Stuck in the 1980's - Why have manufacturers been slow to evolve?
The success of businesses in 2019 lives and dies with taking advantage of the competitive edge gained by fully incorporating digital technologies. Yet we are seeing more resistance to change than ever.
Across most industries the ‘Brick and Mortar’ business model has largely given way to a digital hybrid. We can see this everywhere, from the high-street giants that are routinely spending more and more on their E-Commerce efforts, to family-owned mom-and-pop shops that have dedicated hours of time of digital advertising.
The adoption of these technologies can be defined broadly as ‘Digital Transformation’ and involved the integration of disruptive technologies and practices like, AI, IoT, Cloud Computing, Digital Advertising, Online Investment and Intelligent ERP and MRP systems.
I recently wrote an article which spoke about a particular reason for this, which was the evolution in the expectations of B2B customers to model more familiar in the B2C marketplace. Here, I spoke about how many businesses are beginning to optimize their websites for Mobile use in order to take advantage of the blossoming mobile market and the race to a seamless purchasing journey is becoming the single most important target for most businesses this year.
Across the internet we can see examples of this change in the Retail, Wholesale and Service sectors. And yet even with upward of 1 in 5 manufacturing jobs at risk following Brexit and 2 in 3 manufacturers claiming that they are going to have to significantly raise prices to offset again rising foreign currency costs and import tariffs, we have yet to see evolution in the way that manufacturers maximise their online presence. Now really is a watershed moment for British manufacturers looking to survive the next decade.
‘If it’s not broke, don’t fix it’...
These are the words soon to be immortalised on the tombstones of unwilling manufacturers nationwide.
So why is that manufacturers are slow on the uptake?
It is perhaps predictable that the primary reason for this industry-wide inaction is the presumed cost of implementation. Often, digital transformation is spoken about in terms of overhaul and evolution. Using words like this can induce a feeling of anxiety amongst manufacturers. Completely revamping all of the processes of a businesses at once does on the face of it, sound like an incredibly arduous and costly undertaking.
In reality, Digital Transformation is an iterative, gradual and proportional process. A good Digital Strategy should involve rank-ordering priorities and working through them as resources and time become available. Rome was not built in a day.
In a similar vein, when conceptualized as a business-wide overhaul, many manufacturers envisage a protracted implementation period throughout which they will have to down tools and dedicated time and resources to upgrading their current systems. This simply isn’t in the case. By design, most of technologies most common associated with Digital Transformation (IoT, AI, Cloud) are implemented alongside your current systems. In fact, installing these systems whilst maintaining your current processes is actually considered best practice.
The ‘Doom Loop’
In what is perhaps the most eloquent articulation of the self-fulfilling prophecy that many Manufacturers find themselves in the (Boston Consumer Group) BCG in their report ‘Marketing & Sales, Sales & Channel Transformation, Technology & Digital Mobile Marketing and the New B2B Buyer’ Identified a trend in which businesses that have yet to adopt new technologies are unable to provide evidence for the potential ROI that these changes would make, because they have yet to make these changes. They aptly named this ‘The Doom Loop’.
A fantastic example of this can be seenin the readiness for manufacturers to Mobile Optimise their website. Here, in order for the innovator to persuade Decision Makers, they must provide evidence of the potential ROI that would be gained from the change. Now, here is where the doom-loop comes into play. Since they do not currently make a high proportion of their sales through mobile, they are unable to project ROI with any certainty and as a result the project is promptly dismissed.
Mobile optimisation is relatively routine process for most businesses, but given the infamously antiquated value structures of many manufacturers it can become incredibly difficult.
This same cycle exists not just for Mobile Optimisation but for all technologies. Ultimately, it leads to stagnation in the sector. Early adopters in a tech-resistant sector stand to benefit enormously.
Lack of Information
In the IT world it seems obvious that all businesses should invest heavily in disruptive technologies. Writing from a software company. I often find myself dumbfounded by the lack adoption across the country.
At this point is so, so important to remember that in 1995, Newsweek famously stated
This was in 1995, at this point the internet had already began to establish itself as a foundation for the future, and yet, one of the most reputable News sources in the world scoffed at it. It wasn’t until a few years later when it became truly ubiquitous that naysayers eventually relented and rushed to catch up with their more tech-savvy competitors.
When we consider that fact that even the internet was chalked down and unnecessary tech - A Solution Desperately Looking for A Problem - it becomes clear why manufacturers are slow to pick up the batton. There needs to be a concerted effort among tech companies to product digestible, plain-english and engaging content for the Manufacturing sector.
Sidebar: Whilst writing this I was taken aback by the similarities between Digital Transformation in the manufacturing sector and the reluctance from wider-society to adopt the internet. Ultimately, the consequences will follow in much the same way. The companies that embrace change and the ones that rule eventually rule the world. Have you heard of a little company called Amazon? - Originally a bookshop that took advantage of the internet, now a multi-trillion dollar business.
How can HARE.digital help?
At Hare.digital we work with manufacturers to outline and implement a digital strategy, identifying areas in their current business processes that would benefit from the integration of software.
We conduct a free Digital Audit, visiting your business and discussing some of the issues that you are facing with your current business processes. We then generate an actionable report with recommendations on the best ways to sustainably implement Digital Transformation.
At Hare.digital we don’t attempt to shoehorn our proprietary inhouse software. We pride ourselves on identifying the best software for your business and then work with you to create an integration strategy which reduces cost and disruption to business.