The manufacturing industry continues to evolve and transform at an accelerated rate. Nowhere is change more pronounced than in commerce. Virtually every aspect of B2B commerce—from consumer pressures to sell direct, to the advent of IoT and smart products—is being impacted. Manufacturers have to prepare for the disruption hitting the industry if they are going to stay ahead of the game.
With so many pressures and influences, it can be challenging to determine how to set the strategy for manufacturing commerce in the coming year. In this article, I’ve highlighted the top 8 disruptors for manufacturing in 2019, and ways for forward-thinking, adaptable manufacturers to turn the potential obstacles into competitive advantages.
- The demand for more direct to customer sales is creating more pressure than ever before, and much of this pressure is being created by the need for self-service capability.
B2B customers expect the same kind of self-service capabilities they’ve grown used to in their personal buying experiences and they are demanding it from manufacturers. In return, manufacturers are realizing strong benefits from the data gathered during these transactions. As these pressures continue to increase, manufacturers must consider removing distributors from buying cycles where they can no longer provide value.
- There is more channel disruption overall.
To stay ahead of the first disruptor, every manufacturer should be evaluating their distribution channels for return on investment. Are they still adding value to the buying process? It’s important to consider where and when specific channels are needed. When ROI is not evident, perhaps a manufacturer needs to choose a direct path to sales. For others, it may be time to put higher pressure on each channel to deliver stronger digital experiences and perform against carefully chosen metrics.
- As more manufacturers go “direct” a new disruptor is emerging in the form of logistics challenges.
Commerce now has to support not merely a few delivery locations, but the complex needs of direct to customer with products being delivered to many locations, often within a single order. This added complexity impacts not only order management, but warehouse management and every system that interacts with delivery and returns. Manufacturers need to be constantly evaluating their need to find or expand use of sophisticated distribution centers to handle an increasing volume of direct to consumer transactions.
- Disconnected data is arising from Amazon-only approaches.
Although an Amazon-only approach may seem like an attractive option to handle logistics, it’s not a good idea as it doesn’t move the manufacturer any “closer” to the customer in the buying process. And this can add to the disruptive influence of what is known as “disconnected data.” Many manufacturers already have outdated ERP systems, antiquated quoting mechanisms, and old technology in general. Often proprietary stacks operate within silos that do not allow for data sharing, let alone strong data management. Any manufacturer attempting to compete with an outdated tech stack should be evaluating commerce systems that are built for B2B. It is crucial that the commerce system selected can provide native B2B functionality, easy integration to ERPs and other backend systems, and the ability to scale and extend along with the business.
- Sales enablement will disrupt the commerce process for manufacturers where good data management does not exist.
This is just one of many disruptors that track its origins back to information and data management as well as operational efficiency. Just as the distributor must provide value, manufacturer representatives must also provide strong value – or they risk becoming obsolete. Sales people must have a view into all the data involved in a buying transaction, whether it’s online or off. The reality is that most B2B commerce buying cycles are a hybrid experience of self-service and full-service. Expecting sales to manage this experience without all the information is a disaster waiting to happen.
- “New collar” workers are headed for the workforce.
For sales and every other role involved with manufacturing commerce, the introduction of “new collar” workers into the workforce is a major disruptor. This is not merely a class of worker defined as “millennial.” Within manufacturing and other trade industries, a tech-savvy workforce is emerging. Defined by their personal experiences with online commerce, and for some, a lifelong relationship with mobile technology, these workers demand a modern experience that manufacturers must provide. Otherwise, it may be challenging to find and retain the best new talent.
- Products as well as humans are making major waves in the manufacturing industry.
The advent of IoT, and particularly smart products, is creating a need for a new business model that manufacturers must be ready to handle if they plan to remain competitive. Subscriptions have often supplanted list prices, and manufacturers must have the ability to register products and customers to manage these ongoing transactions. Although this sector is not evolving as rapidly as experts have predicted, it should be part of the long strategy.
- Volatility, Uncertainty, Complexity and Ambiguity.
All of these disruptors lead me to our 8th challenge in 2019, something trendy management experts have awkwardly termed VUCA—short for volatility, uncertainty, complexity and ambiguity. The fact is that the world of manufacturing has been stood on its proverbial ear over the past few years—certainly in the last three that I’ve been predicting disruptors. Manufacturers can no longer take a traditional “build and maintain” attitude. Instead, they need to rapidly adapt to changing times. Ultimately that means they need to create commerce systems that are flexible enough to respond to those changes.
Depending on any specific area of manufacturing, some of these disruptors may represent a greater challenge than others. For some, IoT may be a long way off compared to the need to support field sales. For others, the challenges of old technology may represent the biggest risk.
No matter what drives manufacturers’ primary strategy in 2019, each of these disruptors must be somewhere in the sights of any organization, whether it’s through the microscope or via a much longer lens.
Karie Daudt is the VP of Customer Experience and Marketing for Insite Software.