Four steps manufacturers can take today to be ready for the future
- Posted on April 3, 2020
- Estimated reading time 3 minutes
To say that times are challenging for manufacturing is an understatement. The last year has seen manufacturers navigate tariffs, a trade war between the U.S. and China, and now the unfolding tragedy of the COVID-19 pandemic.
Amid all this uncertainty there is one certainty: some manufacturers will be positioned to bounce back and thrive in the economy that emerges from these tumultuous times and some won’t. How can you prepare your company to emerge as one of the winners? It takes more than broad talk about digital transformation. Here are some ideas to consider:
1) Incorporate manufacturing for social good into the fabric of your company
Tom’s Shoes, Patagonia and Lego have been among the companies leading the way in a trend not only to make great products, but also to give back to the community. And while it’s difficult to point to anything good arising from the COVID-19 crisis, I recently highlighted two examples of companies that rapidly adapted their manufacturing facilities to help in the front-line battle against the virus. French fragrance manufacturer LVMH and Scottish craft beer company BrewDog are both now producing hand sanitizer and providing it at no cost to medical care providers and others in need. These are inspirational examples of how every manufacturer can pitch in not just to aid in the fight against COVID-19, but to help make the world a better place. Need some inspiration? Annie Bright recently wrote an excellent article on what it means to be a socially responsible company.
2) Modernize your business applications
Manufacturers know that data and analytics is a crucial investment area over the next few years. However, manufacturers sometimes overlook the key role that business applications – such as ERP, CRM and SCM – should play in their data strategy. Business applications are the life blood of your business, your primary transactional components, the tools your people need to do their jobs – and the single biggest source of data your business has. They contain information about your customers and what they buy, your products, your suppliers, your assets, everything.
Sadly, most manufacturers are still running on decades-old, on-prem, legacy business applications that are hard to use and harder to get data from. As a result, they keep too much data in side-systems, spreadsheets and people’s heads. Today’s cloud-based business applications are vastly more functional, usable, scalable and perhaps most importantly, accessible. They can support your business strategies by greatly reducing costs and, even better, enabling your entry into new markets, new products and new lines of business. According to recent Avanade research by Vanson Bourne, 94% of industrial equipment manufacturers (IEMs) agree that their marketing, ERP and CRM systems are no longer fit for purpose. If you aren’t in the other 6%, you should seriously consider an overhaul of your business application systems.
3) Invest in your people
If you’re like most of the manufacturing executives I meet, your biggest struggle is people, specifically, having enough people with the skillsets your company needs to thrive in a digital economy. Findings from our research indicate that the most common blocker for implementing digital transformation is hiring and training the right people to implement the transformation (cited by 46%). That’s a daunting obstacle given the new roles that workers need to master in the modern, technology augmented manufacturing facility. Yet, while most executives complain about it, too few do much about it. If that’s also true of you, now is the time to change that.
Technology tools offer a tremendous opportunity to build the workforce you need to compete in a global, digital economy. Use augmented and virtual reality to create immersive learning environments to train, upskill and reskill your workforce without the time and cost of travel. Offer incentives and programs to your retiring baby boomers to transition their experience and knowledge to the next generation of workers. Collaborate on training with your key partners to ensure that employees are using those partner products and solutions effectively. Start a co-op program with a local college or trade school. It’s time for manufacturers to get creative in identifying, developing and retaining top talent.
4) Build a culture of innovation
You know that innovation is crucial to gaining and maintaining competitive advantage as a manufacturer, from improving current products and creating new ones to finding and developing new talent and new markets. So what are you doing about it? Innovation isn’t only a technology issue; sometimes, it isn’t a technology issue at all. Innovation is a multifaceted issue but surely one of those facets is culture.
You need a culture of innovation and you need it to start with top management. One company I know directs each employee to dedicate 20% of his or her time to innovation; that’s a commitment that can only come from the top. Another company created “innovation pods” – physical areas where employees can gather to brainstorm ideas. An innovation culture must be a fast-fail culture, in which failure is accepted as an important learning exercise on the route to success.
The innovation culture must be broadminded enough to look outside of manufacturing for inspiration; smart manufacturers can gain crucial ideas from retail, healthcare, financial services and other industries. Innovators also collaborate with key partners to drive innovation. For example, Avanade offers free Innovation Days, which are collaborative design thinking workshops designed to brainstorm solutions to our clients’ key challenges. Innovation is much more likely to happen when a company creates a culture that motivates and rewards its people to find creative ways to improve.
No one knows for sure what the future of the remainder of 2020 has in store for manufacturers, much less the years to come, but we do know some of the key steps you can take to be ready for change, whatever that change looks like. Avanade brings together the right mix of strategy, industry experts, experience design, advanced technology and a proven approach.
We welcome the opportunity to help you develop a future-ready solution to achieve your manufacturing business objectives.