Ton Hagens / 26 March 2020

The industry is facing several radical challenges that are forcing us to take action. For years, we have stood out for our operational excellence. Within the walls of our company, we have streamlined our processes to perfection. However, the real challenges are now coming from the outside. The consequences of inaction are putting your right to exist in acute jeopardy. In this blog, we discuss 3 external factors that are radically transforming the industry.

From supply to delivery service

Traditionally, manufacturing companies operate in the shadow of the big sellers. They drive anonymously to the back doors of retail chains, webshops and wholesalers with pallets full of new stock. More and more often, however, this back door remains closed. Shops are becoming front portals and are sending their suppliers directly to the end customer’s address, to deliver the products ordered online. The manufacturing industry itself is also changing. Technological innovations are creating opportunities to develop new sales channels. The gap between production, sales and front door is becoming smaller than ever. Welcome to the world of omnichannel retail.

This new model is putting significant pressure on the manufacturing industry. A multichannel sales model is a must to survive. Where you used to load trucks in series behind the scenes, you suddenly have to pick, pack andship smaller loads.

This also has implications outside the walls of the company. You’ll find yourself with more addresses to deliver to, and a lot less to deliver to each one. Chances are, you’ll need the help of several logistics service providers to succeed in delivering last minute orders. Moreover, everything has to be ever faster and more precise; in our e-commerce economy, there is no room for waiting time.

From product trader to information trader

Even if you do not deliver directly to consumers, you will still be affected by these developments. Business buyers are also ordinary consumers, who can easily compare theprocess of ordering from your manufacturing company with that of Apple, Adidas or Philips.

Anyone visiting a product page of these online brands will find a wealth of information, from beautiful product photos and elaborate descriptions, to online reviews and specifications. The consumer is given everything possible to compensate for the lost benefits of ‘physical shopping’. This product information is not only found on the brands’ own websites. Platforms like Amazon or Zalando depend on it in order to sell these brands. The result: the quality and completeness of the product information determine the product’s value.

So how does this trend affect us in the manufacturing industry? Quite simply, we are becoming information traders alongside product traders. The faster and more complete you can provide your data, the more valuable your products will become. This requires a smooth integration of all systems that contain parts of this data, from PLM to CAD, and from e-commerce platforms to the PIM system.

From an isolated provider to an ecosystem partner

This fits in with a larger trend in the industry: in the past, you could have enjoyed success as an ‘isolated’ company, but now you are more and more dependent on your partners and platforms.

To remain competitive in this rapidly-changing world, we need to focus on our core business. This requires us to make clear choices on a range of matters, including technology. Should you develop your own technology, or should you buy it externally? What is the right balance between wanting to be unique on the one hand, and facilitating growth on the other?

Whereas in the past, most companies carried out the majority of their activities by themselves, we now see them only carry out a limited part of their primary production processes, and search for key partners to carry out the rest of the work. For this to work, it’s crucial to have effective systems in place for cooperating with other companies. Successful manufacturing companies work together in order to take a stand against the competition. This is done, for example, by coming together to think through the development of a sales platform or e-commerce channel, or by introducing standards for data exchange that prevent costly interfaces.

Author
Ton Hagens Managing Director