Tag Industry Changes

Tag Industry Changes

The Top 3 Business Trends for Manufacturers in 2017

December 16, 2016 Tags: , , , , , , , , , ,
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The new year is fast approaching, which means it’s the perfect time to look ahead and start gearing up for 2017. We’re predicting that next year will continue to bring fundamental shifts to manufacturing business operations, thanks to technology.

Here are the top three business trends manufacturers should address to improve profits, drive customer retention and stay ahead of the competition in 2017.

1. The relative value of the aftermarket

Manufacturers of industrial-grade equipment have a continual revenue stream problem—it can be years or even decades before customers need to replace a full piece of machinery, and profit margins are tight on these capital equipment sales. On the other hand, selling aftermarket parts is a high-margin, long-term revenue stream.

drill machine parts

Economic studies show that spare parts and aftermarket sales comprise almost 8% of the GDP, meaning about $1 trillion is spent a year on assets that are already owned. Big money is made through ongoing sales of replacement parts and service products. Who is best positioned to sell these products, if not the OEM?

What may surprise you is that OEMs traditionally capture less than 50% of aftermarket part sales. Instead, most of this market share is captured by third party resellers, will-fitters and other suppliers.

This is a huge missed opportunity. By taking steps to increase these aftermarket sales using technology and other resources, companies can see their profits grow exponentially this upcoming year.

2. It’s time to move more sales online

The internet’s broad use by consumers and businesses has dramatically changed how people gather information and make purchases. And the expectation of equipment owners to be able to research and buy parts online is only going to continue to grow in the future.
an with credit card online shopping

Manufacturers have a unique opportunity over the next few years to streamline aftermarket sales with online parts catalogs and flexible purchasing options.

Brand loyalty may be dying in the consumer retail arena, but OEMs have a distinct advantage when it comes to enhancing the buyer experience. With access to exclusive customer data, comprehensive product knowledge, and more precise parts information, manufacturers have a head start on making a “sticky” online sales platform.

While bargain hunters will always exist, modern shoppers have proven that they will pay for convenience and quality, elements that OEMs are uniquely poised to provide.

Providing online parts sales and information is one of the quickest paths to increase revenue and customer satisfaction. The digital shift means that buyers expect real time information with immediate access. Soon (and by “soon” we mean now), a bulky paper catalog accompanied by a parts desk phone number isn’t going to cut it.

3. Internet of Things (IoT)

IoT drawing

Where do people, data and intelligent machines intersect and how is it going to change the world? According to IDC, IoT spending is expected to skyrocket in the next few years, from $656 billion in 2014, to $1.7 trillion in 2020.

And there’s a good reason for it. IoT can make services more responsive, convenient and efficient for consumers. This is true for industrial IoT (IIoT) as well. Most new heavy equipment includes telematics capabilities, with sensors installed on key systems, whether operators choose to use them or not.

Some companies are using these systems to shift asset maintenance from a preventative to predictive model. Downtime is one of the costliest variables in equipment lifecycle costs, and IoT can play a key role in diminishing it.

Instead of guessing the condition of equipment and replacing parts on a predetermined schedule, maintenance can instead be triggered by real-time conditions monitored by sensors installed in the machine. This may seem like a small change, but significant dollars can be saved by not replacing parts that don’t need it, and by optimizing downtime and reducing unplanned work stoppages.

For manufacturers, think of the benefits gained from this type of data, and how customers can be encouraged to buy aftermarket parts from an OEM. With IoT and accurate data, you can predict a customer’s needs and have parts and supplies ready and in stock. And by integrating this data into your online parts catalog, you could send the customer a reminder email with a suggested shopping cart that includes the needed parts.

This is an exciting time to be in the manufacturing business and use technology to increase customer satisfaction and revenue. By integrating streamlined aftermarket parts sales, data and online capabilities into your overall strategy, your business can jump to the next level in 2017.

August 2015 Newsletter – News Manufacturers Can Use

August 5, 2015 Tags: , ,
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August 2015 - Digabit Newsletter

In this Issue

True or False? The latest apps are high-tech and sexy, but manufacturing is dull and old-fashioned. If you answered, “True,” read on to find out how wrong you are!

Manufacturing firms shift from traditional to online marketing. With domestic manufacturing surging, now may be the time to invest in new technology. Find the leaders in cloud technology and enterprise resource management (ERP). Wearable technology isn’t just for joggers — manufacturers disrupt the desktop to improve worker training, safety and production. And last, a ping from the Internet of Things and its potential to upgrade product support, from preventive maintenance to inventory management—subjects dear to our hearts here at Digabit!

Click here to read all of the stories.

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Hot off the Press!

Digabit is committed to keeping current on the latest technologies and trends affecting the manufacturing industry. Every day, we comb popular Manufacturing Association blogs, leading industry websites and tech publications sharing the most popular stories on our social media pages. Once a month, we release our Industry Newsletter which includes the most popular stories.

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July 2015 Newsletter – News Manufacturers Can Use

July 8, 2015 Tags: , ,
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July 2015 - Digabit Newsletter

In this Issue

Last month was all about Big Data and the IoT.

Europe gains traction, showing the potential to dominate industrial IoT. Big data is helping manufacturing machines run longer and more efficiently. Tips for tighter collaboration and visibility up and down supply chain are explored. Business intelligence (BI) software is helping manufacturers make well-informed, timelier, and more intelligent business decisions. More than 160 events for this year’s Manufacturing Day in October are highlighted. And finally, we look at the best practices for executing an after sale web library and eCommerce platform.

Click here to read all of the stories.

Join our monthly Newsletter to receive the latest industry news.

Hot off the Press!

Digabit is committed to keeping current on the latest technologies and trends affecting the manufacturing industry. Every day, we comb popular Manufacturing Association blogs, leading industry websites and tech publications sharing the most popular stories on our social media pages. Once a month, we release our Industry Newsletter which includes the most popular stories.

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How the Adoption of Disruptive Technologies Are Driving Growth for Manufacturers

March 27, 2015 Tags: , , , ,
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There’s a wealth of articles, research, and analysis heralding every scientific breakthrough and technological advance as the next big thing that will change the face of manufacturing.

McKinsey Global Institute estimates that disruptive technologies like the rise of mobile, knowledge work automation, the Internet of Things, cloud technology, and 3D printing, could account for an economic impact of up to $33 trillion by 2025.

Leading executives understand that their strategic competitive advantages might erode or be enhanced by emerging technical solutions. Disruptive technologies could potentially raise productivity, attract more customers, inspire new market strategies, and drive substantial growth.

Adopting these technologies is no longer optional or convenient. It’s a necessity to remain competitive. But how do you know which advances are actually worth your while? Unfortunately, as MGI reported, “Business leaders can’t wait until evolving technologies are having their effects to determine which developments are truly big things.”

While most manufacturers have a tendency to focus new technology investments on driving efficiencies and reducing costs, roughly a quarter of CEOs are planning to use emerging technology for new growth opportunities. Matt Reilly, the senior managing director of Accenture Strategy North America suggests more manufacturers do the same, sharing this equation: “Efficiency plus technology equals new capacities that create opportunities for new business models.”

So let’s take a look at some manufacturing enterprises that are actively adopting new technologies like IoT to drive opportunities for growth.

Union Pacific

One of our asset-intensive customers, Union Pacific, has reduced the number of train derailments caused by failed bearings by 75% with the help of near-real-time analysis of data collected by sensors. With that success under its built, the company is now focusing its R&D efforts on additional sensor technologies, like accelerometers that can feel for bumps that would suggest a faulty track.

As CIO Lynden Tennison explained to Information Week, the whole area of “sensor-based, network-based diagnostic and predictive analytics” will be the biggest technology opportunity in his industry for the next 10 or 15 years.

John Deere

John Deere has implemented several moves toward customer-facing IoT. By incorporating sensors in its equipment, the company can now do remote, wireless diagnostics of some tractors and combines.

Eventually, John Deere wants its harvesting equipment to inform a database that then informs tillage equipment, which, in turn, informs irrigation equipment, according to James Heppelmann of PTC.

Whirlpool

Whirlpool Corporation has found tremendous value in its first forays into creating connected appliances. Introducing convenience features like starting the washing machine from an iPhone have garnered consumer interest, and the company’s stock has continued to climb since introducing these optimized appliances over the past year.

Rather than connecting with customers every ten years when they need a new appliance, Whirlpool is now engaging with their customer base on a much more consistent basis. The result gives the company a deeper understanding of how its customers interact with Whirlpool products.

Which disruptive technology is your company planning to adopt? We’d love to hear from you in the comments.

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Mobile Websites and Apps: How OEMs Can Optimize the Mobile Experience

March 23, 2015 Tags: , ,
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For manufacturers, the global economy is moving away from manual processes and more toward the digitization of daily operations. From the production floor to the job site, the way manufacturers do business is a matter of staying on the cutting edge of the latest technological advancements. Not only is labor less physically demanding compared to the work of previous decades due to automation, but communications and data transfer are also being transformed into tasks that can be completed more quickly. And when factoring in the once-obtuse parts catalogs that OEMs and dealers relied upon, technology has served a vital purpose in moving these catalogs from thousand-page books onto the screens of computers and mobile phones.

But with such a dramatic shift in the way OEMs provide their services to customers, it’s possible that some companies aren’t fully maximizing how effective they can be in their mobile marketing strategies. However, modernity calls for greater customer engagement on the part of manufacturers if they wish to promote their own brands and achieve higher levels of business growth.

Data from Pew Research indicated that more than 90 percent of Americans have cellphones and nearly 60 percent own smartphones, which provides a large potential clientele of users who are capable of searching, contacting and working with manufacturers they can locate online. It’s not so easy, though, because simply having a mobile website doesn’t mean a certain company will show up in search results.

“OEMs can optimize their mobile offerings by creating precise, direct content geared to their customer base.”

Design for effectiveness

The key to leveraging information and communicating actively with customers is to restructure a traditional website to accommodate the needs of a mobile platform. On top of discrepancies between images, pixels and hardware, mobile websites should be designed for the purpose of interactivity on the go. For instance, marketing consulting company Moz noted page speed, reduced pop-ups and touchscreen navigability are some of the primary factors that manufacturers should focus on when creating a user-friendly mobile site.

Since wireless connectivity isn’t a guarantee in all locations, pages on mobile sites should be designed to load quickly and populate the screen with information so users can browse more efficiently. This can be accomplished by limiting redirects and factoring in that customers may accidentally click on certain items due to difficulties with touchscreen navigation.

Updated, consistent content

Once the design phase is complete, OEMs can optimize their mobile offerings by creating precise, direct content that is geared to their customer base. It’s important to note that while mobile websites are accessible by anyone with a web browser, mobile apps are exclusive only to those that own smartphones and probably paid for the app. Crafting content accordingly will help tailor messages to target audiences.

More shopping is done online than ever before and lacking the basic tools and technological solutions to capitalize on this development can directly hinder sales, according to Google research.

Roughly 61 percent of people would leave a mobile website if they couldn’t immediately find what they were looking for. In addition, 67 percent of people are more likely to purchase products from a website that’s mobile-friendly.

gears and manufacturing on top of mobile phone

Essentially, not updating to mobile systems to include the content customers want directly aids competitors because people will search elsewhere.

In terms of a parts catalog, having cloud-based software driving the transcription of numbers, orders and available parts onto a website or app is crucial because in today’s world of convenience and quick service, OEMs stand to gain from more closely aligning to the demands of tech-advanced customers. The after-market industry relies on obtaining spare parts as quickly as possible. Mobile website and app design can aid in this venture.

Impacting future growth potential

A report from mobile analytics company Flurry pointed out the amount of time spent on mobile apps is increasing every year. In 2014, the average person spent roughly 2 hours and 49 minutes on their mobile devices per day, with 2 hours and 19 minutes of that time spent on apps.

These developments are not mere fads, but documented avenues for greater success in the future.

Though manufacturing is typically thought of as one of the oldest economic sectors, the industry is actually advancing far beyond its capabilities of even a few years ago. No longer are phone calls, faxes and face-to-face meetings the primary means of transferring information and coming up with workable solutions to problems. With the use of mobile sites and apps, OEMs have an entire new world of opportunity at their fingertips and customers can see this information in real-time, creating a new, optimized relationship that benefits everyone involved.

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Leveraging Analytics to Enhance Operational Performance for Manufacturing Businesses

March 17, 2015 Tags: , , ,
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Over the last several years, manufacturers have shown a booming interest in big data. According to CSC Global CIO 2014-2015 Survey, 81% of manufacturers feel big data has a positive effect on production and efficiency, and 65% believe big data will be a strategic business driver moving forward. Managers are hoping they’ll reap benefits like improved product quality, more efficient supply planning and shortened order-to-deliver cycles.

With research studies emphasizing data’s importance and advantages, it’s easy to understand why manufacturers are exploring its possibilities. READ MORE

3 Things OEMs Are Worried About in 2015

February 12, 2015 Tags: , ,
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Thanks to new developments in technology and major supply chain shifts, the manufacturing sector is changing at a rapid pace.

In the past year, manufacturing production has increased faster than real GDP growth for the first time in over a decade, and, according to the Institute of Supply Management, revenues are expected to increase across 15 manufacturing industries in 2015.

While manufacturing activity has rebounded and there’s a more optimistic outlook for the future, original equipment manufacturers still report a number of concerns and business challenges weighing on their minds for the year ahead.

Let’s take a closer look at three areas OEMs are worried about in 2015:

1. Labor Costs & Retention

77.1% of manufacturing executives cited rising health insurance costs as their top challenge in this 2014 National Association of Manufacturers/Industry Week survey. With benefit costs climbing an average of 6.3% over the next 12 months, the majority of manufacturers are planning to increase copays, deductibles and premiums.

These changes may make it even harder to attract and retain a high quality workforce, which concerned more than half of the survey respondents. Not only are companies hesitant to hire due to healthcare costs and federal regulations, but many simply can’t find a capable labor pool of skilled workers.

As manufacturing and supply management consultant Patricia Moody explained on the AME blog, “We have a big problem with the labor base — nobody wants their kids to put tires on Buicks, and nobody wants to work in a factory. Factory owners can therefore only do one of two things — outsource or automate.”

2.Changes to Taxation & Regulation

Taxation, regulation and political unrest around the world can make production planning and capital investment extremely risky.

In the U.S., many OEMs are deeply frustrated by recent federal proposals. Regulatory compliance costs are skyrocketing, complex tax rules are becoming business prohibitive, and the Department of Labor is planning to revise overtime regulations.

According to Industry Week, “If federal agencies maintain their current pace of regulatory activity, the load will reduce manufacturing output by up to 6% over the next decade and by as much as $500 billion this year alone.”

3. Adoption of New Technology

OEMs are looking to boost efficiencies and productivity by implementing a variety of new technological tools. The IDC FutureScape for Worlwide Manufacturing predicted that, in 2015, customer centricity will require higher standards for customer service excellence, efficient innovation, and responsive manufacturing, which will motivate 75% of manufacturers to invest in customer-facing technologies.

Though the top technological trends for 2015, ranging from the Internet of Things to SMAC (social, mobile, analytics and cloud), present exciting opportunities, the challenge becomes getting employees, distributors, dealers and customers to adopt these technological advancements. If the intended users don’t recognize what the software can do for them, manufacturers will be hard pressed to get full engagement.

Next Steps

Manufacturers have little control over the rising healthcare costs and regulatory changes of today, but a successful software adoption is one concern that can be alleviated with proper planning.

Having the full commitment of senior management, setting expectations for deployment upfront, and investing in change management can fast-track user adoption. When considering the right technological solution, see what training and implementation services your software provider can offer. Digabit, for example, has a dedicated Services Team that helps manufacturers smooth the transition from the old to the new.

If you want to learn more about our technical services and implementation assistance, contact us today.

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