Your manufacturing business will always go through the same challenges. Rising market demands, global competition, slim margins, and complex business conditions, are just some of the problems you had to overcome. Today, these common struggles have not only been amplified exponentially due to the global COVID-19 pandemic but may have evolved.
Looking beyond survival mode
The manufacturing landscape you are operating in is rapidly changing. Businesses that have acknowledged this fact have already begun their digital transformation journey. These businesses are well-equipped to manage the obstacles the market throws at them. They are also expected to recover faster than their peers, from the monkey wrench that is COVID-19.
They had a head start, but that does not mean it is too late for other manufacturing businesses to start now. The goal of your manufacturing firm should go beyond survival. It should be about meeting the incoming disruptions to the manufacturing industry and thriving despite adversity. Your risks will always be present.
But with digital, your business can create new value for customers and mitigate risks by anticipating and addressing these and mitigate risks by anticipating and addressing these incoming disruptive forces.
Evolving struggles of manufacturers
Manufacturers have been dealing with the same struggles for decades. But with the advent of Industry 4.0, these struggles have evolved. Led by digital, manufacturers are finally able to deal with their current struggles. At the same time, however, they are discovering more challenges ahead because of digital.
Infographic: Evolving struggles of manufacturers.1. Rising market demands VS Customization & personalization (Lot size one)
- Just like how product standardization empowered mass production, digitalization is enabling manufacturers to go back to their origins. To offer customers the ability to customize or personalize a single product. A product that does not exist until your customer asks for it. And a product that has a 100% chance of being sold.
Implications: Instead of using digital to optimize your current infrastructure, strategize on how you can use digital to reduce costs, time, and the resources needed to design, customize and produce a product, and be ready to meet the future demands of your customers.
- Global competitiveness is a standard manufacturer struggle. But digital has added a twist to this ongoing challenge. Manufacturers not only have to look out for international competitors, but they also have to watch out for digital-native competitors who are outperforming traditional manufacturers.
To make matters worse, there is a new group of businesses that started off digital, or have fully embraced digital, that McKinsey dubbed the digital reinventors. These companies are an eclectic mix of digital natives, digital incumbents, and incumbents moving into new sectors through digital. Studies have shown that these businesses are widening the digital divide between them and traditional businesses—and pulling away in terms of revenue gain.
3. Slim margins VS Economic volatility
- Volatility in the global marketplace is a challenge that traditional manufacturers are all too familiar with. But where there are slim margins, there are also high chances that these margins become negative when global economic situations take a turn for the worse—like during the recent COVID pandemic or the US-China trade war.
With digital, manufacturers are able to track and manage their material costs, and have much more accurate forecast capabilities. This gives them more room to navigate the tricky waters of global economics and look for business opportunities via new business models enabled through digital.
- Manufacturers are operating under highly complex business conditions. These conditions can be controlled with digital solutions. But when digital takes over, a new set of challenges emerge: Large amounts of data. In the new digital economy, data is valuable to any business. But like any raw material, data needs to be processed to ensure its quality.
A critical new business requirement is the ability to extract, and organize that data from various parts of your business into a single platform. This makes your most important product and customer knowledge readily available to the teams that need it—especially sales. This step requires agile data platforms that are loosely coupled, but are tightly integrated with your backend ERP systems.
- Manufacturers—who have gotten comfortable with the long sales cycle—have been rudely awakened by the recent COVID pandemic. During lockdown, your customers experienced the efficiency and speed of B2C e-commerce platforms—and they now demand the same from your business.
Even when things return to normal, enabling a superior buying experience will be a distinct advantage for your business. Buyers now prefer digital channels that enable self-service—preferably on mobile. When you digitize the sales process, you also set a strong foundation for new business models (manufacturing-as-a-service, subscription-based, etc.) that will bring in revenue from unexpected areas in your business.
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