The Blurred Line Between Manufacturers and Tech Companies

Is Tesla a car manufacturer, an energy company or a technology firm? Elon Musk envisioned Tesla Motors as a technology company and independent automaker, aimed at eventually offering electric cars at prices affordable to the average consumer. Tesla Motors shortened its name to Tesla in February 2017 to take the focus away from cars. Today its extraordinary ambitious founder has a clear purpose; to accelerate the world’s transition to sustainable energy with electric cars, solar panels, and integrated renewable energy solutions.

Another example of a trailblazing company that has pivoted towards an additional focus area is Google. Traditionally a web company that rakes in most of its money from online advertising, Google has another identity that few people know about – it’s also a huge hardware manufacturer. For many years, Google has developed the servers and networking equipment that drives its many web services. It is in fact probably one of the world’s largest, according to its Chief Financial Officer Patrick Pichette, who admitted this at a recent stockholder meeting.

Manufacturers also have plenty of opportunities to unlock innovation. Through digitalization, they can blur the lines between what is a technology company and a manufacturer, and the impact of this approach is turning industries upside down.

The rise of Supply Chain Innovation

According to the 2020 IDC Future Scape Report, by 2023, 60% of the G2000 will have a digital developer ecosystem with thousands of developers; half of those enterprises will drive more than 20% of digital revenue through their digital ecosystem/platform. Many manufacturers are also transitioning towards an “as-a-service” model, made possible by technology, connected services and intelligent supply chains. Consumers can now pay for usage rather than buying a product and manufacturers will make money from services delivered via apps and APIs instead.

With a technology-driven ecosystem, equipment manufacturers are now able to charge clients for supplying machines based on usage, uptime, lifecycle or even output rather than the traditional model of buying very expensive equipment outright.

The question is then how do they keep up when requirements are constantly changing? The competition is biting at their heels and therefore the increased pressure to adapt means that they need to implement smart technologies that support their long-term growth and enable them to compete with the disruptors, or even better, be disruptive themselves.

Smart technologies encompass all cyber-physical systems including the internet of things (IoT), industrial internet of things (IIOT), cloud computing, cognitive computing and artificial intelligence (AI). AI has the capacity to make sense of the abundance of data gathered by IoT (and IIoT) devices through systems that can adapt and learn. Through the rising use of AI technologies, such as chatbots for customer engagement can become multidimensional conversations covering a variety of complementary channels. By expanding digital intelligence adoption, AI can help decision-makers convert this data into actionable insights to drive improved innovation, resulting in better operational and financial decision making

Keeping the customer at the heart of operations

The golden rule for any manufacturer that is considering a new business model or way of operating is to always keep the customer at the heart of the business. Nowadays customers know what they want when they want it and most know how they will get it. This means that manufacturers need to keep up with the demands for personalization and reduced lead times.

We have reached a tipping point in our industry, where the technological maturity of companies that make goods will determine whether they survive and even thrive in the digital economy.

Nimble supply chains will offer technology-focused manufacturing companies the capabilities they need to quickly capitalize on new opportunities in their ecosystem, allowing them to break down old barriers. By making them the disruptors, they will be able to drive innovation and achieve greater profits. Those that hold back will be driven out of the market by technology-focused disruptors sooner rather than later.

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