The consumerization of manufacturing: How IT systems help manufacturers respond to the call for customer-centric processes
October 24, 2014 by Larry Korak
Oct. 24, 2014 – Consumer power has reached an all-time high, and businesses have felt the impact across their supply chains globally.
It’s not just consumer-facing businesses feeling the impact. Even B2B manufacturers are hearing consumers’ voices across all of their business channels. In fact, according to a recent IDC Manufacturing Insights report, “Consumers are driving the ‘speed of business’ in manufacturing today.”
Being able to capture consumer preferences using advanced search algorithms does not necessarily translate into the ability to rapidly change products or fulfill orders any faster or cheaper. Likewise, accelerating the capture of customer product preferences using online order configurators is only the starting point. Getting the right piece of furniture or pair of shoes ready for shipping requires tightly integrated production and fulfillment capabilities.
In the industrial heyday, manufacturing operations were insulated from the whims of the consumer, separated by a protective layer of distributors, dealers and retail operations who bore the burden of facing the buying public. It was up to the retail clerk to say, “I’m sorry, that only comes in black and it’s on back-order and we don’t know when it will be in stock.”
Then, online shopping emerged and these walls came tumbling down.
Today, consumer preferences and the desire to build intimate relationships with customers drives many manufacturing decisions. This is not only true for consumer goods manufacturers that rely on brand recognition, like those producing toothpaste or laundry detergent. This consumer-centric approach has also reached businesses that cater to other businesses, such as manufacturers of capital equipment and material handling systems.
“This consumer purchasing style is not only having an impact on brand-oriented industries; it is impacting the whole manufacturing value chain to a point that B2B (business-to-business) trading is now often defined as B2B2C (business-to-business-to-consumer), indicating how increasingly important it is to take care of the customer of the customer,” the IDC report notes.
Even though end consumers may be far removed from the manufacturer in the B2B buying cycle, they still expect to be able to influence choices, such as colours, dimensions and materials. In highly complex products, such as industrial pumps or generators, engineers are likely to have very detailed specifications for the manufacturer. Engineers are also consumers and, like any consumer, they want to know their preferences are heard or they will take their project elsewhere. Even in the B2B industry, loyalty is becoming less and less important in purchase decisions.
“Purchasing patterns have been completely redefined by the extensive availability of information through social networks and its rapid transmission via a vast range of new mobile devices,” says the IDC report. It adds, “Consumers are well informed about market products, prices and dynamics. They are brand agnostic and compare, select or discard multiple products with just a tap on their tablet.”
This consumerization of manufacturing is calling for change among companies — big and small — that manufacture, supply and service goods. Especially as manufacturers struggle to compete with low-cost suppliers in emerging nations, the ability to respond quickly to customer preferences is a vital differentiation point.
To seize this opportunity, manufacturers need to make dramatic changes in their company culture and infrastructures. Creating and nurturing a customer-centric approach is not as difficult as it may have been just a decade ago. Today, modern ERP solutions offer functionality that makes tracking and predicting consumer preferences much more reliable. Deep analytics and business intelligence tools turn the mystery of consumer buying cycles into actionable data.
Modern ERP solutions with social collaboration tools also help manufacturers share designs, specifications and production updates with customers. Because the conversation is stored within the ERP solution in context of the customer order, it is far more reliable and relevant than email, texting or other social tools (which are easily lost).
Product configuration tools allow customers or dealers to make design choices online and see a 3D rendering of the product, as configured. This type of solution also feeds directly into the ERP system and becomes a customer order, providing the shop floor with exact specification details and materials required.
In addition to these tactical tools, technology also enables employees — from C-suite to the shipping dock — to take on a new mindset, one that places the customer first. This requires highly engaged personnel and employees who use IT solutions to their fullest to be proactive and alert to potential customer-affecting problems. Modern ERP solutions provide the tools — such as role-based dashboards and personalized performance tracking — but the personnel must be trained, coached and inspired to want to look out for the customers’ best interests. That is a directive that must come from the top and be exemplified by key managers.
Customer-centric manufacturing may require some effort, some training and some technology, but the benefits are well worth it. As competition continues to escalate, it will be the companies who are in-tune with their customers who will receive the biggest piece of the pie.
Larry Korak is the industry and solution strategy director for Infor.
This article originally appeared in the October 2014 issue of Manufacturing AUTOMATION.