Improving Manufacturing Practices

By Rick Chavie, CEO of EnterWorks

 

Improving Manufacturing Practices

If you consider push vs. pull approaches in a modern demand chain, those closest to consumers (e.g. retailers and lifestyle brands) have been the most active in adopting pull strategies to stimulate consumer demand through social branding, aggressive promotional offers and hi/lo advertising techniques.

At the same time, companies who have a supply chain focus (e.g., industrial manufacturers and durable consumer brands) tend to push products into the market with more brand and product centric techniques. While these tendencies have persisted for decades, today’s omnichannel shopping trends are forcing manufacturers to evolve and behave more like retailers.

Manufacturers can use advanced technologies to understand consumers as well by selling products Direct to Consumer (D2C). The early wave of digital disintermediation of the retailer came through third-party websites – primarily Amazon – which provided manufacturers with an alternative route to market with a closer connection to the consumer. Suddenly, manufacturers find themselves with larger, more complex production curves and product management that extends beyond goods sold in bulk.

The concern is that while manufacturers have ample experience handling production logistics, the transactional qualities of interacting with consumers are still foreign to them. For companies that move beyond Amazon and develop their own D2C websites, the opportunities are even greater as they have control over the entire interaction with their customer and are not hostage to Amazon’s rules of engagement.

However, despite the additional steps that servicing individual consumers requires, manufacturers will find many advantages with increased demand-side exposure. As a notable added benefit, manufacturers can better inform their product information management (PIM) and product content systems with a deeper understanding of how their audiences search for their products and can incorporate the desired attributes and key words in their product content, both from physical and digital consumer data points. While traditional two step distribution has shielded manufacturers from such complex purchasing patterns, it has also blinded them from holistic omnichannel insights made available in the closer digital connections.

Improved product information is a key influencer on e-commerce purchases. In addition to PIM, as manufacturers begin to leverage new business channels and interact directly with consumers, they can:

  1. Set the Pace of Manufacturing: Traditionally, manufacturers push products to physical and digital ends, with demand knowledge dependent upon retailers and wholesalers. However, when acting like a retailer and forgoing the middle-man to consumers, manufacturers can more directly set the pace of sale. End data from in-market consumers leads manufacturers to true demand-curve insights, which then informs product generation. With an added dimension of connecting to consumers, manufacturers can avoid external cost pressures, respond to consumer needs and foresee purchasing trends. For example, after determining how well products are selling, a manufacturer can avoid mark-down prices by re-bundling an offer or scaling back production completely. Instead of waiting for external requests, manufacturers should engineer B2B websites that give them greater control over the sales cycle by linking the insights they gain from the D2C consumer selling channels.
  2. Spot and Shape Industry Trends: Every manufacturer should be thinking about trend shaping, as it is one of the more critical techniques in converting consumers. Both personalized and broad product content is useful for testing consumer trends, which will help manufacturers identify peak resonation points. As manufacturers begin to spot trends, they can use targeted product content and marketing to push consumers toward optimal purchasing decisions. When manufacturers are closer to the customer and set product styles or trends, their content is more likely to stand out against the competitors that lack similar knowledge. In short, manufacturers who interact directly with consumers will have a greater influence on the consumer agenda. From an efficiency standpoint, additional consumer insights give manufacturers an extra month or two to anticipate what will happen at market. In the past, manufacturers were unable to convert on trends because they were receiving purchasing insights from retailers too late. Now, manufacturers have the ability to identify popular trends and recreate offerings and products to capitalize on what is most likely to sell.
  3. Sharpen All Channel Experiences: Manufacturers can sharpen interactions across all channels as the volume of consumer information increases. For both product and content lifecycles, customer feedback informs how manufacturers characterize products. As this happens continuously across touch points (mobile, print, flyer, web, signs, etc.), manufacturers will develop targeted content that benefits from every channel’s particular specifications. Manufacturers can also use social mentions to reinforce trend spotting. In this closed-loop system devised through sustained observation, manufacturers should strive to map consumer preferences. It is not simply a matter of something selling, but why it is selling. By tracking where and when sales happen most often, manufacturers can highlight the attributes that consumers are looking for (fabrics, colors, style), as well as the channels they prefer. Brands should try different messaging to proactively go after top markets. They can also integrate multiple content initiatives across channels to increase performance and ensure that new products sell. There are never too many variables one can try when testing content across channels. Product content information is an iterative process that requires a good deal of trial and error. There is also no fixed rule for when testing should stop. Manufacturers need to be intentional about validating product content and keep working to find key sales differentiators over time. Often, the best way to do category management is to put the product on the shelf, test a wide range of variables and see what sells. Then, these customer insights can be gathered and analyzed to inform PIM and make it more compelling and brand consistent.

In the past, manufacturers did not have to worry about the physical and digital interactions with consumers. However, in an increasingly omnichannel world, brands must work to be more demand-chain centric. In order to improve the speed, trajectory and experience of shopping online, manufacturers must master the push and pull. As more manufacturers interact directly with consumers and target segments, they will be able complement their existing supply-chain efficiencies and move more consumers from intent to purchase.