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Three Trends that look set to Influence Manufacturing In 2021

Although it has been a year of great change and unpredictability, the lessons we're learning now will lead to better supply chains, smarter manufacturing and a more competitive landscape that will shape the industrial world in 2021 and beyond.

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Guneet Bedi/ Forbes.com

As we move into a new decade, business leaders will look to leverage technology-enabled business transformations to make their operations more resilient against disruptions. Part of this effort includes looking at advanced technologies and Industry 4.0 initiatives to enable future long-term success.

Along these lines, I believe three trends will significantly impact the industrial world in 2021 and beyond.

1. Supply Chain Vertical Integration
Businesses will start to look for ways to remove barriers and create more value throughout the supply chain. For companies taking on these initiatives, I recommend reviewing Michael Porter’s Value Chain framework. It’s one of the best models for identifying the direct and indirect activities — from procurement and logistics to marketing and sales — that can generate value throughout the supply chain.
As companies go through this discovery process, many will start to vertically integrate by either gaining or releasing control over distribution inputs and outputs. I like to refer to this as “eating someone’s lunch.”
There are benefits to eating some of the OEMs’ share by backward integration for those downstream. For example, take a servicer who will work on an asset from any OEM because they only care about the asset’s performance. This agnostic setup allows the servicer to control more of the inputs, increase efficiencies and positively impact its bottom line.
On the other hand, various OEMs are finding ways to integrate forward. Look at Nike, which has ended thousands of retailer contracts, instead opting to take control of its entire distribution chain. Similar shifts have happened recently with Tesla, Trumpf (a current client of my company), Campbell’s and Toyota, and I predict even more in the future. As you can see, these companies are spread across various verticals and industries. And so yours, too, could be disrupted.

2. Focused Investments Toward Improving Business Predictability
From recent discussions with manufacturing leaders, cash will continue to be king for industrial organizations. In addition to the cash focus, the most important trend I see is companies having recurring and predictable revenues. Be it OEMs moving to an “as-a-service” business model or servicers to predict revenues and hence the cost with annual recurring contracts for operations and maintenance (O&M).
This situation is an excellent example of why moving from capital expenditures (CAPEX) to financial models based on operating expenses (OPEX) is so enticing, which I discussed in a previous article. We’ll see more of these transitions as a driving factor for digital transformations in 2021.

3. Emerging Roles And Responsibilities In The Workforce
People are starting to think differently about how they operate and work internally with colleagues and externally with customers and partners, which will likely lead to a shift in required skills and new titles/roles.
In my opinion, industrial companies going through digital business transformations are particularly in need of talent with the technical expertise required to make implementations a success. Some of these new roles include chief digital officers, data scientists, innovation and software engineers, program managers, technicians and digital consultants.
Alongside transformation efforts are those related to customer success. Thanks to what many call the Amazon effect, this idea of delivering convenience has bled into other industries, turning every organization into a customer-centric business.
As such, industrial companies will be even more focused on the voice of the customer (VoC) to compete for business and retain clients. More than just data-gathering, VoC is about listening to what your customers are saying, interpreting it and then taking action. This process lets you be intentional about growing and adapting to customer expectations.

Some companies are even formally organizing and fostering a culture around customer success and VoC, creating new roles, such as customer success directors. Taking a page from the B2C world, I see this focus on delivering customer value as an integral element of industrial operations moving forward.

Comment: Although it has been a time of great change and unpredictability, it’s also been a catalyst for improving legacy processes and building on the foundations of Industry 4.0. The lessons we’re learning now will lead to better supply chains, smarter manufacturing and a more competitive landscape that will shape the industrial world in 2021 and beyond.

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