Industry 4.0 can solve many key challenges faced by manufacturers such as cyclical demand, market volatility, pricing pressure and the need for quick-turn innovation. Using technology to automate, integrate and optimize manufacturing processes is helping to improve cycle times, product quality and efficiencies across operations. But optimizing processes within the manufacturing plant is only the first stage of industry 4.0. The potential value of Industry 4.0 only is realized fully when the customer is added into the value chain as a key contributor.
New Attitudes on Data Sharing
The first step in adding customers into the decision-making process is getting to know them. As more and more products are sold with embedded sensors, The Internet of Things is giving companies the ability to collect consumer information, a practice which customers seem more willing to accept. A study entitled, “What is the future of data sharing?” found that 75% of the millennials surveyed were willing to share personal, sensitive information with a company or brand they trusted. This number jumped to 80% when consumers were given reward points or product recommendations. Some experts attribute this shift in customer attitude to growing up in the digital age, where people are familiar with providing information for the use products or services (Forbes.com, 2016).
Once systems are in place for collecting data on how customers use their products or services, manufacturers can begin incorporating the customer “voice” into nearly every aspect of the product value chain. Customer usage data gives decisions makers a more thorough understanding of the customer experience so they can address end-user concerns and develop solutions that address pain points. Manufactures can also use customer information to identify changing needs and respond quickly with customer-centered, data-based solutions. Local Motors, for example, has developed a manufacturing process using 3D printing that has shortened product development time from 4-5 years to 1-2 years. Consequently, the company can make custom vehicles based on a customer’s market-of-one requirements (Industry 4.0: What’s Next, 2017).
Yet, bringing the customer into the value chain means more than efficiently manufacturing customized products. Customer insights can be used to develop new business models and operational processes for even greater value. Below are three benefits achievable when including customer data in decision making:
- Greater Customer Retention
Industry 4.0 involves using data and technology to improve operations, resulting in shorter cycle times, better quality and real-time customer communication. Companies that deliver on their promises generate goodwill and trust within their customers, thereby increasing customer retention and loyalty. This can help fortify a business against existing competition and potential new market entries. For example, a chemical manufacturer could integrate its plant production data with a customer’s inventory system, providing the customer with real-time updates on delivery dates, automated document creation and online payment.
- Incremental Innovation
Manufacturers use intelligent products to gather helpful customer usage data such as rates of wear and tear, when and how often products are used and even when products need to be refilled or replaced. This information can be used to develop new and better products that deliver meaningful value to customers. For example, Georgia Pacific, a manufacturer of engineered lumber products, offers a vendor-managed inventory program, which uses sensors to instantly alert customers when their lumber products have been received and the straps cut.
- Disruptive Innovation
Customers also can be added at the development stage to work as part of a company’s innovation team. Including the end-user perspective from the start helps identify not only new products, but also related services. New services can add revenue streams to existing business models or create entire new ways of doing business. Imagine being able to deliver the specific type of fuel a gas station prefers at the exact moment it runs out. Or providing fleet drivers with specific routes optimized to their personal preferences and driving habits.
In the future, products will become platforms for creating value throughout the value chain. Companies from different industries will work together to create more complete offers focused on meeting customers’ demands and according to their unique specifications. When customers are brought into the value chain it opens up worlds of opportunity in which no one company can be the single provider. Instead, it will take an integrated ecosystem to fulfil all their needs.