These are times of disruption for every manufacturer operating today. Even as demand has ramped up through the post-COVID recovery, different pressures have injected a new level of unpredictability into the global trading system. Agricultural exports have suffered severe disruption, just as energy and commodity prices have skyrocketed. Michael Ouissi, Group Chief Operating Officer at IFS, explains.
At the same time, ongoing skills shortages across the sector, unpredictable consumer demand and a legacy of the pandemic, have added further uncertainty into the mix. Coupled with all this, the enduring Ukraine conflict has firmed up the sense that disruption to the industry is part of a new normal for the foreseeable future. All this culminates in a pressing need for digitalisation among manufacturers.
Finding a way forward
This disruption places a high priority for manufacturers and their suppliers on supply chain agility and the ability to predict potential weak points and run alternative scenarios. That’s not easy for any manufacturer to deliver.
Many areas of manufacturing are becoming more project-based and more complex. Discrete manufacturers are increasingly involved in complicated order-driven modes like engineer-to-order (ETO) or configure to order (CTO), for instance. And they need to execute these seamlessly and efficiently to differentiate themselves in an increasingly global marketplace. Process manufacturers, on the other hand, will have to deliver mixed-mode production capabilities for a wide range of different processes, from a traditional batch approach to ‘make-to-stock’ and ‘make-to-order’, in combination with line-based repetitive production.
No matter the specific type of manufacturing in question though, the ultimate aim will always be to navigate and orchestrate systems and processes in order to have the requisite agility in place to deliver at that crucial ‘Moment of Service’, when customers want and expect an optimum outcome or service experience.
How digitalisation points the way forward
The good news is that high levels of agility are now within reach of many manufacturing organisations and their ecosystems of suppliers and customers. Increasingly, they potentially have access to the capability to manage the entire lifecycle of their products, gain complete visibility of their entire supply chain and build truly responsive customer service engagement.
All three of these capabilities can be enabled by digitalisation, the true driver of the Moment of Service for the manufacturer’s customers and its customers’ customers. Digitalisation is key in enabling organisations to successfully orchestrate processes, technology solutions and people to deliver a quality ‘Moment of Service’, in which everything comes together to create a positive result for a customer.
Digitally driven manufacturers can also leverage this knowledge to see what the customer wants and use these insights to launch profitable new services. That’s part of a virtuous feedback loop, playing into a servitisation approach where the service that the manufacturer delivers can be continuously refined and improved based on customer responses and reactions across the whole customer lifecycle.
Why technology is crucial but must not be delivered in isolation
The above highlights what digitalisation can potentially deliver, but how can manufacturers best achieve it? Technology will, of course, be fundamental. A cloud-based single enterprise resource planning (ERP) platform approach has the potential to enable manufacturers to collaborate easily and seamlessly across multiple sites.
It could help manufacturers build a platform that would enable scalability in the future, especially across supply chain and production facilities. Beyond this, such a platform could also support organisations in calculating production requirements based on customer demand and feeding the data into their supply chain for more predictability and control over their costs.
Whatever the specific functionality used, however, it needs to be delivered as part of a broader methodology. Manufacturers must at all costs avoid the trap of simply deploying technology for technology’s sake. By making that mistake, they are likely to find themselves running siloed digitalisation projects that end up mired in pilot purgatory and contribute little or nothing to advancing the organisation’s core business goals.
Instead, it is paramount that they first look at the business problem they’re trying to solve and visualise the role they want to play in the market. In other words, rather than taking a technology-first stance to digitalisation and delivering the Moment of Service, the focus needs to be on transforming the business itself to better provide these moments. By doing so, manufacturers will also help to ensure that their investments in new systems and solutions do not go to waste and are instead applied to real business needs, use cases and challenges.
It is vital, too, that manufacturers take their people with them on the journey. In this context, the business needs to focus on good change management, engaging with users and listening to and acting on their challenges, feedback and suggestions.
If they get the right blend of people and technology in place, manufacturers will be well placed to achieve enhanced agility, drive digitalisation and deliver the Moment of Service that will build customer engagement and keep them one step ahead of their competition.
Rising to the challenge
Doing all this won’t be easy, of course. Shipping delays, parts shortages and transportation hold-ups continue to plague manufacturing supply chains. At the same time, manufacturers are ambitiously adding new strings to their bow, as they expand into new markets and modes of operation in the wake of Industry 4.0 – and that brings even greater complexity.
Often, they need different kinds of capability across multiple modes of functionality: from ‘configure-to-order’ to ‘make-to-stock’. And they have to do all this while ensuring that they deliver the optimum service levels to their customers, whether those are wholesalers, distributors, retailers or end consumers, at that crucial Moment of Service.
Technology can act as a catalyst for all this, of course, but as we have seen, it needs to be harnessed in the right way to ensure that its application positively impacts business performance. Doing this will require a culture shift and a dedicated focus on business transformation for every manufacturer.
Change management will be key to keep employees on side and to ensure that everyone is pulling together to use the new systems and solutions to enhance productivity and deliver on business goals. Get all this right and manufacturers will be well placed to effectively navigate the ongoing disruption impacting the market today and ensure that their digital capabilities drive enhanced revenues, profit performance and business growth.
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