Skip to content

Digital Machine Shop

From ‘How do I Start?’ to ‘Where do I go Next?’

Chapter One: Same Machine Shop, New Era

Two trends have defined the last decade in machine shop manufacturing.

On the one hand, digital technologies have promised to make everything–truly, everything–easier.

On the other, the manufacturing marketplace has grown tougher and more volatile.

So much so that the same decade that saw the popular rise of IIoT, predictive maintenance, and digital machine monitoring also saw profit margins shrink.

In 2010, Modern Machine Shop found that the most competitive machine shops had profit margins around 13%. There’s been a slow decline since. Industry research shows average machine shop profit margins are below 8%, with the trajectory set to continue downward.

So what gives? How did the decade that should have rocketed manufacturing into the future actually result in lower profits?

This is a difficult question, but one answer is that adoption of digital technology remains low in machine shops. There’s been a gap between digital possibility and reality on the shop floor. This is especially true for smaller operations, where there aren’t always the resources to research and implement new technologies.

This guide is our attempt to help you close that gap. We’ll introduce you to machine shop-specific uses for digital technology, and walk through our way of looking at the digital machine shop. A way that’s delivered value for our customers over and over.

By the end, you’ll have a sense of the different means and values specific digital tools can have for you.

So whether you’re asking “how do I start” or “where do I go next,” this guide should help you set a course towards a digital future.

Chapter Two: 4 Characteristics of Digital Machine Shops

Rather than offer a catchall definition, we’ll outline four principles that we think characterize the modern machine shop. In no specific order, they are:

  1. Transparency
  2. Connectivity
  3. Integrated
  4. Openness

The Transparent Machine Shop

It’s common to hear the expression “data is more valuable than oil.”

It can be. So why not stake your claim?

The digital machine shop creates value by providing a completely transparent view of production. It makes sure you have the data you need in a form that’s useful to you.

There are a few ways to do this:

But information is only useful if you can access it.

Digital technologies make it possible to display your key production metrics. Whether it’s shift quotas, machine state, or routing information, you can assess the info instantly. On the shop floor, in the office, on a mobile phone–wherever.

In the digital machine shop, information is visible to everyone on the shopfloor. And through advances like remote machine terminals, it’s visible wherever you need it.

The Digital Machine Shop is Connected

Connectivity opens doors.

Between the cloud, edge devices, and machine to machine communication, there are more ways to create novel connections than ever before. The result is better control over processes and more robust data.

Importantly, connectivity extends to people in the digital machine shop.

This bears repeating: it’s just as important to connect humans as it is to connect machines.

What happens around the machine is just as important as what goes on inside. Human error is the cause of as much as 70% of mistakes in manufacturing contexts.

Savvy manufacturers acknowledge this fact. They don’t try to fight human nature. They work with it.

The Digital Machine Shop Is Integrated

The biggest gains come when shop floor technologies are connected to systems of record like MES and ERP.

The digital machine shop integrates previously disparate systems into an interconnected whole.

The result is a manufacturing ecosystem. Every piece of hardware and software fits in a niche. Everything works together towards a common business goal.

The Digital Machine Shop is Open

Open means something specific here. It’s akin to the “open” in open source.

In the digital machine shop, software, devices, and machines openly connect with other software and devices and machines. There’s no vendor lock-in, hardware incompatibility, or arduous, hard-coded configurations.

The solutions that will be most useful in the long run are those that can adapt to your needs as they evolve over time.

Chapter Three: Who is the digital Machine Shop for?

When it comes down to it, digital technologies benefit the whole team.

Here’s how.

Operators and Set-Up Operators

Whether new hire or seasoned vet, digital tools can support front line workers. Tools like digital work instructions for changeovers and setups help jobs move faster. Error proofing with IIoT makes it easier to get it right. And on machine alerts and notifications make sure problems are documented and supervisors notified.


No code application platforms make it possible to create truly digital workflows. The visibility that human-centric machine monitoring applications provide makes it easier to balance lines, route work, and see exactly how processes unfold from start to finish.


Better data means better operations. Identify your top performers, understand production from a holistic point of view, and drive continuous improvement.


Put the puzzle together. Use the data you collect to compare across plants, regions, product lines. Whatever data makes the difference to you.

Chapter Four: Use Cases

Here’s where the rubber meets the road, so to speak. These are the concrete ways you can apply digital technology in your operations.

1. Machine monitoring – Machine monitoring is the foundation of the digital machine shop. This is because the baseline of data collected by bringing machines online is the foundation for dozens of other improvements.
Machine monitoring can be as straightforward as creating an objective measurement of uptime. You can also track feeds and speeds, throughput, vibration–any metric that will help you improve.

A quick story helps outline why objective measurements are critical.

We worked with one machine shop that prided itself on good data. While scoping a machine monitoring project, they provided us an impressive baseline number for availability in their shop.

After getting machine monitoring up and running, their number was off by nearly 25%. As in: machines were available 25% less than they had measured.

This isn’t to knock on anyone. It’s just an indication that manual data collection is inherently prone to error.

2. On-machine applications – Many modern machine tools have interfaces on them. For older machines, it’s possible to adapt platforms and mobile devices to run machine-specific applications.

The point is, it’s now possible to run machine-centric applications on or near machines.

  • These could be defect reporting or root cause analysis forms
  • Maintenance and diagnosis instructions
  • Machine terminals for viewing current and historical machine performance information.

3. Production visibility – Machine monitoring is a key piece of production visibility, but it doesn’t stop there.

Full visibility includes tracking which stations are hitting their quotas and which are falling behind. It’s tracking how WiP is moving across a line. It’s measuring human activity around machines. It’s moving from OEE to OPE.

4. Tool Tracking – Tool tracking is a specific form of process visibility. Tool tracking applications help you log the location of every tool, as well as keep a history of the jobs, programs, and hours a specific tool has run.

5. Inventory tracking and materials replenishment – Perhaps another extension of production visibility. Inventory tracking applications help you see exactly where and when inventory is consumed across your operations. It can be useful for optimizing schedules, locating sources of waste, and ensuring materials are where they need to be.

6. Predictive maintenance – Predictive maintenance is one of the end-goals of many digital manufacturers. PdM is a means of predicting when a machine or tool will degrade before showing signs of wear. It offers opportunities to reduce downtime, increase asset life, and locate inefficient processes.

The problem is it requires a huge amount of data to start. If you’re interested in PdM, the sooner you can start collecting good data, the better.

Why digitize your machine shop now?

Many of the manufacturers we work with know exactly why they need to get started with digital now.

It could be a business goal, growth that’s exceeding production capacity, or simply a solid manufacturing question (e.g. How long were machines really down last month?

The real hurdle isn’t justification. It’s getting started.

For others, it’s less clear why now is the right time to get started. Here are a few reasons to consider.

The market is volatile

Irrespective of the causes, volatility is a fact.

A recent McKinsey report captured this trend well, leading with, “The industrial sectors will see more disruption in the next five years than in the past 20 combined.”

Other research has confirmed that organizations that embrace digital technology are better able to absorb market shocks as they happen. (In addition to having higher revenues and profits).

Digital technologies help organizations of all sizes adapt, move faster, and increase resilience in the face of adversity.

Digital can be self-serve

In the past, implementing new technologies has been an arduous, expensive process.

The process could take months (or longer). From research to RFPs and RFQs to purchases to implementation and integration to maintenance, technology projects could easily exceed their scope and budget.

With the maturation of software-as-a-service, the cloud, manufacturing platforms, getting started with new technologies is easier than ever. Projects that previously took months can be done in weeks, and return value just as fast. System upkeep and maintenance that took weeks now takes days. And it can all be done by citizen technologists in-house.

The skills gap isn’t going anywhere soon

I had a conversation with a process engineer recently that nicely summarizes the challenge posed by the skills gap.

His operation, which machined parts for a variety of aerospace clients, was doing great.

Orders going out on time. Low scrap. Minimal unexpected downtime. All key metrics up.

The reason for the success, in his eyes, was simple. The seasoned machinists who’d spent their careers learning the ins and outs of their machines and processes knew exactly how to spot when things weren’t quite right. If there was a problem, they could diagnose it quickly and knew just how to solve it.

But in reality, this was a problem. Why? Because two of the three core machinists planned to retire in the next year. The other was looking to relocate.

The engineer was already worried about finding replacements, about what would happen to production when they left.

This is a story we see repeat over and over again in machine shops. Stalwart employees are retiring, and it’s hard to fill their positions.

The good news is that digital technologies can help capture existing best practices, train new workers, and turn tacit knowledge into institutional knowledge before it’s too late.

Chapter Five: 5 Ways to Digitize Your Machine Shop Now

1. Take a look around. Where is there paper? Whiteboards?

Many inefficient processes share a single root cause: paper.

To understand why ask yourself a few questions.

  • Are paper forms the fastest way to get data?
  • Are paper SOPs the best way to convey complex information?
  • Do you know how many versions of SOPs are currently in use on your shop floor?

We don’t have anything against paper. But there are better ways to run your shop floor.

If any of these are things that would be useful to you, they’re all easy ways to get started with digitization.

2. Bring Legacy Machines online

Digital doesn’t mean set your workhorse machines out to pasture.

An easy way to get started with the digital machine shop is to bring legacy equipment online.

The range of sensors, IoT gateways, and edge devices makes this project more attainable than ever.

3. Bring Humans in the Loop

This point is simple. When you plan your digital machine shop initiatives, make sure they account for humans.

Humans are the ones that operate machines, interpret data, and set strategy. Digital tools that empower them give you greater returns.

4. Don’t Just think about your machines
This point follows from the previous. Many of the biggest opportunities for improvement come from optimizing the processes around machines.

For example, it doesn’t matter if all of your machines have perfect OEE if they run into bottlenecks further downstream.

Or suppose a production run has a higher-than-usual rate of defects. It’s harder to get to root causes without having the visibility into each step of the value chain.

Ultimately, efficient job shops have ways of automatically:

  • Tracking inventory
  • Recording product genealogy
  • Optimizing job routing
  • Tracking WiP
  • Replenishing materials

Manufacturing processes are sets of deeply related, interlocking activities. Efficient operations find ways of optimizing the movement of materials from start to finish.

5. Create a single source of Truth
How many different locations is your production data stored in? How long does it take to pull it all together?

One way to open up new opportunities for improvements is to streamline the way you collect and visualize your data.

On the one hand, production dashboards can help everyone in the operation get on the same page. It lets everyone in the operations see if you’re meeting production quotes, machine uptime and downtime for the shift, as well as any other information you need to keep things moving.

On the other, eliminating silos can make finding opportunities for improvement significantly easier.

Chapter Six: Conclusions

Throughout this guide we’ve outlined:

  • What the digital machine shop is
  • Why it’s important to get started soon
  • How to build a project that works for you

Manufacturing technology is going to keep evolving fast. There are dozens of opportunities to pick the low-hanging fruit and boost your profit margins.

Similarly, all trends indicate that disruption and volatility are the new normal. It’s especially important to start building resilience and adaptability into your operations now.

Digital technologies are one of the proven forms of doing so.

If you have any questions on how to get started, we’re here to help. Get in touch.

Digitally transform your operations with Tulip

See how systems of apps enable agile and connected operations.

Day in the life CTA illustration