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Fictron Industrial Supplies Sdn Bhd
Fictron Industrial Supplies Sdn Bhd

4 Misconceptions Manufacturers Have About Digitization


The manufacturing industry has been one that's content with a satisfactory status quo. There's a defined way of operating within the supply chain that has performed well enough, at the moment, leading many manufacturers to consider digitization unnecessary.
With product lifecycles becoming shorter and competitors tightening among industries (even among players within the supply chain), manufacturers can't leave well enough alone for a lot longer. However, many are choosing complacency over improvement, partly the result of a number of widespread myths about what it means to accept digitization, how manufacturers can profit, and whether the cost-benefit scales tip in manufacturers’ favor.
Here are the top four most common misconceptions - and why they don’t hold true.
No. 1 - Our Current Way of Working is Fine As-Is
Manufacturers, as well as distributors, wholesalers, and retailers, have struck an apparently perfect balance. Each partner carries their share of the production, distribution and sales operation, and in turn, gets a share of the profits.
The landscape of B2B buying, however, is changing. Customers desire more self-service options, more competitively priced products, and a shorter time-scehdule from purchase to delivery. By shorter, they don’t mean marginally faster; they have perhaps expectations molded by “The Amazon Effect” and they want their products as close to instantly as is possible.
Today, before a B2B buyer ever contacts a potential supplier, they've already done as much as 70 percent of the buying process (beginning with online research). This means that your internal team is mostly getting cut out of the equation, and you have to find new approaches to serve to customer needs during the first three-quarters of the buyer journey. The obvious answer is e-commerce.
No. 2 - E-Commerce is An Unnecessary Risk (and Cost)
With e-commerce, you can put your business back in the forefront of your customers’ minds. Inspite of this potential, however, many manufacturers keep on being unconvinced. Unsure that e-commerce might be a lot more than an extraneous part of their business strategy, a significant number of manufacturers disagree that the expense of implementing and maintaining an e-commerce experience is way too high. They also disagree that this cost may not be justified. What gain can they be guaranteed from launching a web store?
The successes of manufacturers who do have a web store can speak for themselves.
Resulting from direct-to-consumer (D2C) e-commerce sales, 82 percent of manufacturers selling directly to consumers enhanced their buyer relationships, and 76 percent improved customer experience.
During the past year, at least one-third of B2B consumers purchased straight from a brand manufacturer’s website, particularly due to more comfort, better product quality and a lot faster, more reliable shipping.
What this tells us is that there's definitely a gap to fill. E-commerce can not only make you money, but it helps make you the go-to choice for customers who are dissatisfied with retailers’ and resellers’ e-commerce experience. That is an excellent advantage.
By selling online as a manufacturer, you're satisfying the increasing number of clients who already want a way to bypass third-parties and resellers, and that you're giving your consumers a way to engage with and interact with your brand on-demand any time.
No. 3 - Direct-to-Consumer (D2C) Sales Will Hurt Our Channel Partner Relationships
When looking at the distribution of profits within the supply chain, the reality is that in most cases, distributors make a significant share of the overall revenue. With third-party retailers also marking up the price of goods, it is very clear that the supply chain has started to be a unit of businesses looking out for their individual best interests. Unfortunately, it also means manufacturers are getting the short end of the stick from the start, and then not making anymore profit from the products they have been creating, even when there is more end-revenue up for grabs.
There's definitely a way to keep the supply chain harmonious, profitable, and efficient, and it begins with getting D2C sales right. Thankfully, some manufacturers have already gotten started (and are already reaping the benefits). This does not mean, however, that channel partners can’t win, too.
Within the supply chain, distributors, manufacturers, and retailers have to work together, make profit individually, and offering a strong product and experience for the end-consumer. Fortunately, there are countless ways they can do so, and they've already begun to strike this balance.
Close to half of manufacturers feel that a D2C model has enhanced the flow of incoming leads for their channel partners and has resulted in a growth in sales. The key to success is to know the most efficient use case for each channel partner. Boost effectiveness and profitability by transferring order fulfillment for larger orders through to distributors and retailers. Let manufacturers fulfill sales for lower-volume inventory items or test the success of new products before passing them along to retailers. Comprehend where your players’ strengths are and act accordingly for the best outcome.
No. 4 - Emerging Technologies, Like the IoT and M2M Innovation, Are A Better Fit for B2C
It's true that B2C brands, specifically retailers, are usually the first to ride the digital innovation train. They're often the forerunners for developing emerging and unperfected technology into the core of their sales strategies in hopes of capitalizing on the bulk of early-stage profits. This does not mean, however, that manufacturers don’t have a strong use case—and perhaps even a better use case—to do the same.
The Internet of Things, 3D printing, cloud-based technology and artificial intelligence (AI) can help in with supply chain visibility, with the eradication of organizational siloes, with forecasting for product production schedules, and with automating processes (especially in warehouse management).
Intelligent technology encourages intelligent, informed, and purposeful business. Use these growing technologies to create a digital ecosystem of real-time and predictive data. Then, use that ecosystem to find out the streamlining of the latest processes and shape future methods to product development and distribution.
Like most businesses dabbling in a trial-and-error approach to a strategy that’s not a surefire quick win, it's possible that many manufacturers adopting emerging technologies won’t succeed straight away. None the less, taking the first step to digitization is critical to establishing the foundation for a future-facing approach to manufacturing. Getting a head start on being even a single beat ahead of the competition, in such a tight race, can make all the difference — and it all starts off with the right investment (financial or otherwise) in digital.
This article is originally posted on
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