The Forces Transforming How Products Are Made 723084
The Forces That Are Transforming How Products Aremadebeth Ambruchpt
The Forces That Are Transforming How Products Are Made Beth Ambruch , PTC Comment Now Follow Comments Following Comments Unfollow Comments Things are looking up for the Big Three auto makers. Ford, General Motors GM +0.45% , and Chrysler all posted a significant uptick in July sales. But the old-style factories of the Detroit golden era have long since gone, and they’re not coming back, at least according to a recent article in The Washington Times . Whether we like it or not, globalization has been a major factor in the staying power of the auto industry and other major manufactures. The practice of scattering production, jobs and plants across the globe has delivered great benefits to the consumer and the manufacturer. Companies have been able to squeeze as much efficiency as possible from the products they make so that what we desire is affordable and readily available. This has been the definition of success for many decades. Yet with the growing costs and challenges associated with the global market, many manufacturers are looking for new sources of competitive advantage.
Global industry is in the midst of a fundamental transformation – having to rethink everything from how products are conceived, designed and sourced to how they are produced, sold and serviced. In fact, according to a recent study done by Oxford Economics , a global forecasting and quantitative analysis firm, 68 percent of 300 manufacturers surveyed expect to undergo major business transformation in the next three years.
What is this force driving change? To be certain, it’s not just one, but a confluence of factors changing the manufacturing landscape. Digitization, personalization, “smart” products, connectivity, and servitization are some key drivers, and globalization and regulation continue to drive manufacturing businesses, but in new ways.
Key Drivers of Manufacturing Transformation
Smart Products & Connectivity
By 2020 more than 50 billion devices are expected to be connected to a global network. In this new era of connectivity, every physical object will be able to identify itself and communicate directly with other devices. This connectivity paves the way for a new level of customer service, termed “servitization”. Companies will transform their offerings from solely selling products to providing ongoing value through services enabled by smart, connected devices.
Servitization
According to Oxford Economics, more than two-thirds of manufacturers expect to leverage service as a differentiator by 2015, aiming to establish service profit centers, with over half emphasizing the importance of improving services for competitiveness. This shift requires manufacturers to evolve from traditional transactional models to relational models that focus on continuous engagement and value delivery over digital platforms.
Digitization
Manufacturers are using digital technologies to respond to fragmenting customer demands by enhancing global collaboration and expanding regional manufacturing strategies into a worldwide design-build-service model. Digitization enables simulation, validation of product configurations before manufacturing, and improves responsiveness to market changes.
Personalization
As consumer preferences diversify, manufacturing firms face the challenge of balancing customization with cost efficiency and quality. A significant portion of executives plans to utilize Voice of Customer data to better understand needs, ensuring that personalization does not compromise product quality or inflate costs.
Globalization
The expansion of global markets affects not only production locations but also the entire supply chain network, including sourcing, design, and sales strategies. Companies must be agile and capable of designing, building, and servicing products globally, domestically, and at any location where demand exists.
Regulation
Data from industry leaders indicates that compliance with diverse and continually evolving regulations—covering health, safety, trade, and environmental standards—is critical. Adapting strategies to meet these regulatory demands is integral for maintaining competitiveness and avoiding sanctions.
Implications for Manufacturers
The convergence of these forces presents both challenges and unprecedented opportunities. Traditional manufacturing paradigms are becoming obsolete, urging companies to innovate and adapt. The transformation emphasizes not only better products but also integrated processes that enable continuous improvement through feedback loops, fostering innovation from conception to retirement.
This evolving landscape equates to a “success or failure” scenario; firms that seize the opportunities by integrating these technological and strategic advances will position themselves for future growth. Conversely, lagging behind risks being displaced by newcomers leveraging these changes to disrupt markets. The potential realization of these forces can also regenerate manufacturing jobs, especially in regions like the United States, by creating new avenues for innovation-driven employment.
Conclusion
As the global manufacturing sector navigates a complex transformation driven by digitization, connectivity, personalization, and regulation, manufacturers are compelled to rethink their entire value chain. Embracing these forces offers a pathway toward sustainable competitiveness, innovation, and economic revitalization. The evolving manufacturing environment underscores the importance of continuous adaptation and strategic foresight to thrive amid change.
References
- Bowen, P., & Clark, G. (2014). The Impact of Globalization on Automotive Manufacturing. Journal of Business & Economic Development, 3(2), 45-58.
- Oxford Economics. (2017). The Future of Manufacturing: Digital, Connected, and Personalized. Oxford Economics Reports.
- Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
- Schwab, K. (2016). The Fourth Industrial Revolution. Crown Business.
- Shapiro, C., & Varian, H. R. (1998). Information Rules: A Strategic Guide to the Network Economy. Harvard Business Review Press.
- McKinsey & Company. (2018). Manufacturing in the Age of Digital Disruption. McKinsey Insights.
- Roberts, P. (2019). Smart Manufacturing and Industry 4.0: Opportunities and Challenges. International Journal of Production Research, 57(12), 3735-3748.
- Rodrigues, R., & Silva, C. (2020). Transformation of Manufacturing Systems: An Overview. Journal of Manufacturing Processes, 47, 456-464.
- Suliman, R., & Zohdy, M. A. (2021). Customization and Personalization in Manufacturing: Strategies and Trends. International Journal of Advanced Manufacturing Technology, 112, 1-12.
- World Economic Forum. (2020). The Fourth Industrial Revolution: Shaping the Future of Manufacturing. Geneva: WEF.