Industry Insights

The Digital Revolution in Manufacturing, Part Three: Driving Competitive Value

By James MacTavish / March 28, 2018

The definition of manufacturing has always been straightforward: to make products on a large scale using machinery. With the dawn of Industry 4.0, however, that meaning is rapidly changing.

Today, it isn’t enough for manufacturers to simply create things; they must focus on creating product experiences that set their products, brands, and companies apart. The reason? Digital technologies are creating incredible new opportunities—and disruption—for the manufacturing sector. In fact, a recent survey found that more than half of manufacturing executives, 52 percent, believe their businesses will not exist in their current forms in just five years.

Fifty-two percent of manufacturing executives say their businesses will not exist in their current forms in five years.

While physical goods will always be critical, the key to the future of manufacturing is software. Over the past two weeks, we’ve explored various aspects of the digital revolution that are sweeping the manufacturing sector, including new digitally enabled business models, and how to drive customer retention. This final post in the series takes a look at how to drive competitive differentiation and value with software.

Building a Customer Experience That Can’t Be Found Anywhere Else

For an example of a manufacturing company that has succeeded in creating a digital customer experience that drives value, consider Tesla. Within a few short years, the pioneering car company has created a higher stock value than Fiat-Chrysler, an automaker that is more than 100 years old.

How has Tesla been able to do this? Innovative design is part of it, but the experience that has won over so many loyal Tesla customers is powered by software. For Tesla—and other forward-looking companies like it—software has become a game-changer. Software enables manufacturers to make their devices smart, delivering new features that offer more value, as well as updates that help ensure that hardware won’t malfunction. These customer-centric digital experiences are helping savvy manufacturers overtake companies that are still focused on hardware alone.

How Digital Experiences Drive Competitive Value

Let’s dive deeper into how digital experiences can differentiate a manufacturer. Here are four key ways:

Software can change faster than hardware. It can take years to design, prototype, test, and manufacture a physical good. With software, new services can be created or changed as well as delivered within days. This flexibility gives manufacturers the agility they need to respond to changing markets and stay ahead of competitors.

Software provides ongoing value. Digital services allow manufacturers to extend the utility of a physical good long after the sale. There is a potentially limitless stream of new functionality that can be developed and pushed to hardware, updates that will leave customers wanting to invest in hardware and software for the long-term.

There is a potentially limitless stream of new functionality that can be developed for hardware.

Software delivers insights. With smart hardware, manufacturers can collect and use data in a variety of ways. Context-driven usage data can help companies give customers the functionalities and overall experience that they want. Data can also give manufacturers insights into customer behavior, helping them proactively identify and remedy potential problems, or create additional products and services to satisfy unmet needs.

Software sends a message to customers. A digital experience that puts the customer at the center exemplifies a company’s concern for keeping customers satisfied. Moreover, software gives manufacturers an ongoing touchpoint with their customers, creating long-term connections that are the engine of customer retention.

“Dumb” Devices Aren’t Enough Anymore

Given the incredible potential that software creates for physical goods, time is quickly running out for manufacturers that have yet to join the digital revolution. If you’re interested in learning more about transforming your business to succeed in the digital economy, download our eBook, “Evolving Your Business with IoT: Six Steps to Digital Transformation.”

James MacTavish is the Marketing Manager for manufacturing at AppDirect.