The Rise of Disruptive Factories: How to Adapt and Grow

The era of customer-driven manufacturing is here, and with it comes the need to rejuvenate and re-engineer production from the shop floor to the top floor.

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Louis ColumbusLouis Columbus

The era of customer-driven manufacturing is here, and with it comes the need to rejuvenate and re-engineer production from the shop floor to the top floor. High-performing manufacturers are at the forefront in addressing customers’ higher expectations for product quality, order accuracy, flawless fulfillment, and suppliers’ ability to handle short-notice production runs. These companies are proving that when customers drive disruption of the manufacturing status quo, everyone wins—from suppliers to service providers.

Customers are Moving Decisions and Interactions Online

At the heart of customers’ increased expectations for manufacturers is a wide move toward conducting business online. Consider the fact that 74 percent of business-to-business (B2B) buyers research half or more of their purchases online before ever contacting a sales rep, according to Forrester. Moreover, Forrester has found that 68 percent of B2B buyers prefer doing business online versus with a salesperson, and when they engage with sales, they want that experience to be in a more problem-solving, consultative experience.

It’s also worth noting how Amazon, an early innovator in publishing customer reviews alongside products for sale, has extended this model to the B2B world. Amazon Business launched in April 2015 and amassed more than $1B in revenue in a year; by July 2017, the company announced it was actively serving 100 million U.S. business customers.

Today, B2B buyers are more informed and knowledgeable about product alternatives. They also rely more on their phones to research products needed for work projects and even configure customized products for their companies’ needs. All this happens before a company is ever contacted or a salesperson ever e-mailed or called.

At the same time, business customers’ online purchasing experiences are creating an entirely new level of performance expectations, which many legacy enterprise resource planning (ERP) systems hinder manufacturers from delivering. Customers expect Amazon-like agility and speed from any channel they use to interact with a manufacturer. They also want the freedom to interact with a manufacturer through any channel, anytime, and get consistent, contextually relevant results. Finally, B2B customers expect to be collaborators in creating the products they need, and they require a new level of transparency from the manufacturers with whom they work.

Too often, legacy ERP systems fall short in enabling manufacturers to meet customers’ expectations because they are not designed to respond quickly to unexpected, unfamiliar and unforeseen dilemmas with the fast, smart decisions that new digital business models need to succeed. That is why high-performing manufacturers increasingly are augmenting their ERP systems with analytics, business intelligence (BI), and real-time monitoring.

Real-time Insights Empower Manufacturers to Respond to Customer Demands 

The fastest-growing manufacturers realize that this is the era of customer transparency, and have successfully re-engineered their systems to deliver real-time updates on orders, quality levels and welcome real-time feedback on their products. While updates delivered via secured dashboards have long been provided by manufacturers, providing immediate, quality data is relatively new, and it is revolutionizing the manufacturers' relationships with customers.

For many manufacturers, combining real-time monitoring and analytics is the key to gaining greater insights into improving product quality and delivery while providing customers with the information they need. According to a survey of 151 manufacturers conducted by Decision Analyst on behalf of IQMS, 81 percent of respondents said real-time monitoring is improving their business.

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Real-time monitoring provides the continual data stream that analytics and Business Intelligence (BI) applications need to provide greater responsiveness to customers. In working with manufacturers, we’re seeing the fastest-growing companies excel at orchestrating real-time monitoring, analytics, BI and quality management into entirely new workflows to support evolving customer requirements.

Among manufacturers surveyed, 52 percent say real-time monitoring improves scheduling accuracy, and 48 percent report that it enables better levels of inventory control. Other benefits of real-time monitoring include enabling plants to improve production plan performance (40 percent) and order-to-fulfillment cycle times (37 percent). Also, 34 percent of respondents reported that they improved their track and traceability accuracy by having real-time data on production runs.

How real-time data is delivered is also important. Today, 42 percent of survey respondents say that having access to real-time monitoring and quality data on mobile devices is essential to operating their business, and that percentage is expected to only grow in the future.

Capitalizing on Customer-Driven Disruption Drives Growth

The survey conducted by Decision Analyst on behalf of IQMS found that 27 percent of manufacturers across 14 industries are exceptionally good at capitalizing on the disruption customers are causing today. These companies, which are growing revenues at least 10 percent faster than their peers, are successfully orchestrating diverse technologies to accomplish their core business vision and make product quality their highest priority. In short, they are concentrating on how they can excel at exceeding customer expectations in every interaction by building systems that flex with their needs.

The customer-driven disruptions in manufacturing today are a wake-up call for companies to concentrate on collaborating more closely with customers and understanding in real-time what is happening, from the shop floor to the top floor. A new generation of B2B buyers is savvier, always looking for substitute products that can help their businesses grow. These buyers are the most loyal to manufacturers willing to collaborate by providing transparency in everything from order status to product quality.

Legacy ERP systems were all about looking from the outside in. But meeting the demands of B2B customers requires augmenting ERP software with real-time monitoring, analytics, and business intelligence functionality in addition to manufacturing execution system (MES) and quality management systems (QMSs). By bringing these capabilities together, manufacturers will be able to look outward from the shop floor to customers and provide them the visibility, collaboration, and responsiveness they expect.

Louis Columbus is principal at IQMS.

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