“Cautious optimism” is a phrase we hear a lot these days. Given the past few years, especially in the manufacturing sector, there is a lot to be said for a certain level of optimism. Even though there is still talk of a shrinking market, anything that offers manufacturers a growth opportunity should be grabbed with both hands. That is the general consensus about digital transformation and data connectivity.
Manufacturers are no strangers to these terms. There has been so much talk about the need for transformation in recent years that it may have become a little boring. But the truth remains. Growth opportunities are greater when suppliers better understand their customers’ needs. Much of this depends on how products work and how customers use them. The urgency is only increased by the competition for customers’ attention and loyalty. Therefore, any company that can gain quick and accurate insights into products and customer needs is at an advantage.
The problem many manufacturers face, however, is that they cannot do this on a scale that makes a meaningful difference. Some companies rely on CRM systems and believe that these are enough to cover the customer aspect. However, the reality can be very different. Understanding customer value in relation to products and product performance is key to optimizing customer experiences and relationships. This means connecting different data sources to get the complete picture.
But how many companies actually connect all their data and use it for their strategy? How many companies pass data on to the research and development department, where common problems and customer needs can be incorporated into new product versions?
Out of sight, out of mind
Even when the will is there, data silos often get in the way of progress. So many companies have invested in digital tools and services – supply chain management, inventory, CRM, etc. – but so few have done it from the start. By that, I mean figuring out how to connect different data sources stored in different databases and data centers to create a digital thread of intelligent data that can deliver product and customer insights.
Data silos remain a problem. According to some reports, 81% of IT leaders currently cite data silos as the main reason for transformation delays. So what does this really mean? Simply put, an organization that cannot make holistic decisions based on 100% of its data sources cannot make truly informed decisions on a regular basis.
This inability to identify product performance (both strengths and weaknesses) and connect it to customer needs, warranties, potential sales opportunities (through legacy products or contracts), inventory levels and supply chain capabilities leads to a lack of insight. How can companies truly manage and improve the customer experience without having an overall vision of all the relevant cogs in the business?
The more data collected on things like performance, asset history and work orders, the more information and insight a company can gain about its costs. And the more data points companies have available for the revenue side, the better they can determine and understand margin.
A digital thread
In his research paper Forecasts for global product and service innovation in manufacturing until 2024IDC argues that many aspects of modern manufacturing are now inextricably linked. The company recognizes that over the next five years, “manufacturing insights” will “drive product and service innovations across the manufacturing value chain, with measurable impacts on quality, differentiation, revenue growth, customer experience, ecosystem success, market relevance, time to market, and improved sustainable operations.”
While research shows that service data increases customer asset uptime and improves cross-departmental collaboration, when used correctly, it can also be a source of untapped customer information. This is where companies need to address silos and create a digital thread. So what is a digital thread?
Think of it as an interconnected flow of relevant data that defines a product throughout its lifecycle. It provides a comprehensive view of a product’s journey, from initial design and development through manufacturing, maintenance, service, and retirement. It enables companies to break down silos, streamline workflows, and achieve interoperability across departments, functions, and systems. A digital thread also ensures the quality and consistency of product-related data, keeping everyone up to date and on the same page.
Ultimately, it enables companies to extract value from or leverage product data that was previously inaccessible, under-utilized, or hidden to unlock business value and opportunities. This means that by removing the detrimental effects of silos, companies can improve their decision-making through better collaboration. It also accelerates the development and delivery of new products and increases efficiency at every stage of product development.
This isn’t just about optimizing service teams through service data. It’s about optimizing entire organizations by using service data as one of the core things that can inform the business. While this may seem a little daunting for any organization wondering where its priorities should lie, it’s simple: if your organization cares about margin, it needs to focus on removing silos and connecting data. This is the ultimate tool for shaping the future of an organization. It puts the customer and the asset at the center, and makes the relationship between the two a fundamental driver of opportunity. Now that’s a reason for optimism.
