Successfully satisfying new market demand

Posted on 26 Nov 2016 by The Manufacturer

Amid the rapid changes driving the current industrial revolution, Diego Tamburini, manufacturing industry strategist at Autodesk, explores what manufacturers need to do to successfully meet new market demand.

In my last column, I considered the key elements that are giving innovative manufacturers the opportunity to succeed and grow. But in order to deliver against these opportunities, manufacturers must take on six new processes and working practices.

Here are my recommendations for how organisations can satisfy new demands in the market.

Diego Tamburini, manufacturing industry strategist, Autodesk.
Diego Tamburini, manufacturing industry strategist, Autodesk.

1.     Empower customers

Customers want to feel special, and are willing to pay a premium for it. This empowerment can take two forms:

  • A more influential role in the development of the products they buy, working side-by-side with the team defining the product. This puts pressure on manufacturers who have to identify ways to make their walls more permeable to the outside world and put processes in place to enable close participation between all parties. But they are also realising the opportunity; not only because it boosts customer loyalty, but also because often the best ideas come from outside the walls of the company. Some organisations (such as FirstBuild, GE, Unilever, and Autodesk) are experimenting with this through crowdsourcing, design challenges, community nurturing, and social listening.
  • The ability to personalise products to meet customers’ unique desires and needs. This is one of the hardest capabilities to develop, as it requires fundamental changes in the way products are designed, manufactured and sold. For some, it may require a shift from mass production to mass customisation.

2.     Satisfy fragmented demand

Manufacturers must position themselves to satisfy a demand that is fragmenting due to shifts in demographics and calls for more personalisation. Mini Cooper is a great example of this in practice, offering hundreds of customisation options which are manufactured by BMW on demand.

To deliver against this fragmented demand, manufacturers must develop the ability to produce lower quantities of more variants and do this as closely to the customer as possible.

This requires two mutually complementary strategies:

  • Flexible manufacturing is about being able to quickly and economically switch from making one product to another, in the same factory. This requires modularisation of equipment (i.e., tools that can be reconfigured and moved around the factory), and utilising processes such as 3D printing and smart robotics that are more flexible and require little fixturing.
  • Distributed manufacturing is about having a network of (smaller) factories strategically distributed to better satisfy the requirements of local markets. These distributed factories could either manufacture the entire product or add late differentiation to a partially assembled product coming from another factory in the network.

Design can also help satisfy fragmented demand, by designing products that are easier to configure, and by reducing the need for custom fixtures and manufacturing operations.

Of course, companies must first understand the concept of fragmented demand. To do this, manufacturers need to connect with their local markets and get insight into their regional preferences and regulations.

3.     Increase agility

Agility refers to the ability to rapidly respond to change, bounce back from disruptions, get innovation to market faster, develop IP quickly, embrace new technologies, and adapt to shifts in the business, economic, or social environment.

Agility must be elevated to a strategic level, as it will increasingly be a requirement for manufacturers to be competitive. For some, that will mean letting go of the models of the past where economies of scale, large manufacturing operations, long product cycles, and mass production were the rule.

4.     Master product complexity

Products are becoming more complex – with more electronics, software, connectivity, and advanced materials. As a result, design requires an unprecedented level of sophistication, and manufacturers must now develop a deep expertise in multi-disciplinary techniques, advanced simulation, new manufacturing technologies and materials.

Complex products require a systems thinking approach to their design. No longer can designers jump from the specs to the definition of the geometry of the product – they must define the architecture of the product (now, a system), understand the interdependencies and trade-offs among disciplines and the interconnection to other systems. In addition, products can now be seen as nodes of a larger network of interconnected products, which communicate with each other to collectively perform a mission. Therefore, optimisation must be performed at the system level, rather than at a product level.

5.     Connect products and build an analytical muscle

By connecting products, manufacturers can not only deliver enhanced customer experiences, but also extract valuable insight from the data their sensors collect.

In addition, when products are connected, it is easier for the manufacturer to update their software. Take Tesla, for instance. The electric-car company has been delivering over-the-air updates to its Model S for years and recently upped the ante with its autopilot update. Deployed wirelessly, the update essentially turns these vehicles into self-driving cars.

This requires building a muscle in data analytics. It is said that “data is the new oil”, and the ability to extract insight from this data is rapidly becoming a competitive differentiator in manufacturing. For example, closely watching customer demand, economic trends, costs, operational efficiencies, and identifying new opportunities. Also the ability to play what-if scenarios of disruptions that could occur to operations, design mitigation and response strategies ahead of time.

6.     Introduce innovative services & business models

By connecting products and collecting data about their performance 24/7, manufacturers can add value by offering attached services – such as predictive maintenance, energy and operations optimisation, and design optimisation. Product-as-a-service (PaaS) is aimed at maximising the use of the product and developing more long-term loyalty.

We are on the brink of the biggest change since the first industrial revolution. These advancements are not only dramatic, but happening fast; we will see more change as a result of these trends in the next decade than many incumbents have experienced in their lifetimes. The winners in the future of making things will be those who can adapt to these changes, embrace the technologies at their disposal, and respond to new demands.