Author: Tronserve admin
Wednesday 28th July 2021 11:18 AM
4 Misconceptions Manufacturers Have About Digitization
The manufacturing industry has long been one that's content with a satisfactory status quo. There's a defined way of operating within the supply chain that has performed well enough, for the moment, leading many manufacturers to think digitization unnecessary.
With product lifecycles getting shorter and levels of competition tightening among industries (even among players within the supply chain), manufacturers can't leave well enough alone for longer. However, many are choosing complacency over improvement, in part because of a handful of widespread myths about what it means to embrace digitization, how manufacturers can benefit, and whether the cost-benefit scales tip in manufacturers’ favor.
Here are the top four most common misconceptions - and why they don’t hold true.
No. 1 - Our Current Way of Working is Fine As-Is
Manufacturers, along with distributors, wholesalers, and retailers, have struck what seems to be perfect balance. Each partner carries their share of the production, distribution and sales operation, and as a result, gets a share of the profits.
The landscape of B2B buying, then again, is changing. Customers want more self-service options, more competitively priced products, and a shorter timeframe from purchase to delivery. By shorter, they don’t mean marginally faster; they have expectations molded by “The Amazon Effect” and they want their products as close to instantly as is possible.
Today, before a B2B customer ever calls a prospective supplier, they've already finished as much as 70 percent of the buying process (beginning with online research). What this means is that your internal team is largely getting cut out of the equation, and you have to find new ways to cater to customer needs during the first three-quarters of the buyer journey. The clear answer is e-commerce.
No. 2 - E-Commerce is An Unnecessary Risk (and Cost)
With e-commerce, you can lay your business back in the forefront of your customers’ minds. Aside from this potential, however, many manufacturers keep on being unconvinced. Unsure that e-commerce might be more than an extraneous part of their business strategy, many of manufacturers dispute that the fee for implementing and maintaining an e-commerce experience is too much. Furthermore, they argue that this cost may not be justified. What gain can they be assured from launching a web store?
The successes of manufacturers who do have a web store can speak for themselves.
Due to the direct-to-consumer (D2C) e-commerce sales, 82 percent of manufacturers selling directly to consumers enhanced their customer relationships, and 76 percent improved customer experience.
Just the past year, around one-third of B2B consumers purchased right from a brand manufacturer’s website, specifically due to more comfort, better product quality and faster, more reliable delivery.
What this tells us is that there is a hole to fill. E-commerce can not only make you money, but it will make you the go-to choice for customers who are disappointed with retailers’ and resellers’ e-commerce experience. That is an invaluable reward.
By selling online as a manufacturer, you are satisfying the increasing number of consumers who already want a way to sidestep third-parties and resellers, and you are giving your purchasers a way to engage with and interact with your brand on-demand anytime.
No. 3 - Direct-to-Consumer (D2C) Sales Will Hurt Our Channel Partner Relationships
When it comes to the distribution of profits within the supply chain, the reality is that mostly, distributors make a large share of the overall revenue. With third-party retailers also marking up the price of goods, it is very clear that the supply chain has started becoming a unit of businesses looking out for their individual best interests. Unfortunately, it also means manufacturers are getting the short end of the stick from the start, and then not making any more profit from the products they are creating, even when there is more end-revenue up for grabs.
There's definitely a way to keep the supply chain harmonious, profitable, and efficient, and it starts with getting D2C sales right. Thankfully, some manufacturers have already gotten started (and are already reaping the benefits). This doesn't mean, nevertheless, that channel partners can’t win, too.
Within the supply chain, distributors, manufacturers, and retailers have got to work together, profit individually, and provide a strong product and experience for the end-consumer. Fortunately, there are numerous ways they can do so, and they've already begun to strike this balance.
Approximately half of manufacturers feel that a D2C model has increased the flow of incoming leads for their channel partners and has resulted in a growth in sales. The key to success is to understand the most efficient use case for each channel partner. Boost productivity and profits by moving order fulfillment for larger orders through to distributors and retailers. Let manufacturers fulfill orders for lower-volume inventory items or test the success of new products before passing them along to retailers. Realize where your players’ strengths are and act appropriately for the best outcome.
No. 4 - Emerging Technologies, Like the IoT and M2M Innovation, Are A Better Fit for B2C
It is true that B2C brands, particularly retailers, are mostly the first to ride the digital innovation train. They are often the leaders for carrying out emerging and unperfected technology into the core of their sales strategies in hopes of capitalizing on the bulk of early-stage profits. This does not mean, however, that manufacturers don’t have a strong use case—and maybe even a better use case—to do the same.
The Internet of Things, 3D printing, cloud-based technology and artificial intelligence (AI) can help in with supply chain visibility, with the removal of organizational siloes, with forecasting for product production schedules, and with automating processes (especially in warehouse management).
Intelligent technology fosters intelligent, informed, and purposeful business. Use these growing technologies to create a digital ecosystem of real-time and predictive data. Then, use that ecosystem to find out the streamlining of most current processes and shape future approaches to product development and distribution.
Just like most businesses dabbling in a trial-and-error approach to a strategy that’s not a surefire quick win, it is possible that lots of manufacturers adopting emerging technologies will never succeed right away. Nevertheless, taking the first step to digitization is required to setting up the foundation for a future-facing approach to manufacturing. Getting a head start on being even a single beat ahead of the competition, in such a tight race, can make all the difference — and it all depends on the right investment (financial or otherwise) in digital.
This article is originally posted on manufacturing.net