The industry is facing several radical challenges that are forcing us to take action. For years, we have stood out in operational excellence, making processes run smoothly within the walls of the company. The real challenges now come 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 backdoor of retail chains, webshops and wholesalers with pallets full of new stock. More and more often, however, this back door remains closed. Shops become front portals that send their suppliers directly to the end customer’s address to deliver the products ordered online. The manufacturing industry itself is also on the move. New technology creates opportunities to develop other sales channels. The gap between production, sales and front door is becoming smaller than ever. Welcome to the world of omnichannel.

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

This also has implications outside the walls of the company. You get more delivery addresses, where you deliver relatively a lot less. Chances are you will need the help of several logistics service providers. Moreover, everything has to be 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, these developments have an impact. Business buyers are also ordinary consumers, who can easily compare the process of ordering from your manufacturing company with that of Apple, Adidas or Philips.

Anyone visiting a product page of these online brands will find an excessive amount of information. From beautiful product photos and elaborate descriptions to online reviews and specifications. Everything to compensate for the lost benefits of ‘physical shopping’ online. This product information is not only found on the websites of these brands. Platforms like Amazon or Zalando depend on the same input to sell these brands. The result: the quality and completeness of the related product information determine the value of a product.

This trend also affects the manufacturing industry; we are becoming an information trader alongside a product trader. The faster and more complete you can provide your data, the more valuable our 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 platform to 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 been successful as an ‘isolated’ company, but now you are more and more dependent on partners and platforms.

To remain competitive in this rapidly changing world, companies need to focus on their core business. This requires clear choices, also from a technological point of view. Do I develop my own technology, or do I buy it externally? Where is the balance between wanting to be unique and facilitating growth?

Whereas in the past, most companies carried out most of the activities by themselves, we now see the opposite. Today, companies only carry out a limited part of the primary production process, and search for key partners to carry out the majority of the processes. Good cooperation is crucial: you are forced to think outside the walls of your own company. Successful manufacturing companies seek cooperation with each other in order to make a stand against the competition. For example, by reflecting together on the development of a sales platform or e-commerce channel. Or by introducing standards for data exchange that prevent costly interfaces.

About the author

This article was written by Ton Hagens, Managing Director at our sister company Pulse Business Solutions in The Netherlands. Pulse has built a strong reputation future-proofing production, trading and service companies, by optimizing and supporting business processes using software based on the Microsoft Dynamics 365 platform.