By John Bruno, VP of Product Management, Elastic Path Software.
Agility is now a vital attribute for modern manufacturers however, it requires a different mindset. One that goes against years of conditioning and forces manufacturers to think quite differently than they have in the past.
The vast majority of manufacturers have spent decades following the lead of brands like Toyota to pursue lean manufacturing. They’ve devoted themselves to an absolute focus on optimising yields, reducing product variance and building quality into their processes.
To grow and scale their businesses, their strategy has been to optimise their ability to produce product. They’ve invested in great facilities and their supply chain, or acquired others in their space, taking a very inside-out approach.
When it comes to customer relationships and getting products to market, they’ve relied completely on their networks of distributors and agents.
The need for agile manufacturing today turns all of this on its head and requires manufacturers be directly in tune with their customers. They now need to be capable of providing downstream and upstream value. They need to start looking outwards and thinking like their customers.
Doing the necessary 180-degree turn, and in essence abandoning the very things that have made them successful to date, is challenging, intimidating and for some, downright terrifying. Here are my five key pieces of advice to guide manufacturers on this journey:
1. Move away from a product for product’s sake mindset
To achieve agility in terms of customer experience, manufacturers need to fundamentally change the way they think about business. This means moving from a pure product and quality mindset to one that focuses on, and prioritises, customer outcomes.
In part, this means using channel partners differently. Instead of just focusing on how much product distributors are able to move, manufacturers need other ways to incentivise their network.
Manufacturers often lose sight of who the end users of their products are, and channel partners can play a valuable role in helping to gain better insights. Instead of just pushing information out on products, they can be gaining important data about how the products are being used.
2. Emphasise customer experience
Customer experience is a difficult thing to nail down in a business-to-business setting like manufacturing. The things that differentiated manufacturers in the past — quality product and the ability to deliver it – no longer cut it.
Agility on the other hand can be a disruptive differentiator in customer experience. For example, Harry’s Shave Club has been able to undercut and drive customers away from Proctor & Gamble / Gillette. This is because they have engaged with customers directly and created a ‘digital-first’ relationship through its subscription model. The customer is put first, predicting very accurately when they need a product so that it can be shipped in advance and at a lower cost, which reduces the friction often associated with purchasing and delivery. With no reliance on agents further down the purchasing stream.
Successful agile manufacturers optimise how easy, effective and trustworthy the purchasing process is and learn to focus on this. Providing a rich digital experience where customers can navigate a portfolio of products, research information and make direct purchases is crucial.
3. Embrace customer engagement
Traditional manufacturers who have been able to grow and scale based on the reach and expanse of their network now need to realise that customers want to engage with them directly.
Distribution networks are fairly commoditised in most sectors of manufacturing. If manufacturers can successfully reduce the different layers in their customer engagement model it is mutually advantageous for the manufacturer and the customer. Customers can expect lower overall costs but there is more margin for the manufacturer because they’re not sharing that with so many downstream channel partners.
4. Ask for customer feedback
You can’t be agile without incorporating feedback on multiple levels.
However, rather than carrying out direct qualitative customer feedback, which might seem the obvious approach, there are other ways. Through emerging technologies like IoT, manufacturers can embed sensors into products, which opens up a huge array of additional quantitative customer data on usage patterns, maintenance requirements, etc.
In turn, agile businesses that are able to become adept at aggregating and more readily using this kind of data in the development of new products will greatly increase their chances of success long term.
5. Build loyalty and trust
Most manufacturers are operating off the same playing field. The bar is very level. Those that are able to take customer and market feedback and circle that around into the next iteration of products are going to be received better.
As a result, this will add fuel to the fire in terms of the desire from customers to work more closely with the manufacturer as opposed to their channel. That will usher in the next wave of manufacturing… the age where customer experience reigns king and relationships are based on loyalty and trust.
Some companies will rise to the top, others will wither away and struggle. The winners will be those manufacturers who harness the ability to deliver products more quickly to market and are more in line with their customers’ needs.