A new insights paper from Tātaki Auckland Unlimited reveals how small manufacturers can embrace digital technologies without breaking the bank or risking disrupting their processes.

Manufacturing remains a cornerstone of Tāmaki Makaurau Auckland’s economy, contributing more than $11 billion to the region’s GDP and employing approximately 85,000 people.

Despite this significant economic footprint, New Zealand’s manufacturing sector faces persistent productivity challenges compared to other advanced economies.

A pioneering initiative called Digital Manufacturing Light aims to change this by helping small and medium-sized enterprises (SMEs) in the manufacturing sector take their first steps toward digital transformation.

This month, Tātaki Auckland Unlimited (the region’s economic development and cultural agency delivering on behalf of Auckland Council) is releasing an insights paper that introduces the Digital Manufacturing Light concept and shares findings from a successful pilot programme.

The Digital Manufacturing Light pilot, which began in April 2022, was led by the University of Auckland in collaboration with Tātaki Auckland Unlimited.

Around 20 Auckland-based organisations participated in the pilot, which included workshops and trial deployments of digital solutions.

Pam Ford, Director of Economic Development at Tātaki Auckland Unlimited says, “Digital transformation doesn’t have to be expensive or disruptive. By adopting a phased approach using readily available technologies, manufacturing SMEs can create affordable and low-risk digital solutions that provide immediate benefits.”

The Digital Manufacturing Light concept draws inspiration from the United Kingdom’s ‘Digital Manufacturing on a Shoestring’ programme developed by the Institute for Manufacturing (IfM) at the University of Cambridge, and is being developed in collaboration with IfM and partners across Australia and New Zealand.

It follows similar principles but has been adjusted to suit the New Zealand business environment.

This approach is particularly relevant for New Zealand’s manufacturing sector, which is predominantly composed of small businesses.

Of the country’s 24,000 manufacturing businesses, only 1.6% employ more than 100 people, and 74% generate annual sales of less than $1.5 million. For these smaller operations, traditional approaches to digital transformation often seem out of reach due to cost and complexity.

Dr. Xun Xu, a professor in smart manufacturing from the University of Auckland’s Department of Mechanical & Mechatronics Engineering, says “Recent research suggests that New Zealand lags at least 10 years behind many OECD countries in adopting digital technologies in manufacturing.

“The Digital Manufacturing Light programme aims to close this gap by making digital transformation accessible and practical for smaller manufacturers.”

The insights paper outlines the expected outcomes of scaling the Digital Manufacturing Light concept into a national programme:

• Increased production efficiency – enhancing manufacturing processes through digital solutions to produce more with the same or fewer resources
• Lower business costs – achieving significant cost reductions through improved operational efficiencies and resource management
• Improved product and process design – implementing digital tools that enhance design capabilities and innovation
• Higher business turnover – generating increased revenue streams through digital transformation initiatives.

Ultimately, the concept leads to greater overall productivity, combining efficiency improvements, cost reductions and innovation to achieve substantial productivity gains.

Ford comments, “If a significant number of Auckland businesses adopt digital technologies, it could boost productivity and competitiveness in the local economy and open additional exporting opportunities. With manufacturing accounting for 50% of Auckland’s exports, the potential economic impact is substantial.”

The insights paper serves not only as a guide for manufacturing SMEs looking to implement digital solutions but also as an advocacy tool to promote the benefits of this approach among stakeholders in both government and industry.

Dr. Jan Polzer, the lead researcher of the pilot at the University of Auckland, adds, “As Industry 4.0 continues to transform manufacturing globally, initiatives like Digital Manufacturing Light may help ensure that New Zealand’s manufacturing sector remains competitive in an increasingly digital world.”

Voices from the project: Digital Manufacturing Light initiative

We spoke with four key figures behind the Digital Manufacturing Light initiative about its significance for New Zealand’s manufacturing sector and the broader economy

Bridging the digital divide

“Manufacturing is at a significant turning point,” says Konstantin Selitskiy, the project’s lead and Growth Programme Specialist at Tātaki Auckland Unlimited.

 “We’re seeing a clear divide emerging between digitally-enabled manufacturers and those that haven’t yet begun their digital journey. What we’ve learned through the Digital Manufacturing Light pilot is that this divide isn’t about company size or resources – it’s about approach.”

Selitskiy explains that many small manufacturers believe digital transformation requires massive investment and can cause disruption to their business. “That’s simply not true. Through Digital Manufacturing Light, we’ve demonstrated that manufacturers can implement targeted digital solutions that address specific pain points without overhauling their entire operation.”

He points to examples from the pilot where companies achieved significant productivity gains with modest investments. “One participant automated their inventory tracking using affordable off-the-shelf components, saving hours of manual work each week. Another implemented simple digital quality control checks that reduced defect rates by 15%.”

A pragmatic approach to productivity

For Dr Jan Polzer, lead researcher of the pilot and Senior Lecturer, Department of Mechanical & Mechatronics Engineering, University of Auckland, the Digital Manufacturing Light initiative addresses a critical national challenge.

“New Zealand’s productivity figures tell a concerning story,” Polzer notes. “We’re falling behind our international counterparts, and in manufacturing, that gap is particularly pronounced. Digital transformation isn’t just a nice-to-have – it’s essential for our economic future. Australian manufacturers are already making big strides in implementing the Shoestring concept.”

Polzer believes the Digital Manufacturing Light methodology offers a pragmatic path forward. “What makes this approach so powerful is its accessibility. We’re not asking companies to invest millions in enterprise-wide systems or to completely reinvent their processes. We’re showing them how to take small, strategic steps that deliver immediate value.”

The insights paper reveals that participating companies typically saw productivity improvements of 5 to 12% from their first digital solution. “These aren’t marginal gains,” says Polzer. “When you’re operating on thin margins, as many of our manufacturers are, improvements of this magnitude can mean the difference between struggling and thriving.”

Building a national movement

Marissa Brindley, Head of Tech Economy at Tātaki Auckland Unlimited sees the Digital Manufacturing Light initiative as the beginning of a national movement.

“Our vision extends well beyond Auckland,” Brindley explains. “We want to create a nationwide community of practice around digital transformation in manufacturing. The insights paper is just the first step in that journey.”

Brindley outlines plans to expand the programme through partnerships with regional economic development agencies, industry associations and tertiary institutions. “We’re already in discussions with potential partners in Waikato, Canterbury and other regions. The framework we’ve developed can be adapted to local manufacturing ecosystems.”

She emphasises that the goal isn’t just to implement technology but to build capability. “Digital transformation is as much about people as it is about technology. We’re focused on developing the skills and mindsets that allow companies to continue innovating long after our initial engagement.

“Digital Manufacturing Light is helping to ensure the manufacturing sector remains strong and competitive in the digital age.”