Skip to main content

trade with estonia

IT as value driver for manufacturing industries

Vertical integration brings added value for highly complex solutions

The benchmark study „Digitalization index mid-sized sector 2019/2020” by the German Telekom, already carried out for the fourth time, shows that next to industry 4.0 and cloud computing, business analytics, robotics, and artificial intelligence are increasingly moving into the focus of the medium-sized industry. At the same time, companies recognize that digitalization activities have a positive effect on their performance indicators: processes get more effective, quality of products and customer satisfaction increase, sales and revenues rise.

There is a difference concerning the extent of digital transformation: companies with more than 50 employees are already ahead in the process than smaller companies, and metal and electronic industries occupy the top positions within the industrial sector.

A country that exports digital transformation and that ranks at the top of the digital revolution in Europe is Estonia – as large as Lower Saxony. Information technologies drive the economy, and IT stands for modernization. Estonian companies provide industry 4.0 and automation applications for different economic sectors – from automotive supply and energy over to mechanical engineering, retail, and logistics to pharma and chemistry.

“In our country, there is a flourishing IT start-up culture with hundreds of companies”, says Triin Ploompuu, member of the board of the Federation of Estonian Engineering Industry. “At Ülemiste City alone, a 36 ha large technology campus in Tallinn, there are 200 companies with 6,000 employees.”

Behind Skype, Hotmail and TransferWise, the online money transfer service, are programmers from Estonia. Four Estonian start-ups developed to so-called “unicorn” technology companies, which means they have a market value of over one billion US dollars. The Germany-based logistics company Kühne+Nagel also develops its IT applications in Tallinn.

In the mid-90s, the Baltic state set the course for digitalization with „Tiigrihüppe“, the Tiger Leap Foundation. As a global pioneer in digitalized governance and a role model for many countries, Estonia has extended its digitalization into the education sector, as well as into many areas within the society and industrial sectors. Estonia is considered as the most digitalized country in the world, and the term “e-Estonia” stands for a highly interconnected society.

Competitive edge through digitalization

“The entire entrepreneurship in Estonia is moving towards digitalization”, says Tanel Uibokand, Head of Sales at Radius Machining, a company for factory automation, contract manufacturing as well as development and engineering services. In manufacturing industries, Estonian companies are pioneers in the digitalization of processes in automation, robotics, and information communication technologies (ICT) as part of production chains. For example, Proekspert from Tallinn was awarded the German-Estonian Business Prize in 2018 for its “industry 4.0“ solutions. Numerous German and European companies source components and services from Estonia, such as Parker Hannifin, Siemens, Bühler Technologies, Diehl Aviation or Skoda Electrics. “More than 120 countries use ICT solutions from Estonia”, says Triin Ploompuu.

Using technology from the Estonian company Cleveron, Walmart from the US and Zara from Europe, e.g. in Hamburg, have accelerated their parcel delivery. Every customer that orders online immediately receives a PIN and a barcode. As soon as the items arrive in the store, they are transferred into the pickup terminal, which automatically organizes the packages inside according to size; the customer is notified of the arrival via smartphone or e-mail. When the customer reaches the terminal, the machine scans the barcode and delivers the parcel within seconds.

This „click & collect“ solutions continues the positive experience customers take away from online-shopping. At the same time, it reduces operating, personnel, and transport costs. Behind it, there are two parcel robots, the Cleveron 401 and the larger 402, which take up to 1,000 resp. 1,400 packages of different sizes and automatically organize them. Since the retailer Walmart launched the project in 2015, it now uses 1,600 robots with 480,000 compartments, and its e-commerce sales have increased.

The modular design allows this application-specific layout. The Cleveron 402 can also be integrated into walls and can be adapted to the branded interior design of the sales room. Only one delivery terminal forms the link to the customers.

„Through IT innovations, i.e. the implementation of digital solutions, processes are accelerated and customers receive their items faster”, informs Triin Ploompuu. The brand loyalty is strengthened through a positive experience and, at the same time, the process-related efficiency increases as well as the economic efficiency through lower costs.

Vertical integration brings added value for highly complex solutions

The company HY-Tech Comp near Tallinn, a contract and serial manufacturer of mechanic, electronic, and electromechanic components, relies on modern technologies for contract manufacturing, such as robots in the production process. “We invested in new IT technologies from the beginning”, explains Urmo Sisask, CEO at HY-Tech Comp. “Through the use of digital solutions, we strengthen our position within the industry and, at the same time, it also has a positive effect on our costumers – through advanced solutions, but also through guaranteed delivery times.” Intelligent devices enable the monitoring of production utilization efficiency, starting from the overall equipment efficiency to the measurement of employee performance.

“Whenever highly complex solutions are required, Estonian companies can add value“, says Emöke Sogenbits from the company Hanza Mechanics. “They provide a high vertical integration and connect design and development with mechatronical solutions.” Before joining Hanza Mechanics, she worked internationally in procurement and knows about the advantages and added value of comprehensively viewing processes, solutions, and their efficiency as a whole and interconnecting them instead of getting lost in the sheer mass of components and individual price considerations.

Easy access for German companies
IT is a value driver in almost all industries. Over 200,000 employees in Estonia work in the ICT sector. Together with the mechanical engineering and metal working industry as well as the electronic industry, they present the solutions for the digital transformation. German companies can find more information on Estonian expertise as well as an access to exemplary case studies on the German-speaking website

Original article can be found HERE  by “Produktion”  Ragna Sonderleittner


ready to trade with estonia?

ready to trade with estonia?

What is it really like to do business in Estonia? How can you benefit from the country’s world-famous e-solutions and unique business culture? What opportunities await you in your sector?

The Trade Estonia team is here to answer all your questions and point you in the right direction.

Request sourcing help