How Manufacturers Need to Change to Meet Shifting Customer Demands
Ramya Kannan |
In short, manufacturers’ customers are placing more demands because their customers, the end consumers, are demanding more from products, services, and experience.
Ramya spearheads the delivery of business and technology solutions for Industry 4.0 across multiple verticals. While collaborating with customers and partners, Ramya strives to be the catalyst for change by facilitating a shift in perspectives and approaches. 'People' are her priority, with the firm belief in enabling growth through learning and skill development.
Manufacturers today have far more responsibilities to their customers, community, and the supply chain than any other time in history. End users (consumers) are spoiled for choice, making them more demanding with retailers and store operators. That, in turn, puts pressure on suppliers to over-deliver. Gone are the days where making and delivering defect-free products on-time to their customers was enough to keep them happy.
As brands and retailers embrace digital transformation and resiliency, they have created agile supply chains, putting more pressure on manufacturers to provide value and agility or risk replacement by an upstart who plays by the suppliers’ rules.
Here are six reasons why adaptability is critical for manufacturers and how they can capitalize on meeting their customers more than halfway.
Customers Control the Relationship
Product companies that outsource their manufacturing have more opportunities to dictate terms to their suppliers. They will often request multiple manufacturers to customize the design and development process to easily move from one provider to another. While this creates instability for any one manufacturer, brands can easily find enough alternatives to agree to their terms or quickly replace any one provider who declines. It is best to participate on the brands’ terms and over-deliver value as a competitive advantage.
Quick Pivots to Changing Needs
COVID-19 overnight changed the habits of consumers and businesses, which cascaded down the supply chain. Not only did retailers and suppliers need to switch their strategies, but they were also incentivized and encouraged to participate in the effort to keep people safe and healthy.
Some examples of brands participating:
- Estee Lauder produced sanitizers to help protect against COVID-19
- Clothing brands such as Hanes, Gap, Nordstrom, Inditex, and Brooks Brothers produced PPEs to help reduce shortages
- Barcardi’s distilleries switched to ethanol production for sanitizer ingredients
- A Hawaii-based canoe manufacturer pivoted to making face shields
To be a good partner during this time, manufacturers had to make quick changes to their production process, calibrate their production equipment, source and change their suppliers of raw materials, and conduct staff training. None of this is achievable unless a manufacturer builds for agility.
Now, more than ever, there is always another manufacturer making the same product better or replacing it with a radically different product that delivers those functionalities and more.
Analyzing Trends and Staying Ahead
Manufacturers must better understand where the world is going to stay ahead of the competition. What happened to camera manufacturers when people began to use their phones to take most or all photos? They either needed to pivot to building great mobile phones or creating high-definition cameras for professional photography. Those who saw the writing on the wall too late fell behind their more prepared competitors.
Additionally, a manufacturer that can identify a trend before its corporate customers will become a more valued partner and have the first-mover advantage to supply that client with the relevant products and services to sustain and grow business.
Smart and Cost-Effective R&D
Technology can bring costs down as it promotes efficiency and can reduce labor costs. But it often introduces a high initial CapEx before companies can realize those savings. It’s also hard to know which technologies will produce actual ROI. Manufacturers should return to basics by identifying their greatest strengths, focus on areas to sustain their business, and assemble the best technology stack to execute those fundamentals.
Transparent Insights and Analytics
Manufacturers hold many secrets about the efficiency and effectiveness of their processes. While historically, those insights have been considered trade secrets, it has become one of the most valuable assets to share with their customers. The world has become more connected and transparent. Manufacturers who invest in technologies like IIoT, Vision Intelligence, and 5G, and integrate APIs with real-time analytics, will achieve ROI through customer loyalty.
A More Strategic Path Forward
Smart customers are looking for manufacturers who operate as true partners. As described above, customers have designed more opportunities than ever before to move on from any one supplier. While the actual building of products becomes more commoditized, manufacturers can help their customers plot a more profitable and beneficial direction. Customers will forgo short-term cost savings if they believe they will thrive more with any one strategic manufacturing partner. With so many smaller providers bringing niche solutions for specific problems, the ability to aggregate relevant niche capabilities, integrate them to drive business outcomes will be key to becoming a strategic partner.
While today’s environment provides manufacturers with more challenges than almost any other time in history, ample opportunities await those who prioritize strategic thinking, agility, and future-readiness. We’d love to talk to you more about UST can help you prepare for this new world.