Visit Our Sponsors
Sometimes it helps to get outside for a bit because when you see different things, you see things differently. Not only is that good advice for people, it seems to be a pretty good thing for manufacturers as well.
Preoccupation with internal matters often can blind us to opportunities beyond our four walls. Among the benefits that manufacturers can expect from their new perspective on things are tighter cooperation with partners, better ideas for products and more creative designs for them, and expanded or even new markets to exploit.
At least that is the thinking, in large measure, behind what ARC Advisory Group calls Collaborative Value Networks. What may seem like analyst-speak is in fact a "big idea" designed to encourage manufacturers to envision opportunities that they either have overlooked or have not seen for their full potential.
That's because they have focused mostly on internal operations rather than on outside developments and the innovations they have generated, according to the ARC thesis.
Admittedly, anything that has the word "collaborative" in it is going to sound more old-hat than like a new idea. The entire supply chain world has talked about collaboration so much and for so many years, surely they've sucked the life from it?
Not really, says Greg Gorbach, ARC vice president. The emphasis has generally been inwardly focused, he maintains. Yes, of course, words like "seamless" and "integrated" are equally common and argue that collaboration has indeed been focused externally. But collaboration, more discussed than actually done, has still been largely an inside job, focused on silo destruction. External collaboration, even when done right, generally has centered on one plant or one supply chain.
But we're working in a multiple-plant world now, where enterprises have many supply chains. More importantly, innovations coming from four sources are providing huge opportunities - or threats, depending on your view - and manufacturers are advised to make sure they and their value networks are attuned.
The four drivers, all at work for some time now, behind CVN are the global shift in economic power, which is bringing opportunities for new players; changing workplace demographics; resource and environmental pressures; and innovations in IT, not least of which is social media.
Obviously, no one of these is a new phenomenon, and their individual effects are hardly unknown. It's the potential locked within them as a whole, stemming from the innovations they are birthing, that's important.
Says Gorbach: "Importantly, these forces act on the whole of the business ecosystem, not just the industrial players themselves. This means that innovations throughout the ecosystem will force business process changes for industrial companies."
First, the global economic shift has brought not only new consumers but new expectations. In addition, new sources of capital have been generated that are driving innovation in products, business processes, marketing, sales and delivery - to benefit these new consumers.
Another large and very powerful force is the so-called Millennials, the generation that is quickly replacing Baby Boomers. They are more than just a large pool of potential purchasers of product. More comfortable with technological change, they are driving much of the innovation in that space, and the decisions on technology use and investment in the workplace and elsewhere.
The planet now houses seven billion people or more, and the changes caused by ever growing environmental pressures are enormous, Gorbach says. But they are driving their own set of innovations and opportunities, and manufacturers are remiss if they are not in step.
Lastly, there is the impact of IT development.
How does a manufacturer compete in such an environment? To do so, Gorbach says, "Companies will need to rely more on their value network partners, and the entire value network will need to act in a more flexible and dynamic manner."
Technology illustrates the need for flexibility quite well. Levels of applications that are "integrated to some degree" are no longer sufficient to lend the clout that world-class competitors need today. Innovation in IT has brought us - and by extension, the manufacturers who cater to us - mobile technology, social media, cloud computing, even the so-called Internet of Things.
Gorbach and others have written extensively about the influence of social media, for example on production, but he amplifies on that theme here:
"Social media and the connections that result from that are taking collaboration to a much higher level. The older notion was that collaboration was about sharing information more efficiently and that that would bring more accuracy. All true. But now we're seeing a whole host of trends coming together here.
"One of them is cloud computing. We're seeing it in manufacturing all the way down to the plant floor. It's a natural way to provide access and to collaborate across the entire value network."
Manufacturers operate in ecosystems, whether they realize it or not, Gorbach says. And because their customers use social media and their design partners do as well, they will have to follow suit. Already, mobile devices and applications are used to access analytics on the plant floor and to drive more efficiency there, he says.
But more importantly, these new technologies make working together so much easier. Andy Chatha, president and CEO of ARC, touts cloud computing because of the relative ease with which partners can share information.
"In the past, companies had networks, but who could access them, what you could see or not see - that was difficult to manage. Now, with the cloud, it's much easier to manage a very elaborate network as compared to few years ago."
Companies already have product Facebook pages, but Gorbach says the potential is there for such pages to tie together not only manufacturers but customers, engineers and design partners. "It's already starting to happen, these partners working together from the beginning all the way through."
It's one thing to talk about the role of analytics based on point-of -sale data and other sources: what widgets did customers buy and in what quantities; it's another thing entirely to actually involve customers in the creation of a new product. That innovation is now possible, Gorbach says, and value networks stand to gain from it if they are linked in to the process.
"In my view," says Chatha, "what CVN does is make the customer integral to developing new products. The supply chain manager can go to the customer and say, 'I want you to tell me what you want, I want you to work with my engineers to design exactly what you want, I want to know what your needs are."
Could the next step be akin to the concept that Groupon is built on - a discounted deal offered to people if a sufficient number of folks agree to participate in its purchase? For instance, if you could get enough consumers together to agree to buy a product, would it be possible for them to collaborate with the design and production of the thing?
As Gorbach notes, it's always a bit difficult to know what the landscape will look like when significant shifts like these take place. But why not a Groupon model? It's amazing how getting out can change your perspective on things.
ARC Advisory Group
Enjoy curated articles directly to your inbox.