My daughter doesn’t remember Blockbuster. She’s part of Gen Z and, quite frankly, there’s not much to miss about the old way of consuming content. Back then, if the store ran out of a hot new release, you were simply out of luck.
Now, content can be digitally transmitted as bits over the Internet. Netflix was the first to drive this media-streaming craze that would enable consumers to receive video direct to their device of choice, providing instant gratification, and large volumes of data, which streaming service providers can analyze to anticipate what audiences will want to watch next—and put it into production.
In this post-pandemic era, the rate at which we demand and consume items dramatically fluctuates. Manufacturers must keep pace, adapting to the volatility and continued disruptions. To do this effectively, they need a manufacturing cloud enterprise resource planning (ERP) system that facilitates a digital “signal chain” to connect the demand and supply chains, synchronizing them with production capacity to meet customers’ ever-changing needs.
Before we jump into what a signal chain is, let’s consider why it’s needed. Today, mega trends—or powerful, transformative shifts—are afoot and have the potential to dramatically affect our business strategies and where we apply technological innovation.
In addition to ongoing supply chain disruptions, the tight labor market and financial pressures driven by inflation and the economy, we must also keep an eye on three customer-centric trends that affect our business.
1. Continuous Monetization
Today, the fulfillment of an order is just the beginning of what manufacturers hope will be an ongoing customer relationship. Many manufacturers have been moving to a recurring-revenue model. Once items are sold, the manufacturer still wants to monitor the health of its products.
For instance, does the product require servicing, repairs or maintenance? If it’s a printer, is it about to run out of ink or require spare parts, such as a new drum? Tracking this information requires a modern cloud platform to receive signals from other systems via Internet of Things (IoT) sensors. And that data feed—or digital signal chain across all stakeholders—will allow companies to successfully transition to a managed services model rather than a one-and-done sale.
2. Mass Personalization
At the same time, customers don’t want generic or highly commoditized goods; they want something that’s tailored to their needs. The consulting firm McKinsey & Company researched this personalization trend and reported that 71% of consumers expect companies to deliver personalized interactions, and 76% get frustrated when this doesn’t happen. They also found that “companies that excel at personalization generate 40% more revenue from those activities than average players.”
3. Dynamic Responsiveness
In volatile times, manufacturers want to be able to track leading indicators that point to emerging threats in their markets. For example, they want immediate alerts if there’s a disruption in raw materials from a supplier, or if a salesperson has received a particularly large order. With this information, a manufacturer will know when to adjust production plans or source other suppliers.
As we saw during the pandemic, a manufacturer might have to make an immediate shift, such as drastically reducing production of a particular item, bringing a new product to market or manufacturing the same product in a different way to accommodate shortages.
In this dynamic environment, legacy systems can’t keep pace because they’re disconnected and unable to receive signals from different stakeholders across the industry. Instead, manufacturers require connectivity among applications, business units, and service providers.
In our content-streaming example, we saw how innovation was applied to a unique customer experience. Through a digital makeover, an industry became continuously monetized with a subscription model and personalized offerings.
Manufacturers must apply similar principles to their product-centric businesses, where boxes still roll off factory lines. And by “boxes” I mean any final product, whether it’s a mobile phone, hybrid car or heavy industrial equipment.
Over the last 20 years, most innovation related to customer demand. Organizations worked hard to simplify and automate the proverbial “buy now” button so customers could easily select, pay for and have items shipped to them. As a result, this side of the house has been digitally transformed and is making good use of “bits” as digital signals to help them move boxes of their finished product.
However, manufacturers still have a long way to go to optimize supply chain and production workstreams to be at that same level, as well as to have these streams connected to demand. But once it’s achieved, they’ll have a competitive advantage and be able to quickly adapt to shifts in the market. Connecting a signal chain across these functions will enable this to happen.
To build this digital signal chain, manufacturers need to bring demand chain, production capacity and supply chain functions together on a unified cloud platform. This platform comprises both ERP and CRM solutions, so it must be rock solid in terms of reliability, performance, scalability and security.
On this platform, the ERP solution must be purpose-built for manufacturing so it can enable manufacturers to receive signals related to all of their operational areas including engineering, production, supply chain and inventory. The modern ERP solution acts as the centralized hub to manage and shift production schedules and supplier relationships as needed.
The ERP solution natively connects and exchanges digital signals with the CRM, which is part of the same platform. Disjointed silos of information are eliminated, as the digital signal chain benefits from end-to-end platform connectivity and a complete 360-degree view of the business.
While Blockbuster made a last-ditch effort to level the playing field with Netflix by offering a DVD subscription service, the change was too little too late.
Similarly, manufacturers can’t take half measures by trying to stick legacy applications on the cloud and expect to solve today’s problems with yesterday’s technology.
Instead, a true signal-chain manufacturer must select a platform that runs all the way from the frontend to the backend of their business—from demand to supply.
The manufacturing cloud ERP serves as the intelligent hub that empowers leaders to leverage one dynamic source of truth. They can actively interpret and act upon all the signals they receive.
These insights help them adapt and succeed in a volatile market. And the result is a highly desirable one, as they’re better equipped to compete and thrive, and they’re less likely to end up like Blockbuster. This approach is something my daughter would agree with; as she would say, IYKYK (if you know you know).
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