Why SMBs Struggle to Adopt Manufacturing Tech

Digital twin technology is revolutionizing the way companies approach product development and manufacturing.

At its core, a digital twin is a virtual model of a physical product, allowing engineering teams to simulate, analyze, and optimize designs in real-time. This technology bridges the physical and digital worlds, providing enhanced traceability, improved quality control, and overall efficiency throughout the product lifecycle.

According to a recent McKinsey survey, more than 75% of companies in advanced industries have already adopted digital twin technologies, many with a medium-to-high level of complexity.

Digital twins are making an impact across industries such as aerospace, automotive, healthcare, infrastructure, energy, and electronics. The COVID-19 pandemic further accelerated the adoption of this technology, as travel restrictions forced manufacturers to find remote solutions for monitoring production.

However, there is a notable gap when it comes to small and medium-sized businesses (SMBs).

While digital twins are becoming a mainstay for large corporations, SMBs face significant challenges in adopting this technology, mainly due to the high costs and substantial resources required to build and maintain these systems.

To explore how digital twin technology is being adopted by SMBs, I spoke with Devon Copeland, co-founder and CTO of Serial, a manufacturing traceability software startup focused on SMBs.

With previous experience at Apple and Tesla, Devon brought a unique perspective on how both large and small companies navigate the adoption of advanced manufacturing technologies.

During our conversation, Devon shared insights on:

• Key challenges in today’s manufacturing software

• Why SMBs struggle with tech adoption

• How Serial is tackling these issues

…and much more.

Let’s dive in 👇

PS: Robot sensing company ForceN recently implemented Serial’s software to optimize their manufacturing processes. You can read more about it here.

Challenges facing SMBs in adopting manufacturing tech

One of the main technologies used to improve manufacturing processes is the Manufacturing Execution System (MES). These systems manage the flow of information between the shop floor and manufacturing teams, providing real-time data on the status of production from raw materials to finished goods.

The key benefits of MES systems include:

• Increased Efficiency: By automating processes and reducing cycle times, MES systems increase productivity.

• Improved Quality: MES ensures adherence to established production standards, reducing rework and scrap, leading to higher-quality products.

• Better Visibility: Real-time tracking of production provides transparency and supports data-driven decision-making.

• Cost Reduction: By optimizing resources and processes, MES systems can significantly lower manufacturing costs.

• Compliance and Traceability: In highly regulated industries like pharmaceuticals and aerospace, MES systems ensure compliance with standards by providing detailed traceability throughout the production process.

Despite these benefits, Devon explained that SMBs face considerable obstacles when it comes to implementing MES software:

• Complexity and Resource Requirements: Traditional MES systems require a large investment in both financial and human resources for setup and ongoing maintenance. Configurations are often complex, requiring customization and integration with existing systems. For SMBs, which typically have smaller IT teams and fewer resources, this complexity can be a major barrier to adoption.

• High Costs: MES platforms are not only expensive to implement, but they also come with recurring costs for hardware and maintenance. SMBs with tighter budgets often struggle to justify this level of expenditure, which limits their ability to benefit from these systems.

• User-Unfriendly Software: Many legacy MES systems are rigid, making them difficult to adapt to the dynamic needs of modern manufacturing environments. Devon pointed out that there is growing demand for user-friendly, engineering-focused solutions that are easier to implement and modify.

In many SMBs, manual processes and tools like Excel spreadsheets are still heavily relied upon to manage data, adding hidden costs. According to Devon, these manual processes consume valuable time that could otherwise be spent on improving production efficiency.

While SMBs are aware of these inefficiencies, many hesitate to invest in new systems due to the perceived complexity and cost of moving away from established workflows.

How Serial Addresses the Needs of SMBs

Serial aims to fill this gap by offering an MES platform specifically designed for SMBs.

Devon explained that Serial’s focus is on user-friendliness and simplicity, starting with traceability as the core function. Serial provides a more accessible solution for companies that manufacture in-house or work with third-party manufacturers, allowing them to collect and analyze production data seamlessly.

Serial's long-term vision is to evolve into a comprehensive MES system, functioning as the factory's operating system by expanding beyond traceability into inventory management, scheduling, and other critical operations—all while maintaining robust product data management.

Geographic Differences in Tech Adoption

One of the key trends in manufacturing today is nearshoring, where companies move production closer to home, often to regions like Mexico or the US.

For SMBs to fully leverage digital twins, they need their factory partners to adopt similar technologies as well. However, given the smaller volumes SMBs typically produce, they may not have enough influence to push their manufacturing partners to upgrade their facilities.

I asked Devon how this trend is influencing the adoption of manufacturing technology, and how factories in developed and emerging markets differ in their readiness to embrace digital transformation.

Devon noted that Mexico is rapidly emerging as a key manufacturing hub, supported by favorable policies and its proximity to major markets like the US.

However, Devon said that the pace of technology adoption varies significantly by region.

In developed markets like the US, companies are increasingly adopting advanced technologies like digital twins to stay competitive. Meanwhile, manufacturers in emerging markets like Mexico and India are still in the early stages of their digital transformation journey.

Even small technological improvements, like introducing barcode scanning, can have a significant impact on these factories, improving inventory tracking and reducing errors.

In contrast, companies in developed markets like the US are driven by the need to optimize their operations and remain competitive. The adoption of digital twins in these regions allows businesses to reduce costs, improve quality, and streamline their processes.

This conversation has been edited for length and clarity.

Let's start with your founding story. How did you come to build Serial?

Devon Copeland: My co-founder and I both spent time working at various hardware startups and had internships with big names like Tesla and Apple while we were at the University of Waterloo. I was involved with product design for the Apple Watch, and my co-founder worked on the manufacturing side for the iPhone. Throughout these experiences, one thing that stood out was the critical importance of traceability. 

At companies like Apple and Tesla, where you're producing thousands or millions of units, having robust traceability systems is essential. But we realized that traceability is just as important for smaller companies, especially those transitioning from the prototype stage to their first manufacturing runs. 

Large corporations have the resources to either buy expensive off-the-shelf traceability solutions or develop their own systems internally. However, small to medium-sized companies often can't afford these solutions, even though they still need a way to maintain observability over their manufacturing processes and keep a digital record of what they produce. This gap is what inspired us to create Serial, to provide an affordable, scalable solution that offers the same level of traceability for smaller hardware companies.

When you say traceability, are you focusing on what's happening in the manufacturing plant or the entire supply chain, including raw materials?

Devon Copeland: Our view of traceability is primarily focused on what's happening inside the manufacturing plant. We're interested in tracking the lifecycle of each product, including any associated metrics such as when it was built, who built it, specific configurations, measurements, and any visual documentation like photos captured during production. We aim to capture a comprehensive digital record of everything related to the product's creation. 

We don’t delve into upstream traceability, which involves tracking raw materials back to their source, like tracing the origin of cobalt in battery production. This kind of upstream traceability is important for different reasons, such as ensuring ethical sourcing or understanding environmental impacts, but it’s not part of what Serial currently focuses on. We're more concerned with the processes and data directly tied to the manufacturing and quality assurance of the final product.

How does your product work? Is there any hardware involved?

Devon Copeland: Serial is primarily designed for use by manufacturing teams, particularly those that are handling in-house production. It can also be deployed with third-party manufacturers if they’re willing to integrate Serial into their operations for data collection purposes. 

The system facilitates a visual representation of the manufacturing process using flowcharts and diagrams, which makes it easier to define and understand the steps involved. Both product and manufacturing teams collaborate to set these up. 

You can incorporate digital work instructions that guide operators through each step of the process, including collecting specific data points. These instructions can prompt operators to manually input data, like using calipers to measure dimensions or taking photos at different stages. 

On the other hand, if you have automated test fixtures, Serial can integrate directly via our API or Python library to automatically capture and log data. For instance, if you're using a glue dispensing machine, Serial can log the amount of glue dispensed, take a picture of the application, and associate all this data with the specific serial number of the product being manufactured. 

This setup provides a robust framework for both manual and automated data collection, ensuring comprehensive traceability.

From your experience, how are operations and manufacturing teams handling traceability today?

Devon Copeland: A lot of them are still heavily reliant on Excel spreadsheets to manage their data, whether they're manufacturing in-house or collaborating with external partners. Spreadsheets are versatile, but they require a lot of manual effort to maintain. Engineers often find themselves spending significant amounts of time cleaning up data, merging sheets, and ensuring accuracy. This process takes away valuable time that could be better spent on analysis, decision-making, and process improvement. Essentially, what we see is a hidden cost: skilled engineers are bogged down with administrative tasks instead of focusing on optimizing manufacturing operations. 

By using a system like Serial, companies can automate much of the data collection and record-keeping, allowing their teams to focus more on adding value rather than performing tedious data management tasks.

How receptive are teams to adopting Serial? Are they actively looking for solutions, or is it more of a push from your side?

Devon Copeland: It’s a bit of a mix. The challenge we face is making the hidden costs of manual processes more visible to decision-makers. Many times, company leaders see their teams as capable of handling these tasks with existing tools like Excel. 

However, when we speak to the engineers and individual contributors, they’re often more aware of the inefficiencies and are eager for a better solution. 

To make our case stronger, we're looking into features that align more directly with cost centers, such as inventory management. 

When you tie traceability and data collection directly to inventory costs and other tangible financial metrics, it becomes easier for decision-makers to see the value of adopting Serial. Right now, we’re in the process of educating the market about these hidden inefficiencies and showing how our system can help reduce them.

What other trends are you seeing in hardware manufacturing and supply chains?

Devon Copeland: The software-for-hardware space is starting to catch up, but it’s still relatively underserved compared to software development tools. In the software world, you have a plethora of tools and resources that make building and managing applications relatively easy. The same can't be said for hardware. 

However, this is beginning to change. We’re seeing more startups focusing on specific pain points within hardware manufacturing. 

For example, Vendra.io is building a better platform for managing communication and documentation with overseas vendors. This can be a game-changer for companies managing multiple vendors for different parts. Another example is Giga.io, which is simplifying the process of getting machine parts manufactured. Their platform allows engineers to upload CAD files, get instant quotes, and manage the entire process of prototyping or even full production runs, whether they choose local or overseas manufacturers. 

These innovations show that the ecosystem of tools available to hardware manufacturers is expanding, which is an exciting trend.

Where do you see Serial going in the long term? What's your vision?

Devon Copeland: Our long-term goal is to evolve Serial into the most user-friendly and engineering-focused Manufacturing Execution System (MES) on the market. We envision Serial as the operating system for factories, helping manage how decisions are made, how processes are scheduled, and how information is recorded. 

We believe that traceability is the cornerstone of this system because the end product is what ultimately matters. 

By focusing first on creating a robust traceability framework, we're laying the groundwork for adding other functionalities like inventory management, production scheduling, and more. We want to build everything around the accurate and comprehensive capture of product data. 

By doing this, we can provide a solution that not only tracks and manages the manufacturing process but also offers insights that drive continuous improvement and operational excellence.

In terms of technology in factories, do you see any differences between developed regions like the US, and developing regions like India or Mexico?

Devon Copeland: Absolutely, there are significant regional differences. In places like the US, many manufacturing facilities are already equipped with the necessary technology to integrate advanced systems like Serial. 

However, in regions like India or parts of Mexico, the level of technology adoption can vary greatly. Many factories still rely on very basic methods for tracking production, like manual data entry into notebooks. That said, we are seeing a shift, particularly in places like Mexico, which is becoming a hub for nearshoring due to its proximity to North America and current trade policies. 

At trade shows, we’ve interacted with many Mexican manufacturers who are actively looking to adopt new technologies to enhance their operations. Even simple advancements, like integrating barcode scanning for inventory tracking, can be revolutionary for some of these factories. 

While the infrastructure may not be there yet for all, the interest and momentum toward modernization are definitely growing.

PS: Do you have any questions for Devon? Reach out to me at [email protected] and I can pass it on.