When you think of pioneers in digitisation, manufacturing is usually not the first industry that comes to mind. Retail, banking, travel, media and entertainment were among the first to set up digital channels, digitise their internal processes and cater to the new needs of the demanding customer. Manufacturing companies were mainly focusing on improving their supply chain and workforce productivity. It’s high time manufacturers also started taking a customer-centric approach.
The way consumers are using digital in their daily lives has changed enormously over the last five to ten years, and even more so the last six months. Many industries have jumped on the digital bandwagon too. Airlines and travel have undergone massive transformations in their customer journeys and have invested heavily in the user experience. Even tightly regulated sectors like insurance, healthcare and pharma have innovated with an emphasis on service and customer experience. While all these industries are looking outward, manufacturing has mainly been looking inward. The Internet of Things (IoT), Artificial Intelligence (AI) and Robotic Process Automation (RPA) are already receiving significant investment from large manufacturing companies. But many medium-sized manufacturers are still using systems & processes that date back to the previous century and this applies in particular to their sales and marketing activities as well as the connectivity required between their sales, production & channel partners.
Being easy to do business with
Of course, many manufacturing companies are five or six steps removed from their end-users, particularly if they are a component manufacturer. In B2B too, the customer has changed. B2B buyers do a lot more research online, comparing offerings and expect the same kind of user experience as an individual consumer does. This customer experience is influenced by many factors, but many centre around how easy it is to do business with a company. This is not just about sales and marketing being customer-focused instead of product oriented. It’s also about being transparent and consistent on pricing, and sending invoices and credit notes that are easy to understand. Digitisation in manufacturing has to happen across all systems and processes, from sales and marketing to supply chain and all back-office functions. Each of these functions has to be digitised and transformed, without forgetting to build all the connections between front office and back office.
No rip and replace
The good news is that many organisations already have a lot in place and can switch gears quickly. When consumer packaged goods organisations like Heinz lost some of their sales channels due to the COVID-19 lockdown, they set up different routes to market, for instance by putting in place an eCommerce solution for direct-to-consumer. For Heinz, this meant launching Heinz to home. The same happened with chocolate retailer Lindt in Canada, which had to close their 50 shops and went online. They didn’t have to spend millions doing this, they could simply use capability that was already prebuilt. What it did require, though, was a more customer-centric approach on how they were organised. No rip and replace required. All that is necessary to make this move is to realign their focus on a go-to-market strategy that is centred on how to serve customers better and how to sell goods and services to them, with less emphasis on productivity, quality and unit cost.
Technology and vision
You may wonder if in this day and age it is a good moment to invest heavily in digital capabilities. I would argue that it is. In the past, when we had crises of this nature, those organisations that invested in customer-facing technologies were, in general, able to accelerate growth and profit at a greater rate than their peers who didn’t. Research from McKinsey on the repercussions of the 2008 financial crisis shows that 13% of enterprises fared better post-crisis. Why? They were prepared, had to optimise, built a solid infrastructure, were more agile and had seen the next wave coming. There is always a next wave coming, so companies should prepare. Becoming more customer-centric is not merely a technology exercise that needs big investments, it is also about hiring and retaining digital talent, creating ambition and vision at board level and – let’s not forget – change management and user adoption.
The winning manufacturers of tomorrow will be the companies that develop a mature vision and drive it throughout the organisation, installing the right technology that enables that vision and hiring the right talent to make the vision come true.
All these elements have to be put in place if companies are going to survive. The pace of change is increasing, and companies can become obsolete in a matter of years. Companies that are heralded as the number one today, may be struggling tomorrow if they take their eyes off of what the customer wants. The current COVID crisis has only accelerated the move to digital. For companies that have not started their digital transformation yet, there is no time to waste.