How to drive efficiency and unlock new opportunities
Your manufacturing sector is changing
The world of manufacturing is changing at a rapid rate and inevitably, there will be winners and losers.
Firstly, climate change and the security of supply of raw materials are a growing concern for many businesses. 80% of manufacturing executives view raw material shortages as a key business risk. Closely linked to this is price volatility, which is worrying enough to make a business stop and listen and look for ways to decouple from raw materials
Secondly, rapid development in technology with the introduction of instant reporting, 3D-printing and robotics is creating a huge divide in the capacities and outputs of manufacturing businesses. This requires businesses to stay abreast of technological changes with the requirement to continue to adapt to new developments.
And finally, the world is more interconnected than it has ever been. This provides a huge opportunity to extend to new markets, but it also means that the competition is global, creating even a greater need to continuously learn, develop and adapt.
Compounding to these three challenges is also the fact that a growing number of customers prefer access to services over product ownership. Spotify and Netflix are modern day entertainment examples where customers no longer desire to own a CD or a DVD but are willing to pay for an ongoing subscription to receive digital content.
What does this mean for manufacturers?
These fundamental challenges and the changing consumer behaviour is demanding manufacturers to rethink how they view the products that they produce. Rather than viewing their product as a static creation, businesses are now considering about how that product will be used throughout the customer journey.
Rather than viewing their product as a static creation, businesses are now considering about how that product will be used throughout the customer journey.
For example, in the Netherlands leading developers to increase the value of their proposition by thinking about the productivity of people using the buildings they develop, rather than viewing the property as an empty shell.
These businesses have also been able to unlock new business opportunities by rethinking about how customers will use their products rather than just thinking about a static end product.
- Rolls Royce – keeping you flying. Rolls Royce TotalCare takes away the task of maintenance from their customers and transfers it back to the business. Total care is charged on a fixed rate per flying on an hourly basis, so they are only rewarded for the engines that perform
- Ikea partners with Task Rabbit – some of us are DIY champions and others are not. For those that do not get satisfaction out of assembling flatpack furniture, or you simply don’t have time to do it, Ikea has thought of you. The business has teamed up with Task Rabbit service platform that will match you with a tasker to assemble your furniture
Not only are businesses switching from seeing what they produce as a service rather than a product, they are also looking for a way to reduce their dependency on virgin materials and fossil fuel in order to reduce cost and supply chain risk. For example:
- Precision Marketing – Suffolk based business, Precision based marketing generate a lot of heat from the printers they use. The businesses decided to harness the heat through a heat recovery system allowing them to reduce energy cost and their environmental impact -a double win
- Apple – have established a closed-loop supply chain goal. The business is working towards recovering the raw materials such as tin used in their phones and to recycle these into new phones
What should you do next?
If you haven’t already started to, you should be reviewing risk and opportunities that climate change, technology and globalisation are presenting to you. By adopting a more flexible way of thinking about the products and services you provide, you can adapt and turn risks into opportunities.