Digital disruption in manufacturing - Getting started - Part 1
August 23, 2017The series offers advice on how to get started on your digital journey. The insights apply to large enterprises and SMBs, industrial manufacturers as well as fabricators, contractors, and organizations in the Food & Beverage industry, Chemicals, Auto, or A&D. While the specifics of the industry may change, the core concepts remain the same. All manufacturers can benefit from these tips.
Digital transformation starts with a new approach to business. A report from Constellation Research says “Digital transformation begins with design thinking, a methodology that unlocks solutions to questions that have not been asked before.”
Design thinking involves imagining business from the customers’ shoes and asking, “If I was our customer, what services would I want that I’m not getting? What could make my life easier?”
Then, the next step is to plan how to meet those needs. That’s likely going to entail changing internal business processes, improving existing services, adding new services, and new ways for customers to engage. And, it’s going to entail adopting new, disruptive technologies—like advanced analytics, omnichannel commerce, social, mobile, Internet of Things (IoT), and more.
As customer behaviors and needs change, the manufacturing industry must have the flexibility to adjust business practices in order to meet those changes. Organizations need to embrace innovative technologies that help you to optimize daily operations and hone profit margins. It’s not just about offering the lowest prices. Now, to succeed, there must be layers of service that differentiate the business and help build customer loyalty.
Here are seven ways to start building this differentiation through digital transformation, and the technologies that will help make these goals a reality.
1. Embrace value-added services
“Service” now means so much more that what we typically think of good customer service. It may be eliminating an onerous task for your customers, anticipating their needs, managing a process for them from beginning to end, or streamlining your interactions with them. That service may be something you deliver directly to the customer, or in some cases, something you do to make engagement with the customer more convenient or more valuable. Customers today have concerns that transcend the singular product. They are also concerned about the impact on the environment, the working conditions of plant workers, and sustainability of the operations and the supply chain. .
Constellation Research suggests that communication and engagement with the customer can help reassure the consumer of the end-to-end relevance of the company. One way to accomplish this is to evolve from traditional business models which may have focused on a narrow aspect of the relationship, such as one mass produced product. Today, customers expect individualized offerings, highly personalized experiences, and purchases they can feel good about and recommend to friends.
Software solutions will help manage processes and streamline activities to support customers. Extended warranties and service contracts are value-added services. Online portals can also be used to interact and collaborate on personalized products or offerings. With modernized systems, these added customer-centric features can be relatively simple to provide, yet yield high returns in customer loyalty.
2. Improve the customer experience
According to Constellation Research, “Organizations are moving from products to services, services to experiences, experiences to insights, insights to brand promises.” Manufacturers–in all vertical industries–need to make sure they’re following that same progression.
It’s becoming increasingly important to build a distinct brand and stand out in your customer’s recognition. In today’s global economy, customers have many choices.
Understanding what customers want (and need) and how they prefer to interact is key. Chances are customers are accustomed to omnichannel commerce opportunities, which allow them to do business anytime, from anywhere, whether that’s home, school, office, plant or factory-floor. Manufacturers need to provide tools to do business the way customers prefer, whether that means through an Internet portal, via text, from a mobile phone or in person. Customers may also prefer to let their machines do the talking as they turn to sensor-based technology to convey data about equipment status.
Modern technology supports this flexibility. Customer experience suites, ecommerce, contract management solutions, and tools for online portals are just some of the ways modern solutions can transform the customer experience into a point of differentiation
3. Fine tune supply and demand forecasting
In most manufacturing and food processing operations, inventory represents a sizable investment. Keeping the necessary inventory can be costly. Effectively managing inventory levels is one of the ways companies can optimize cash flow—without risking customer satisfaction. Accurately understanding customer needs, predicting seasonal demand, and projecting logistical needs will help procurement managers have the necessary resources to fulfill orders.
Connectivity with the extended supply chain also helps control spending. The ability to track suppliers and components or ingredients helps managers to feel confident about just-in-time strategies. They can fine-tune inventory levels, reducing redundancies, excessive inventory of raw resources (some of which may have a short lifespan), and make strategic decisions about inventory of slow moving parts.
Advanced analytics with predictive science capabilities make this level of forecasting possible. Modern ERP solutions with easy-to-use reporting and contextual business intelligence can be applied to inventory, sales projections, service trends, and resource requirements, including labor.
Companies which have invested in modern, integrated ERP system with advanced analytics capabilities, as well as sophisticated supply, demand, and inventory tools, will be best positioned to take advantage of these opportunities.