Head of Consumer Business
Globalisation brings risk and uncertainty and, of course, opportunity to Tomorrow's Manufacturer. The challenge is how to change quickly enough to build and retain customer loyalty.
In a more competitive, more transparent marketplace, manufacturers have to work harder and harder to ensure customers remain loyal. Lean Six Sigma operations play a large role in achieving this, as customers demand ever higher quality at ever lower cost. But these are not the only means of building loyalty - manufacturers need more than ever to innovate, and to really get under the skin of their customers' business. So it's also about customer service, mobility and partnership. And, of course, this all has to be done through a 'green,' sustainable and ethical business model.
Increasing the value-add
In a world of value-based systems, products do not exist in isolation. Tomorrow's Manufacturer understands how and why a customer uses their product to derive value. They also understand what resources the customer has available to maximise the value from the product, and what additional services are or could be required. A balance is struck between endless customisations of the core offering, and a low-cost but inflexible set of products and services. For some companies, a transformation is made from a product manufacturer to a service provider. Either way, viewing the marketplace as a value-generating system, rather than a set of discrete organisations, is the key objective here.
Innovating to survive
Traditionally, innovation was kept close to the heart of the manufacturing organisation, under lock and key. Certain sectors, such as Automotive, began to collaborate on research and development (R&D) as a way of competing more effectively. For other sectors, innovating was a way of keeping a premium proposition to differentiate against low-cost competitors in Asia.
Now, low-cost countries are recognised as innovation centres in their own right, and manufacturers are compelled to radically change the way they innovate. Co-innovation, Open Innovation, Collaboration, Partnering - all of these are different ways of saying the same thing: companies need to find ways of involving other partners in the innovation process while, at the same time, being clear about the boundaries and management of the potentially huge investment risks.
These, more innovative ways of working can be unlocked by transforming the way that supplier relationships are managed - moving away from a cost-focused, confrontational set of processes, to processes that encourage trust and mutual investment. As well as becoming the supplier of choice, manufacturers need to become the customer of choice!
Mobility has been around for some time in the form of mobile asset management and other "blue collar" applications. What's changed recently has been the emergence of the "consumerisation of the enterprise" and the demand for more "white collar" mobility.
Consumersiation is largely due the growing popularity of Smartphone devices - the typical example being the CEO asking the CIO to access the enterprise IT-based systems on their iPhone. And it's also about the fact that, while in the past the company laptop used to be better than the one at home, increasingly it's the other way round, and employees risk being "underwhelmed" by enterprise devices.
The second trend - "white collar" mobility - generates demand for a different type of device from the one that companies are used to managing. Instead of the ruggedised, locked-down, Windows Mobile device, there is now a place for a more sophisticated device that enables employees to engage more effectively with other business organisations - in particular, the customer-facing sales force. What will your customer think if your sales person sits down with pen and paper, when the next representative comes in with a fully-functional, highly engaging iPad, where customer and sales rep can together engage with rich information, including multimedia collateral, to generate a valid quote during the meeting?
Increasingly, manufacturers are expected to operate in a way that is green, ethical, compliant, risk-minimised and profitable. And they are expected to do this across a more complex, less transparent, and more competitive value chain. Simple?
The good news is there are still huge opportunities left for realising operational improvements: for every tonne of manufactured product that ends up being used for example, 100 tonnes of raw materials enter the system! That means 99 tonnes of waste are generated. That waste represents opportunities for improved environmental performance, and improved profitability.
As in many other areas, data capture is one of the challenges underpinning all of these trends. Most enterprise IT systems are architected to capture financial information to report profit, loss, assets, liabilities and cash flow. Re-architecting them to capture sustainability measures - without creating unsustainable levels of administration - is critical and achievable.
Being a manufacturer in today's economy is no easy task. But with a strong heritage of continuous improvement, and a can-do attitude, the sector is well-placed to rise to the challenge.