expected to favor the country, boosting energy efficiency, and increasing manufacturing productivity. - Investment in Technologies (Innovation) 40% of member companies do not use the base technologies: Cloud computing, IoT, Big Data, Analytics, or AI. Of the companies that own and invest in technology, the most used is Cloud Computing, representing 43%, followed by IoT (30%), Big Data (2%), and Analytics (19%) - 58% of industries are aware of the importance of technology for industrial competitiveness, but the rate of use is still low. 73% of manufacturing companies use at least one digital technology, such as process automation sensors. However, there is a lack of investments in the technology area due to the high costs in the Brazilian scenario. The Government is intensifying investment in IoT, in addition to promoting the development of strategic technologies such as collaborative robotics, AI, big data, additive manufacturing, and nanotechnology. Roadmap Companies have a well-defined model but with a focus on technology implementation. Leading companies have clear roadmaps that are being implemented. The other organizations do not have a defined transformation plan. - - Ongoing development of a technological roadmap supporting the information and communication technology sector, not directly the industry.

Digital Transformation Aspects	Definition	Authors
Strategy	Digital transformation is directly related to creating opportunities through new business models that aim to increase flexibility and improve operational performance. The strategic aspect of the organization must be aligned and planned in a structured manner to achieve the digitalization objectives.	Bader et al. (2019)Bader, S., Barth, T., Krohn, P., Ruchser, R., Storch, L., Wagner, L., Findeisen, S., Pokorni, B., Braun, A., Ohlhausen, P., & Palm, D. (2019). Agile shopfloor organization design for industry 4.0 manufacturing. Procedia Manufacturing, 39, 756-764. http://dx.doi.org/10.1016/j.promfg.2020.01.434. http://dx.doi.org/10.1016/j.promfg.2020.... and Zangiacomi et al. (2018)Zangiacomi, A., Sacco, M., Pessot, E., De Zan, A., & Bertetti, M. (2018, June 17-20). A perspective for the implementation of a path towards the factory of the future: the Italian case. In G. Baltes & M. König (Orgs.), 2018 IEEE International Conference on Engineering, Technology and Innovation (ICE/ITMC) (pp. 1-9). New York, United States of America: Institute of Electrical and Electronics Engineers. http://dx.doi.org/10.1109/ICE.2018.8436386. http://dx.doi.org/10.1109/ICE.2018.84363...
Qualified Professionals	It is essential that companies make human competence and employee development one of the main components of the system, strengthening the “digital awareness” of their employees.	Havle & Üçler (2018)Havle, C. A., & Üçler, C. (2018, October 19-21). Enablers for industry 4.0. In Institute of Electrical and Electronics Engineers (Org.), 2018 2nd International Symposium on Multidisciplinary Studies and Innovative Technologies (ISMSIT) (pp. 1-6). New York, United States of America: Institute of Electrical and Electronics Engineers. https://doi.org/10.1109/ISMSIT.2018.8567293. https://doi.org/10.1109/ISMSIT.2018.8567...
Resource Management (Environment)	Refers to using technology aimed at sustainability to reduce the consumption of resources such as energy and materials during the production process.	Calabrese et al. (2022)Calabrese, A., Dora, M., Ghiron, N. L., & Tiburzi, L. (2022). Industry’s 4.0 transformation process: how to start, where to aim, what to be aware of. Production Planning and Control: The Management of Operations, 33(5), 492-512. http://dx.doi.org/10.1080/09537287.2020.1830315. http://dx.doi.org/10.1080/09537287.2020....
Customer Focus	Digitalization of customer contact and integration of product data. Use of digital technologies to intensify customer contact. Use of digital technologies to constantly adapt to customer needs.	Rachinger et al. (2019)Rachinger, M., Rauter, R., Müller, C., Vorraber, W., & Schirgi, E. (2019). Digitalization and its influence on business model innovation. Journal of Manufacturing Technology Management, 30(8), 1143-1160. http://dx.doi.org/10.1108/JMTM-01-2018-0020. http://dx.doi.org/10.1108/JMTM-01-2018-0... and Schumacher et al. (2019)Schumacher, A., Nemeth, T., & Sihn, W. (2019). Roadmapping towards industrial digitalization based on an industry 4.0 maturity model for manufacturing enterprises. Procedia CIRP, 79, 409-414. http://dx.doi.org/10.1016/j.procir.2019.02.110. http://dx.doi.org/10.1016/j.procir.2019....
Roadmap	The roadmap helps through planning and visualization over time, following each decision on the way to digital transformation. It is a roadmap of the relevant technologies to be implemented to facilitate the digital transformation journey according to the business model and company needs.	Ghobakhloo & Ching (2019)Ghobakhloo, M., & Ching, N. T. (2019). Adoption of digital technologies of smart manufacturing in SMEs. Journal of Industrial Information Integration, 16, 100107. http://dx.doi.org/10.1016/j.jii.2019.100107. http://dx.doi.org/10.1016/j.jii.2019.100... and Zangiacomi et al. (2018)Zangiacomi, A., Sacco, M., Pessot, E., De Zan, A., & Bertetti, M. (2018, June 17-20). A perspective for the implementation of a path towards the factory of the future: the Italian case. In G. Baltes & M. König (Orgs.), 2018 IEEE International Conference on Engineering, Technology and Innovation (ICE/ITMC) (pp. 1-9). New York, United States of America: Institute of Electrical and Electronics Engineers. http://dx.doi.org/10.1109/ICE.2018.8436386. http://dx.doi.org/10.1109/ICE.2018.84363...
Culture	Aspect associated with the company's strategy in the sense of a definition of how the existing culture will be adapted and transformed into a digital culture.	Lipsmeier et al. (2020)Lipsmeier, A., Kühn, A., Joppen, R., & Dumitrescu, R. (2020). Process for the development of a digital strategy. Procedia CIRP, 88, 173-178. http://dx.doi.org/10.1016/j.procir.2020.05.031. http://dx.doi.org/10.1016/j.procir.2020....
Integration – Vertical and Horizontal	Vertical integration aims to connect processes through ERP and MES systems at all organizational levels, from operations to company management. In turn, horizontal integration aims to ensure the interoperability of the supply chain using technology between suppliers and the organization. This aspect represents the complete integration of the value chain from customer to supplier, covering the entire organizational structure from the shop floor to management.	Havle & Üçler (2018)Havle, C. A., & Üçler, C. (2018, October 19-21). Enablers for industry 4.0. In Institute of Electrical and Electronics Engineers (Org.), 2018 2nd International Symposium on Multidisciplinary Studies and Innovative Technologies (ISMSIT) (pp. 1-6). New York, United States of America: Institute of Electrical and Electronics Engineers. https://doi.org/10.1109/ISMSIT.2018.8567293. https://doi.org/10.1109/ISMSIT.2018.8567... and Lin et al. (2020)Lin, T. C., Wang, K. J., & Sheng, M. L. (2020). To assess smart manufacturing readiness by maturity model: a case study on Taiwan enterprises. International Journal of Computer Integrated Manufacturing, 33(1), 102-115. http://dx.doi.org/10.1080/0951192X.2019.1699255. http://dx.doi.org/10.1080/0951192X.2019....
Operations Management: Monitoring and Control	Integration between information systems that allow production management, manufacturing execution, and control of manufacturing processes in a connected way for decision-making. This aspect determines the behavior of operations over time and depends on the commitment of top-level process owners to manage the implementation and performance of processes, the management of systems and process requirements, and the quality of metrics used for measuring the success of the operation.	Calà et al. (2018)Calà, A. L. A., Luder, A., Boschi, F., Tavola, G., & Taisch, M. (2018, May 15-18). Migration towards digital manufacturing automation - an assessment approach. In A. A. N. Melendez & S. Shavetov (Orgs.), 2018 IEEE Industrial Cyber-Physical Systems (ICPS) (pp. 714-719). New York, United States of America: Institute of Electrical and Electronics Engineers. http://dx.doi.org/10.1109/ICPHYS.2018.8390795. http://dx.doi.org/10.1109/ICPHYS.2018.83... and Lin et al. (2020)Lin, T. C., Wang, K. J., & Sheng, M. L. (2020). To assess smart manufacturing readiness by maturity model: a case study on Taiwan enterprises. International Journal of Computer Integrated Manufacturing, 33(1), 102-115. http://dx.doi.org/10.1080/0951192X.2019.1699255. http://dx.doi.org/10.1080/0951192X.2019....
Investment in Technologies (Innovation)	The organization must invest in internal and external sources for developing new technologies both externally by observing practical examples from other companies and scientific publications and internally by investing in research and development activities.	Zangiacomi et al. (2020)Zangiacomi, A., Pessot, E., Fornasiero, R., Bertetti, M., & Sacco, M. (2020). Moving towards digitalization: a multiple case study in manufacturing. Production Planning and Control, 31(2-3), 143-157. http://dx.doi.org/10.1080/09537287.2019.1631468. http://dx.doi.org/10.1080/09537287.2019....
Information Technology Infrastructure	The organization must have a clear perception of the value of Information Technology, which includes the development and monitoring of a structure of digital hardware, integration software, data security measures, trained professionals working on technology projects, and, finally, system maintenance.	Ghobakhloo & Ching (2019)Ghobakhloo, M., & Ching, N. T. (2019). Adoption of digital technologies of smart manufacturing in SMEs. Journal of Industrial Information Integration, 16, 100107. http://dx.doi.org/10.1016/j.jii.2019.100107. http://dx.doi.org/10.1016/j.jii.2019.100...
Smart Products	Development of products capable of collecting and transmitting information, either for the organization or its own life cycle.	Török (2020)Török, L. (2020). Industry 4.0 from a few aspects, in particular in respect of the decision making of the management/will the new industrial revolution change the traditional management functions? International Review of Applied Sciences and Engineering, 11(2), 140-146. http://dx.doi.org/10.1556/1848.2020.20020. http://dx.doi.org/10.1556/1848.2020.2002...
Smart Services	Introduction of new services and solutions added to the product, giving a new value proposition to the business through digitalization.	Rachinger et al. (2019)Rachinger, M., Rauter, R., Müller, C., Vorraber, W., & Schirgi, E. (2019). Digitalization and its influence on business model innovation. Journal of Manufacturing Technology Management, 30(8), 1143-1160. http://dx.doi.org/10.1108/JMTM-01-2018-0020. http://dx.doi.org/10.1108/JMTM-01-2018-0...

[1] * luciana_stradioto@hotmail.com

Brasil

Brasil

Digital transformation in Brazilian industry: bridging theory and practice

Abstract

Paper aims

Originality

Research method

Main findings

Implications for theory and practice