The need to become more customer-centric is driving the next wave of digital transformation in manufacturing.
Manufacturers are embarking on the next wave of technology and digital transformations in order to become more customer-centric, while incorporating artificial intelligence (AI), the Internet of Things (IoT) and other Industry 4.0 technologies. To enhance overall customer experience, manufacturers are enhancing their digital customer engagement tools, customizing software to better predict and deliver on a customer’s specific wants and needs, and incorporating more product personalization into their offerings. They are also managing warehouse efficiencies; prioritizing solutions for supply chain resilience and worker shortages while introducing human-robot collaborations and reducing their carbon footprints.
Whether selling products to other businesses, directly to consumers or via Amazon, it’s now an imminent need to have robust AI software and analytics detect customer trends and automatically adjust supply, and to implement IoT to mitigate errors in a faster-paced workplace. Moreover, customers are looking for maintenance, repair and installation services as well as the ability to make direct contact with the manufacturer when they run into an issue with an item.
“Many manufacturers are shifting their investments to technology and innovations that support and meet their customers’ latest demands,” says Tizu Menelik, SVP, Group Head of Fifth Third’s Diversified Industries and International Corporate Banking at Fifth Third Bank. “The manufacturers that leverage technology to engage their customers and provide better service can differentiate themselves and show the value of their digital investments.”
Here are some of the new technologies and digital solutions manufacturers are pursuing to address their customers’ needs, modernize operations and increase overall efficiency:
Digital Customer Engagement Tools
Many manufacturers resorted to using digital communication tools during the pandemic to connect with vendors and customers, and discovered some commercial benefits in the process. Compared to more limited means of buyer communications used in the past, digital platforms are helping manufacturers create ongoing relationships with consumers. This ongoing communication through various digital channels helps manufacturers connect with customers when a purchased product is nearing the end of its lifecycle, providing opportunities to suggest upgrades or offer discounts on new products.
Many manufacturers have also developed new revenue streams by offering aftermarket services like maintenance, repairs, insurance and training programs. According to a survey by BDO, 76% of middle-market manufacturers had introduced or were planning to introduce new aftermarket services in 2021. Though offering direct-to-consumer services introduces a competitive customer service element, this strategy effectively cuts out retail middlemen and aids in fostering brand loyalty and repeat purchases.
Improved agility and customer centricity are increasing the need for powerful, AI-driven analytics and software to facilitate faster recognition of customer preferences. Collecting this data more quickly, in turn, allows for faster adjustments to be made to manufacturing flows at small-scale modular plants and allows for greater product customization.
One example McKinsey provides is a Consumer-to-Manufacturer (C2M) business model for the apparel industry, which can give mid-sized manufacturers real-time understanding of consumer preferences and market trends. AI data analytics detects trends and feeds that information into supply chain systems, adjusting the materials needed to match the predicted demand. Digital simulations can evaluate risk, and online quality checks allow for instant error detection.
The desire for custom products and services has been a long-running trend among consumers. According to a Deloitte report, one in five consumers are not only willing to purchase a custom product, but are prepared to pay 20% more for it. With margins of that magnitude, it comes as no surprise that manufacturers are expanding their offerings to meet this demand.
The importance of product personalization is also underscored in a survey by the Harvard Business Review. Of the 137 executives in manufacturing who took part in the global survey, 26% said they were ‘highly likely’ to invest in personalized products in 2021 and 2022 to support their customer experience (CX) strategy.
Supply Chain Resilience
Supply chain management technology is also a major focus of digital innovation. Efforts are focused on meeting higher customer expectations for more personalized and faster-produced products while minimizing waste, without inflating costs. Digital supply chain transformations can provide invaluable real-time information about each step in the supply-chain process, facilitating quicker and more cost-effective decisions, such as which products are low in inventory and where to redeploy raw materials.
Manufacturers are also connecting with networks of smaller suppliers to diversify their supply chains. Supply chain diversification has become a global trend in the manufacturing industry, after companies experienced the challenges of having their factories and supplies concentrated in China during the pandemic. Creating a wide network of supplier options helps manufacturers mitigate a range of risks, including supply shortages, product recalls and changes in trade barriers. The flexibility of a diverse supply chain can provide manufacturers a competitive edge.
IoT to Solve Worker Shortages
Many manufacturers struggled to meet surging product demand in 2021, and those challenges show little sign of diminishing. Supply bottlenecks bear some of the blame, but labor shortages also contribute. According to a study by Deloitte and the Manufacturing Institute, a manufacturing skills gap in the U.S. could see 2.1 million jobs go unfilled by 2030, potentially costing the economy up to $1 trillion.
Manufacturers are turning to IoT-controlled wearables for a solution, which can assist manufacturing team members with everything from remotely monitoring equipment to smoothing changeovers. Work instructions, smart container and asset tracking information can be delivered to workers on tablets and wearables, making it possible to instantly switch from producing one product to another, and to minimize error when factory or warehouse floor staff numbers are low.
The need for social distancing has also accelerated the use of virtual reality (VR) and augmented reality (AR) use. A specialist on duty can now use an AR headset or hologram to perform maintenance work with virtual support from remote specialists.
Industry 5.0: Human-Robot Collaboration
The regular mass customization of products has created the need for a new breed of collaborative and industrialized robots with collaborative qualities. These robots are expected to reconfigure production lines, allowing humans to work alongside them and speed up production.
Smaller collaborative robots, or cobots, have been around for some time, but now they are more user-friendly and affordable for middle-market manufacturers. The cost of the average cobot is around $24,000—an affordability factor that underpins projections by Automation World that cobots could make up more than a third of all robot sales by 2025.
The new breed of cobots do more than just take on repetitive monotonous tasks. New motion sensor and visual technology allows cobots to be trained by human workers physically demonstrating tasks. It also means they can operate more safely beside human employees, sorting and picking objects from conveyor belts, or finding specific objects placed into bins by their human co-workers.
Cobots have the added benefit of freeing up employees for upskilling at a time when skilled labor is scarce. Employees are also more engaged and productive when cobots are involved. Idle time can be reduced by 85% when people work with a human-aware robot, according to one MIT study.
Another distinguishing feature of cobots is that many are quick to set up, with some requiring just a few hours before they can contribute to operations. Many cobots are also compact and mobile, meaning they can safely move around a factory floor with the aid of sensor and vision technology.
Now, collaborative capabilities are being added to keep workers safe while working with large, industrialized robots on factory floors. The need for a more flexible production line is leading to new breeds of smarter industrial robots with motion sensors, visual technology and cognitive computing capabilities. Collaborative industrial robots can sense humans entering their cage, slow down and be reconfigured to accommodate customized production.
Eco-Efficiency and Lean Manufacturing
The manufacturing industry is constantly evolving. Lean manufacturing—a methodology for manufacturers to reduce waste—is increasingly adopted to ensure the product has value and integrates core value propositions into the production process.
Customers and employees—especially Millennials and Generation Z—are voting for sustainably produced products with their wallets and investment dollars. Governments are also increasing regulations that will move economies toward net-zero carbon emissions.
Manufacturers with foresight are now employing digital solutions and technologies using loT and predictive analytics to improve energy use across factories. Supply chain management software, coupled with AI data and analytics, can reduce waste by matching supply materials with demand needs.
“We think sustainable manufacturing will be one of the biggest digital trends,” says Menelik. “Being first on the market with the product customers desire won’t mean as much if your company is being criticized for harming the environment. Taking the time to meet customer desires for sustainable solutions ahead of time could save you time and money in the long run.”
The face of manufacturing is changing quickly, with consumer trends and technologically enhanced efficiency at the forefront. Integrating these new digital solutions into manufacturing processes is what will ultimately set companies apart—and ahead—in their industries.
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