This article was written before COVID-19 became a global pandemic. As the virus continues to spread, the priority for everyone must, of course, be on staying safe and well. Yet there’s also no escaping the fact that the crisis is testing manufacturing companies in ways that few will ever have experienced before. Though not written specifically with the coronavirus in mind, I strongly believe that the networked approach outlined below can help manufacturers navigate these unprecedented and challenging times, and give themselves the best possible chance of emerging with their business intact and ready for the future.
A networked ecosystem can help firms engage with clients in a very different way, deepening … [+]
Any customer can have a car painted any color that he wants so long as it is black. Those are the now-famous words of Henry Ford, uttered in 1909 in reference to his company’s new Model T. Ford believed that by minimizing changes to the car during production, he could reduce the factory hours required to make it, keep the price low and catapult motor vehicle ownership into the American mainstream.
He was right, too. The Model T was an unprecedented success, with 15,000 orders placed within days of its release. Yet fast-forward to today and would Ford’s rigid approach be as effective? Can manufacturers afford to take such a linear view of how they serve their customers?
The simple answer is no. Rather than operating under the traditional B2B, B2C or even B2B2C model, today’s manufacturing companies should now see themselves as part of a network. An integrated ecosystem of business partners — from suppliers and parts manufacturers to OEMS, distributors and dealers — all working together to meet different customers’ individual needs.
This customizable, networked view of the value chain would no doubt have sounded ridiculous to Henry Ford in the early 1900s. Yet, adopting it may ultimately prove to be as transformative for modern manufacturers as the Model T was for his own business back then.
Why? Because it can help firms engage with clients in a very different way, deepening relationships, personalizing interactions and, ultimately, meeting customers’ expectations of how a product is developed, the way they buy it and the service they experience afterward.
Let’s take those three elements of the value chain in order …
Crowdsourced product development
In a networked ecosystem, product development is no longer about feature and function. It’s about fostering an atmosphere of collaboration between OEMs, distributors, dealers and customers to create innovative products that meet a genuine end-user need.
Here, social media can be invaluable, letting manufacturers crowdsource a diverse range of product viewpoints and ideas that target the real expectations of customers. A great example is Local Motors’ recent approach to creating its new Strati, billed as the world’s first 3D-printed car. Rather than being designed behind closed doors by engineers, the Strati is the result of a worldwide collaboration between the company and its community of fans and customers.
Approaching product development in this more integrated way also carries another benefit. Namely, it gives manufacturers greater visibility of the full supply chain. This allows for more flexibility, agility and resilience when faced by uncertainty in the marketplace. It can also help firms better manage shorter-term crises in supply and demand, such as the one currently being experienced by makers of necessity items like toilet paper, baby formula and sanitizing products.
Differentiated buying experiences
The sales process must evolve, too, reaching far beyond just getting customers to sign on the dotted line. Instead, it means creating a differentiated, more customized experience of buying – a great example of which is “available to promise” delivery.
Historically, manufacturers have tended to make stock to order, an approach that often leads to lengthy, unpredictable delivery wait times for customers. Yet companies can now leverage cloud-based analytics across their network to understand the various elements involved in getting a product into the hands of the end user and, crucially, how long each one will take.
Consequently, they can offer (and fulfill!) far more precise delivery timings — whether that’s a new sofa for a homeowner or a set of air conditioning units for a building management company.
This is a genuine pain point for customers, most of whom simply want to be assured they will get what they want when they want it. Delivering on this need can therefore have a highly positive impact on the overall purchase experience and help secure their long-term loyalty.
Enhanced aftersales services
While product development and sales can help bring customers into a manufacturer’s ecosystem, the after-sales experience is where firms can really build the so-called stickiness in that relationship.
A great example is using data analytics tools to predict a product’s maintenance and performance, thereby meeting expectations around self-diagnosis and self-repair while offering ongoing touch points with customers throughout a product’s life cycle.
So, just as we’ve all become accustomed to downloading software updates on our mobile devices when prompted, an elevator manufacturer could use product data to determine when a large hotel customer’s elevator motor is approaching the end of its life. They could then work with a business partner to proactively alert the hotel and conduct the repair before the elevator breaks down — a service that delights the customer and keeps the relationship in good health.
Accelerating customer value
To be clear: this isn’t about first mover advantage. Many manufacturing companies — particularly in the automotive and consumer goods industries — are doing much of what I’ve described already.
Yet even here, large-scale adoption remains in its infancy. The winners will therefore be the manufacturers that accelerate and leverage their ecosystems quickest. The ones that truly break down functional silos between “product people,” “sales guys,” “service providers” and the like, and instead unite everyone in improving customer value from beginning to end.
For those companies, the future isn’t based on the old linear models of B2B, B2C, et al. It’s a network. And it has customers, not products, at the center.
The views expressed are those of the author and not necessarily those of Ernst & Young LLP or other members of the global EY organization.